Since 2012, Arion Bank has invested in 80 startups in various industries. At the time, the need for a structured approach and organized startup programs was strong in Iceland. Together with leading supporting entities in Iceland, Arion Bank founded the Startup Reykjavik and Startup Energy Reykjavik startup programs which help startups shape their businesses through these seed stage, mentor driven programs. The programs have helped the startup community flourish with a more far-reaching impact than originally anticipated.
Iceland experienced tough times in the years after the 2008 financial crisis. The three local commercial banks went bankrupt, the local currency plummeted, unemployment rose and the state finances were in ruins. The whole of Icelandic society was impacted.
This story is familiar to all or most of the Western world. In the dot com era in the last years of the 20th century many startups were formed and almost as many vanished in the early 21st century. In the years to come, interest in startups was minimal. The culture of failure was engrained into the minds of investors and others. Despite rapid technological advances, businesses and consumers were busy in the next few years consuming the cheap debt which was freely available to most people. The 2008 meltdown was a realization, a wake-up call. Value creation was needed in order to sustain the desired growth of economies, locally and globally.
Ample talent was available from 2008. Unemployed software engineers, designers, developers and marketing personnel were in dire need of building a new career, or just achieving plain economic survival. Yet, starting a company, building it from scratch is different to having a (not so) secure job. The learning curve is steep and the same or similar methods need not apply in a startup of three founders vs. a corporate of >500 employees.
For a startup the most important issue is time from execution to revenue creation or external funding in the form of investment. Many startups were formed in the uncertain years of 2009 and 2010. But new methodology and structure was to some extent needed.
Many communities experienced this need. In 2011, a book, The Lean Startup by Eric Ries, was published and in the following year, the methodology of Business Model Canvas was introduced. In short, these ideologies changed to a large extent how startups approach their product development. The general notion is that, in particular, companies with scalable business ideas should focus on developing a Minimum Viable Product (MVP), gain instant feedback from customers and iterate the process until it is ready for the masses. The key is to fail often and fast and learn from the whole iterative process.
While startups were being founded in the wake of the 2008 events, there was little support in most communities. The need only grew larger year by year. The adoption of the Lean startup methodology spread. Incubators and co-working spaces with support for the startups were established in many places. The biggest change was, however, the rapid formation of seed stage, mentor driven business accelerators around the world. Modern day accelerators emerged in 2005 with the launch of Y-Combinator, followed closely by Techstars in 2006. Shortly thereafter, several other stakeholders decided to follow their approach of a limited duration program for cohorts of early-stage entrepreneurs, with the aim to facilitate connections with potential investors. The number of business accelerator programs worldwide is still growing.
Arion bank is proud of its contribution to building a thriving startup ecosystem. Enabling startup founders to pursue their vision and dreams is rewarding. Supporting startups has now become ofe of the pillars of the Bank's social responsibility efforts. A fundamental belief is that "give before you get" will benefit one in the long term. The Bank's support has also increased empoyees' awareness and interest in this previously neglected but important industry where ideation and value creations is the goal.
Situated in the North Atlantic Ocean between Europe and the United States, Iceland is a European country with 330,000 inhabitants. The capital and largest city is Reykjavik. Two thirds of the country's population live in the Greater Reykjavik area. Iceland, as other Nordic countries, ranks high in economic, political and social stability and equality.
Icelandic citizens are early adopters when it comes to technology and technical infrastructure is good where 97% of residentials have access to internet. Iceland ranked number six globally in terms of GDP per capita in 2016 according to the International Monetary Fund.
About Iceland on iceland.is
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