Roughly one year ago, GP’s at Frumtak announced the closing of their second fund, Frumtak 2. The fund is a 5 billion ISK ($38.5 million) fund focused on investing in companies that are past their seed stage and show promise of growth and expansion. For more info about the fund, you can read Nordurskautid’s detailed report on the fund last spring (Icelandic).
So far, Frumtak 2 has made six investments, of which four are fresh investments for the fund and two are followups. The investments total 1410 million ISK (around $10.85 M).
The fund was announced in Q1 2015, but understandably didn’t make its first investment until Q4 2015. We don’t have enough data yet to see a quarterly trend.
|Company||Year / Quarter||Amount ISK / ~$|
|Arctic Trucks||2015 / Q4||400m ISK / $3.1m|
|Controlant*||2015 / Q4||260m ISK / $2m|
|Activity Stream||2015 / Q4||116m ISK / $900k|
|Apollo X (Watchbox)||2015 / Q4||50m ISK / $380k|
|Unannounced||2016 / Q1||284m ISK / $2.2m|
|Unannounced||2016 / Q1||300m ISK / $2.3m|
|* followup investment||Total: 6||1410m ISK / $10.85m|
The average investment over the time period is 235 million ISK ($1.8m) and the median is 272 million ($2.1 million ISK). These numbers are right in the middle of their estimated investment span, which is between 100-500 million.
Frumtak’s GP’s proposed to the fund’s board of directors to invest, lower amounts than the general rule, in several companies. According to Eggert Claessen, GP at Frumtak 2, the fund sees this as an experiment and will invest in two companies in that experiment. Eggert noted that even though the investment amounts are lower than in general, the companies fulfill all the requirements set by Frumtaks investment policy.
According to Eggert, this is based on their experience from Frumtak (their former fund), where they had instances of entrepreneurs they wanted to fund, but weren’t ready for the bigger investments the fund set out to make.
Frumtak’s Available Funds
Based on public information, we mapped out the capital available to Frumtak 2.
Note: We estimated the fees based on general practice in the VC industry, where funds take 2% of the total size per year in management fees. Frumtak has a operating lifetime of 7-10 years, so we took the median, 8.5 years and multiplied by its yearly, estimated management fee which totals at 850 million.
As a percentage, we can see that Frumtak has deployed just under 34% of its total capital.
The fund’s investment period is four years. Based on the fact that the fund has allocated ~34% of its capital in about a year, the fund is well on its way to finish its investments for the fund – given that the fund keeps investing at the same pace until now.
It should be noted, however, that the funds operating period is 7-10 years, where the fund is able to follow up on previous investments. That means, the fund doesn’t need to deplete itself in the four year investment period.
That would also be in line with the current activity in the Icelandic Startup scene, which has been growing fast.
Updated on March 3, 16:30 to better represent the funds available funds.