Project Genesis is an initiative to establish a $50 million venture capital fund in Iceland focusing on innovation in specific field where there is a unique social, biological, ecological, environmental and geographical advantage. For example, Icelanders are ranked 3rd in the world for life expectancy by the United Nations and Iceland employs renewable energy to power the entire country. Both we feel are social, ecological, environmental and geographical advantages of Iceland.
Our initiative is to invest in the ideas, leaders, people and teams by finding entreprenuers who are trying to create valuable solutions for the Global market from these unique advantages inherent in the country. Iceland is a fertile ground for venture investments. The advent of the financial crisis has created several opportunities for investment in Iceland. There has been no point in time than now where Icelanders have had to reinvent themselves more rapidly and broadly, this we feel provides a unique opportunity as well as timing. With the young demography and the affinity of icelanders to live in this island, we believe will motivate the population to find new ways to solve issues that are global in nature.
History has been good to Iceland, Icelanders transformed themselves from one of the poorest nations in the Nordic region to one of the richest in less than half a century. They acheived this by utilizing the resources, namely fish, geothermal and hydro energy that were available in their natural environment and through innovation. If we extrapolate this to the new Iceland which has one of the best infrastructures in the world, abundant renewable energy and highly educated workforce, what can be created can be as broad as our imagination.
The fund will focus on all areas where there is a unique advantage in Iceland. The goal of the fund will be to look at the next phase of technology, information and renewable energy usage, expanding the value chain of renewable energy usage. All products and services produced in Iceland use renewable energy sources, which means all of these end-products are Carbon Neutral. We believe that there is demand for products and services that are produced using renewable energy and this trend is going to grow. The energy utilized in Iceland to make these products and services are one of the cheapest in the world. In addition, energy remains one of the most volatile factor inputs in the production process since oil became the energy source of choice. We believe that products and services produced from renewable sources will have stable factor cost and thereby enabling pricing that is corresponding to the value of the product and not driven by the price of fossible based fuels.
The typical timeframe of investment for the fund is 7 years. The goal of the fund would be to provide active mentoring and leadership to its portfolio companies in the areas of business strategy, internationalization, product and service development, branding, marketing, legal, financial and operational process development. The fund will run an active 3 month long business accelerator centre for entrepreneurs. The accelerator will be very selective, top 0.5% of business plans will be accepted into the program. These companies get up to $18,000 in seed funding, three months of intensive top-notch mentorship, and the chance to pitch to angel investors and venture capitalists at the end of the program. The fund will be given a 6% equity by the companies that are selected by the accelerator program. The accelerator will solicit the support of successful entrepreneurs across the globe and bring a world class mentorship program to Iceland where typical startup and business development challenges are solved faster by tapping the vast resource of knowledgable Zen Masters of business. The intention of active mentorship is to enable entrepreneurs do more things faster. We believe that with the current state of technology and communication, world class companies can be built faster. Facebook and Twitter did not exist 10 years back, Google did not exist 15 years back. We rest our case!
The fund would provide returns to its limited partners in 3 ways, (i) Initial Public Offering (IPO) of its portfolio companies, (ii) portfolio company acquired at a higher valuation by another company and/or (iii) the portfolio company transforms into a well run dividend paying company. Venture Capital funds have a unique investment return profile, our fund will aspire to multiply the investment in our portfolio companies many times over and our philiosphy of investing is not anchored on exit. We believe in patient capital as world class products and services take time to build but we believe we can squeeze more juice out of this time with the right platform.
Here is an interesting article about "How to make a region innovative" by Strategy+Business portal of Booz & Company. Why am I writing about this? well, because there is all this talk about Innovation Clusters in Iceland around Geothermal Energy, Seafood etc In My Humble Opinion (IMHO), it is a waste of time! this is old school thinking that never works. Don't take my word for it go and read the article. I am not the only one who thinks this way, there is a need for new thinking on innovation and entrepreneurship all around the world so how does not go about creating this new value i.e new equity. We are here because over indulgence in Debt has basically eaten away all the equity in the world. I am sure we all can agree that is the case in Iceland, but more and more countries are starting to feel the pain of this... hello! have you seen the news about Greece, Spain, Italy, Portugal... and the USA? So, here is a thought start hyper growth companies that can innovate at the speed of the internet and it can be done only by small teams because of chemistry, mechanics, change management etc. There is enough evidence to support Bigger a company gets the smaller is their rate of innovation, I am sure there are exceptions to this, but the majority of large companies fall into What Clay Christensen calls the Innovators Dilemma. If you have not read the book I highly recommend it. The only way to innovate out of crisis is to start small, start at the grass root and change the entire paradigm of thinking and radically make traditional businesses obsolete. There is only one sector that is good at this at the the Startup Nation! Actually I would go one step further and say... you better be thinking about a Startup Of You, no wait Reid Hoffman of LinkedIn just wrote a book with that title. People these days, always stealing ideas :) just kidding. Go and read that book it is fascinating to think about the fundamental changes that are happening right in front of our eyes, but you need to be aware to see or suddenly you become obsolete. Are you getting obsolete?
