Start ups leaving Iceland? Skip to content

Start ups leaving Iceland?

According to Jón Ágúst Thorsteinsson, director of the Icelandic Association of Start-Ups, there are signs that start ups in Iceland plan to move their operations out of the country, reports Icelandic National Broadcast Service, RÚV. Flaga Medcare, a provider of sleep diagnostic systems, announced last Wednesday that they would move their operations out of Iceland.

Jón Ágúst says that the high exchange rate and high research costs as well as a hostile business environment are to blame.

Start ups employ well educated individuals, focus on research and development, and product development for substantial value creation. Jón Ágúst says that the environment that they operate in has deteriorated not solely because of the high exchange rate.

Jón Ágúst recommends that the Technical Research Fund be strengthened so that Icelandic start ups can be competitive with companies abroad. According to Jón Ágúst the business environment of similar companies are much more favorable in other countries for example Canada. Jón told RÚV that the Norwegian government repays up to 20% of all research costs through the tax system; Canada up to 80%.

RÚV quotes Árni Mathiesen, minister of finance, saying that it is not out of the question that the government will react and improve the competitive position of the Icelandic start ups. Árni said that tax discounts for start ups were not in the works.

In announcing that they would move their operations abroad Flaga Medcare also announced that it plans to lay off 40 workers.

In a separate news item, the builders of the aluminum smelter, Alcoa-Fjardarál, announced that they would hire 400 employees in the next two years. 60% of the 400 will be unskilled laborers.

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