With a metropolitan population of around 240,000, it accounts for more than two-thirds of the national population yet remains compact, intensely collaborative and internationally connected. Reykjavík has emerged as a base for purpose-driven innovation, particularly in sectors like green energy, fintech, gaming and biotech, and its strategic location between Europe and North America supports growing interest from founders and investors. It has also had its first unicorn: Kerecis, which develops soft-tissue regeneration products made from patented fish-skin, was acquired by Danish medical-device manufacturer Coloplast for up to $1.3 billion.

Innovation at the edge

Iceland’s geographic isolation has historically encouraged resilience and resourcefulness. Today, Reykjavík’s startup ecosystem is defined by its ability to incubate high-impact companies that scale beyond the island. Standout examples include CCP Games, the studio behind EVE Online (one of the world’s most complex Massively Multiplayer Online games); and Meniga, a fintech firm specializing in AI-driven digital banking, which has now partnered with global institutions like Santander.

Reykjavík’s startup population has grown significantly over the past decade. According to StartupBlink 2024, Iceland ranks fifth globally in startups per capita, with Reykjavík at the center of that activity. While small in absolute size, the ecosystem produces a high volume of science- and software-driven ventures, often supported through public–private mechanisms and university partnerships.

Support foundations 

Startups in Reykjavík benefit from a highly accessible support infrastructure. KLAK - Icelandic Startups (klak.is) is a central resource for new founders, offering free business-development advice and structured accelerator programs like the Startup SuperNova, as well as access to regional and Nordic networks. Its resources are in English, and entry points are tailored to early-stage founders across sectors.

Additional public support is available through the Directorate of Internal Revenue (rsk.is) and Business Iceland (islandsstofa.is), which guide company registration, tax setup and access to export markets. RANNIS (rannis.is) manages national R&D funding for science- and tech-driven ventures and can serve as a gateway to Horizon Europe and Nordic innovation grants.

Business meets research

Reykjavík’s innovation pipeline is deeply linked to Iceland’s universities and research institutions. The University of Iceland and Reykjavík University play a role in spinouts and founder education, particularly in engineering, computer science and sustainability research. Reykjavík University also hosts innovation courses and entrepreneurship electives, and it participates in applied research collaborations with local companies. Reykjavík Science City (rsc.is), connects these universities with companies, researchers, environmentalists, engineers and many other players, leveraging strengths in sustainable tech. 

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Notably, the Gróska Creative Community located in the university area has become the unofficial epicenter of Reykjavík’s startup life. The Gróska building hosts companies, investment teams and university labs all under one roof, functioning as both a coworking space and community engine. Similarly, Innovation House, founded by technology entrepreneur Jon von Tetzchner, provides a soft landing space for early-stage startups and remote teams building globally from Iceland.

Sectors with momentum  

Reykjavík’s strongest startup sectors mirror Iceland’s national strengths. Renewable energy, particularly geothermal and hydro, has shaped a cluster of clean energy ventures focused on grid innovation, carbon capture and sustainable infrastructure. Carbfix, for example, is a global leader in mineral CO₂ storage that originated from public research partnerships. The gaming sector is another pillar, with talent density built on CCP’s legacy and smaller studios like 1939 Games gaining international traction.

Biotech and healthtech are also growing rapidly. DeCode Genetics, now part of Amgen, remains one of Europe’s most important genomic research companies. A new wave of AI-assisted diagnostics and personalized medicine startups is emerging from Reykjavík’s research ecosystem, supported by access to Iceland’s comprehensive national health data and a digitally literate population. Other relevant startup clusters include the blue economy, fintech, aluminum, the circular economy and sustainability.

Policy and access  

Although it’s not a member of the European Union, Iceland participates in the European Economic Area and adheres to GDPR and other key frameworks, meaning startups based in Reykjavík can scale seamlessly across Europe. Corporate tax rates are relatively low (20%), and founders report ease in setting up operations compared to many continental hubs.

In addition to national schemes, Reykjavík supports startups through climate-forward public procurement, open data policies and urban innovation platforms. Initiatives like the Reykjavík Green Deal and Icelandic Climate Council signal interest in collaborating with ventures that address energy, mobility and the built environment.

An ecosystem in formation  

Reykjavík is still a small ecosystem by volume, and most founders cite the importance of peer collaboration and international ambition. Events like Iceland Innovation Week d bring together global and local players each year, while investor groups such as Crowberry Capital and Frumtak Ventures are backing a growing number of early and growth-stage deals, often co-investing with European funds.

There are challenges: talent is highly educated but limited in supply, and access to seed capital can be competitive. Yet Reykjavík’s founders often operate with low overhead, a long runway and strong alignment with Nordic and EU innovation agendas.