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Venture Capital - Iceland

Iceland

The country in Iceland is projected to see the Total Capital Raised in the Venture Capital market market reach US$1.95bn in 2024.
In Iceland, Early Stage dominates the market with a projected market volume of US$0.87bn in 2024.
In global comparison, most Capital Raised will be generated the United States (US$136,600.0m in 2024).
Amid Iceland's growing startup ecosystem, venture capital firms are increasingly investing in tech companies, signaling a promising future for capital raising in the country.

Key regions: Europe, United States, United Kingdom, Australia, Brazil

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Analyst Opinion

The Venture Capital market in Iceland has been experiencing significant growth in recent years, driven by various factors such as customer preferences, trends in the market, local special circumstances, and underlying macroeconomic factors.

Customer preferences: Customers in Iceland have shown a growing interest in investing in startups and innovative businesses. This is partly due to the increasing awareness and understanding of the potential returns and opportunities that can be gained from investing in early-stage companies. Additionally, customers are attracted to the idea of supporting local entrepreneurship and contributing to the growth of the Icelandic economy.

Trends in the market: One of the key trends in the Venture Capital market in Iceland is the focus on technology and innovation. Icelandic startups in sectors such as software development, biotechnology, and renewable energy have attracted significant attention from investors. This trend is driven by the country's strong technological infrastructure, highly skilled workforce, and government support for innovation and entrepreneurship. Another trend in the market is the rise of angel investors and crowdfunding platforms. These alternative sources of funding have become popular among both investors and entrepreneurs, providing a more accessible and diverse range of investment opportunities. This trend has further fueled the growth of the Venture Capital market in Iceland.

Local special circumstances: Iceland's small population and close-knit business community create a unique environment for venture capital investment. The country's relatively small market size encourages investors to seek opportunities abroad, leading to an international outlook and a focus on global scalability for Icelandic startups. Additionally, the close relationships between entrepreneurs, investors, and government agencies foster a collaborative and supportive ecosystem for startups to thrive.

Underlying macroeconomic factors: Iceland's strong macroeconomic fundamentals have played a crucial role in the development of the Venture Capital market. The country has experienced steady economic growth, low unemployment rates, and a stable political environment. These factors create a favorable investment climate, attracting both domestic and international investors to the Icelandic market. Furthermore, Iceland's focus on renewable energy and sustainability has positioned the country as a leader in green technology and innovation. This has attracted significant investment in the renewable energy sector, as well as related industries such as electric vehicles and energy storage. The government's commitment to transitioning to a carbon-neutral economy has further stimulated venture capital investment in these areas. In conclusion, the Venture Capital market in Iceland is experiencing growth due to customer preferences for investing in startups, trends in the market such as a focus on technology and innovation, local special circumstances including a small population and collaborative business environment, and underlying macroeconomic factors such as strong economic growth and a commitment to sustainability. These factors are likely to continue driving the development of the Venture Capital market in Iceland in the coming years.

Methodology

Data coverage:

Data encompasses B2B and B2C enterprises. Figures are based on the amount of capital raised, the average of deal size and the number of deals.

Modeling approach / Market size:

Market sizes are determined through a combined top-down and bottom-up approach, building on a specific rationale for each market segment. As a basis for evaluating markets, we use data from OECD, annual financial reports of key players, industry reports, third-party reports, publicly available databases, and survey results from primary research (e.g., the Statista Global Consumer Survey). In addition, we use relevant key market indicators and data from country-specific associations, such as GDP, CPI, number of small and medium-sized enterprises (SME), new businesses registered (number) . This data helps us estimate the market size for each country individually.

Forecasts:

In our forecasts, we apply diverse forecasting techniques. The selection of forecasting techniques is based on the behavior of the relevant market. For example, the S-curve function and exponential trend smoothing are well suited for forecasting digital products and services due to the non-linear growth of technology adoption.

Additional notes:

The market is updated twice a year in case market dynamics change. The impact of the COVID-19 pandemic and the Russia-Ukraine war is considered at a country-specific level.