The numbers: $3.6m in losses due to writedowns
It shouldn’t surprise anyone that NSA Ventures was quiet last year. No fresh investments, and just over 200m ISK (~$1.6m) in follow ons. These are normally not announced or specifically listed.
The fund sold its share in three companies – Gogogic, Andrea Maack Perfums, and Transmit. At least two of them, Gogogic and Transmit, have been defunkt for some time, so the sale is more about housecleaning than realising gains. The fund’s portfolio now holds 29 companies. In addition, the fund wrote down 433m ISK (~$3.6m).
Obviously, judging the fund by a its annual report is pointless – profits of a fund like this can vary wildly between one year and the next.
Major changes in personnel
The most interesting story about NSA Ventures these days is the changes in personnel. First of all, three (of four) investment managers left late last year to found their own VC fund. Now it’s also public that the fourth investment manager, Egill Másson, will leave NSA Ventures at the beginning of next month. On top of that, Smári, the CFO, is on leave of absence.
That leaves Huld – the new CEO – and Svala the office manager to oversee NSA Ventures, one of Iceland’s main investors in early stage companies.
And wait, there’s more.
Almar Guðmundsson, chairman of the board, who’s discussed changes in the operations of the fund for some time now, was let go from the Federation of Icelandic Industries (in a chaotic, strangely handled debacle). He’s been chairman of the board for the last three years, and was there when Huld was hired. Whether or not he remains on the board is unclear, but I would say unlikely, as he sits there as a representative of the FII.
Problems and solutions
Almar’s notes in the annual report, as then-chairman of the board, notes several main issues (that I’ve detailed several times in the Memo).
The investments are too old (three companies are older than 20 years old, and seven companies have been in the portfolio for more than ten years), exits have been sluggish (three sales last year but no real returns) and fresh investments have been lacking (no fresh investments in 2016 and only one in 2015). He then discusses the need to reevaluate the legal framework around NSA Ventures, and suggests that the new minister is indeed inclined to do so.
At the annual meeting, Þórdís Kolbrún R. Gylfadóttir, the minister of industry and innovation made a speech. In broad strokes, she discussed the history of the fund, and more importantly, its purpose: to support innovative new companies at their earliest stages, to combat market failure that historically has made it difficult to raise money for new ideas and companies. She mentioned that representatives of the fund have suggested the fund partner with private operators of an early stage fund (General Partners), which could provide positive returns and lower operating costs. She closed the speech by announcing a four person working group that will work on suggestions. She didn’t disclose who was in the group.
In reality, not much new here. Those who have followed this story for the past year(s) have figured it out:
Everything points to NSA becoming a fund of funds.
I’ll discuss what that could mean for the ecosystem later (sign up for the Memo to get all of this straight into your inbox), would love your thoughts and feedback until then.
What do you think will happen? What do you think should happen?
Send me an email with your thoughts.