Icelandic environment for innovation and entrepreneurship

- at a glance -

: Team Iceland

0 20,000 40,000 60,000 80,000 100,000 120,000

GermanyFinland

Hong Kong SAR, ChinaCanadaAustria

United KingdomNetherlands

IcelandSweden

DenmarkSingapore

North AmericaUnited States

AustraliaIreland

QatarNorway

Macao SAR, ChinaSwitzerland

Luxembourg

Iceland is among the world's most prosperous countries…

2

GDP per capita 2015 (top 20 countries)

USD

Source: World Bank

0 50 100 150 200 250 300 350 400 450 500

Everything else

Exports of marine products

Exports of manufacturing products

Revenues from foreign travelers

...but the economy lacks in diversity

3

Exports of goods and services (Q4 2015 - Q3 2016)

Source: Statistics Iceland

billion ISK

Aluminum Other

0

2

4

6

8

10

2007 2008 2009 2010 2011 2012 2013 2014 2015 2016

Iceland has recovered remarkably well from the economic crash in 2008

4

Unemployment (seasonally adjusted)

Source: Statistics Iceland

%

Real wages index (2000 annual average = 100)

100

110

120

130

140

2007 2008 2009 2010 2011 2012 2013 2014 2015 2016

Inflation has been unprecedentedly low and stable in local currency terms…

5

Inflation (annualized, 12 month trailing)

Source: Statistics Iceland

0

5

10

15

20

2007 2008 2009 2010 2011 2012 2013 2014 2015 2016

-40

-30

-20

-10

0

10

20

30

2007 2008 2009 2010 2011 2012 2013 2014 2015 2016

...but currency fluctuations make planning in foreign currency wildly unpredictable

6

Consumer price change in USD (since jan 2007)

Sources: Statistics Iceland, Central Bank of Iceland and own calculations

%

Iceland's population is small and younger than most western countries’, …

7

Population by sex and age group 2015

Source: United Nations Department of Economic and Social Affairs

-15 -10 -5 0 5 10 15

-40 -30 -20 -10 0 10 20 30 -15 -10 -5 0 5 10 15

thousand females thousand males

0-5 y/o

10-15 y/o

20-25 y/o

30-35 y/o

40-45 y/o

50-55 y/o

60-65 y/o

70-75 y/o

80-85 y/o

90-95 y/o

Europe USA

Total population: 329 thousand

...fairly well educated, …

8

Educational attainment 2015 (16-75 year olds)

Source: Statistics Iceland

0 5 10 15 20 25 30 35 40

Basic education

Upper secondary education

Tertiary education

%

ISCED 5, 6, 7, 8

ISCED 3, 4

ISCED 1, 2

0 10 20 30 40 50 60 70 80 90 100

Turkey

Macedonia

Malta

Italy

Romania

Denmark

Norway

Switzerland

Sweden

Iceland

…with the highest work force activity rates in Europe for both sexes.

9

Workforce activity rates in Europe 2015 (16-65 year olds, top 5 and bottom 5 for female)

Source: Eurostat

%

MaleFemale

…

The population is increasingly - yet still not highly - diverse…

10

Source: Statistics Iceland

0

100,000

200,000

300,000

400,000

2000 2002 2004 2006 2008 2010 2012 2014 2016

Population by country of birth Population by country of birth 2016

Born in Iceland

All other countriess of birth

0 100,000 200,000 300,000

All other countries

Thailand

United Kingdom

Lithuania

Philippines

Germany

Sweden

United States

Denmark

Poland

Iceland

...but recently with opposite immigration trends for Icelandic and foreign citizens - possibly a sign of “brain drain”

11

Net immigration by citizenship

Source: Statistics Iceland

-6,000

-4,000

-2,000

0

2,000

4,000

6,000

8,000

10,000

12,000

2000 2002 2004 2006 2008 2010 2012 2014

Icelandic citizens

Foreign citizens

Technological infrastructure is strong…

12

Households with internet access (top 20, Europe 2014)

