Áslaug Arna Sigurbjörnsdóttir, Minister of Higher Education, Science and Innovation, published plans to merge Nýsköpunarsjóður atvinnulífsins (NSA or The New Business Venture Funds) and Kría (Iceland Venture Initiative). While NSA invests in startups, Kría invests in VC funds operating in Iceland.
Addressing the new initiative, Áslaug said, "By merging Nýsköpunarsjóður atvinnulífsins and Kría, the goal is to create a powerful investment fund that focuses on supporting new ventures in their early stages, as well as investing in fund of funds. The new combined fund aims to be flexible to meet rapid market changes and ensure that the Icelandic support system for innovation is up to high standards."
The merger's goal is to follow similar models like The Export and Investment Fund of Denmark (EIFO) and Tesi in Finland, where public funds are used to stimulate and support the innovation ecosystem through investing in venture capital and private equity funds and in startups and growth companies. The fund plans to support projects that provide solutions to social challenges and mainly in the areas where there is market failure and a lack of private capital.
NSA was founded in 1997 to support startups and its role and purpose in the ecosystem has been a topic of discussion and debate. Five years ago, the Ministry for Industry and Innovation released a report on the future of the fund, and Northstack had some opinions about it.
Kría began operations in 2021 to invest in VCs as an LP and to develop the environment for seed funding in Iceland. Its creation followed Iceland's innovation policy where through 2030 the government decided to focus on supporting the funding ecosystem by investing in funds as opposed to directly investing in companies. As Northstack previously covered, the LP landscape in Iceland before Kría was homogenous and consisted mainly of pension funds and banks.
Plans for the merger are available on the Ministry of Higher Education, Science and Innovation's website (in Icelandic) and it's possible to submit comments and suggestions until November 20th.