Source: Statistics Iceland

0 10 20 30 40 50 60 70 80 90 100

PolandHungarySlovenia

Czech RepublicSlovakia

AustriaMalta

IrelandBelgium

FranceEstonia

GermanySwedenFinland

United KingdomNorway

DenmarkIceland

NetherlandsLuxembourg

%

0

0.1

0.2

0.3

0.4

2007 2008 2009 2010 2011 2012 2013 2014 2015

...and technology adoption very high

13

Source: Post and Telecommunications Administration in Iceland

Broadband connections per capita Mobile subscriptions per capitaFiber optic xDSLOther

0

0.2

0.4

0.6

0.8

1

1.2

1.4

2007 2008 2009 2010 2011 2012 2013 2014 2015

Entrepreneurship levels are rather high…

14

New business registrations (per 1,000 people ages 15-64, top 20 countries 2014)

Source: World Bank

0 5 10 15 20 25 30 35

MauritiusNetherlands

GeorgiaIreland

MongoliaMontenegro

SwedenNorway

ChileBulgariaIceland

SingaporeLatvia

BotswanaCyprus

AustraliaEstonia

New ZealandMalta

Hong Kong SAR, China

0 100 200 300 400PortugalBelgium

AustraliaCzech Republic

KazakhstanPolandCanada

NetherlandsIsrael

ItalyIceland

MonacoRussian Federation

Iran, Islamic Rep.Switzerland

SwedenNorwayFrance

LuxembourgUnited Kingdom

SingaporeDenmark

AustriaFinland

New ZealandChina

GermanyUnited States

JapanKorea, Rep.

...and so are innovation levels

15

Patent applications (per 100,000 population top 30, 2014)

Source: World Bank and own calculations

0 100 200 300CroatiaGreeceEstoniaFrance

ItalySpain

Korea, Rep.GermanyPortugal

United StatesCzech Republic

North AmericaLuxembourg

IsraelAustria

BelgiumIreland

United KingdomNew Zealand

CanadaSlovenia

IcelandNetherlands

FinlandNorway

SingaporeSweden

AustraliaDenmark

Switzerland

Journal articles (per 100,000 population, top 30, 2013)

Salaries in high-tech are modest, and have a particularly narrow distribution

16

Source: Icelandic Association of Computer Scientists

Computer scientists’ monthly salaries (Feb 2016) …by experience

0

200

400

600

800

1,000

1-3 years 4-6 years 7-9 years 10-14 years 15 years+0

5

10

15

20

25

<500 500-599 600-699 700-799 800-899 900-999 1000+

~ 80,000 USD annual%thousand ISK

thousand ISK

National R&D investment level is high, …

17

R&D expenditures as percentage of GDP (top 20, Europe 2015)

Source: Eurostat via Statistics Iceland

0 1 2 3 4

SlovakiaSpain

PortugalLuxembourg

ItalyHungaryEstonia

United KingdomNorway

Czech RepublicNetherlands

IcelandSlovenia

FranceBelgium

GermanyFinnlandDenmark

AustriaSweden

%

0

5

10

15

20

25

2014 2015 20160

50

100

150

200

2014 2015 2016

…early stage funding activity is decent, …

18

Source: Northstack (subject to change)

Number of deals by type Value of deals by type (undisclosed amounts excluded)

OtherVentureSeed

OtherVentureSeed

M$

…with several - mostly modestly sized - exits

19

Icelandic startup exits to foreign buyers, past 5 years

Source: Northstack (subject to change)

Company Buyer Industry Buyer geography Year

Marorka Mayfair GmbH Energy Germany 2012

Decode Genetics Amgen Biotech USA 2012

Betware Novomatic AG Gaming Austria 2013

CLARA Jive Enterprise software USA 2013

DataMarket Qlik Enterprise software USA 2014

Modio Autodesk 3D printing USA 2014

Zymetech Enzymatica Biotech Sweden 2016

QuizUp Glu Mobile Gaming USA 2016