General Director of Rannís
Innovation / Iceland
Strong government support for Icelandic innovation ecosystem
Rannís, the Icelandic Centre for Research, serves as a one-stop shop for public funding and support in research, innovation, education, culture and youth activities. Rannís is tasked with supporting R&D and innovation in the country. Working under the aegis of the government’s Science and Technology Policy Council, Rannís promotes innovative business and international opportunities, as its General Director, Ágúst Ingþórsson, explains.
How would you describe Iceland of 2022?
I am privileged to be part of a team that has been transforming Iceland for the last three decades, starting with the negotiations for the European Economic Area (EEA) Agreement. It has made us more international in trade, research and innovation, culture and education, and I see opportunities everywhere.
To take one example, Rannís oversees the Erasmus+ program locally, a huge European mobility initiative under which more than 15% of the population received support at one time or another to study or work abroad. There are more people coming to Iceland, too. In the last seven years, there were around 12,500 outbound and around 23,000 inbound students, staff and volunteers. To put this into perspective, Iceland’s population stands at 375,000.
What role did Rannís play during COVID-19?
The government decided to roll out extra funding to be deployed quickly. Companies spending on research and innovation represented the most significant parcel, with Rannís assessing and certifying specific projects. Around 85% of companies that applied received a tax deduction or reimbursement. During COVID, the amount increased to 25% for big companies and 35% for small companies. From 2020 to 2021 overall support doubled and this became the third-most generous support system in the OECD.
How does this align with Rannís’s broader mandate?
We have been successful in fostering research, innovation and technology development through direct grants and the tax deduction system. The support system itself was very stable from 2004 to 2010 and then we also introduced the tax aspect, so the overall support increased. New increases followed in 2013 and 2016 saw a significant boost to both basic research and the Technology Development Fund, our early-stage financier of R&D projects and start-ups.
Most of the Technology Development Fund money is allocated to company grants. We might provide €15,000 for the initial development of a business idea during six to nine months. Then there’s a grant of €100,000 per year for two years for what we call ‘sprouting’, and then additional funds for growth and even more for the sprint. So, most of the funding goes straight to companies, while a portion of the applied research funding is allocated for collaborations between universities and companies. We’ve had 800 applicants which, given the size of Iceland, is a fairly high number. There’s a great amount of competition for each grant with a success rate of around 20%.
What else about Iceland’s operating environment is conducive to business?
The entire innovation ecosystem, which receives support from politicians and the general public. We still have a shortage of people qualified in STEM (science, technology, engineering and mathematics) subjects, but the government is committed to tackling this.
If you’re a foreign expert, or an Icelander who has lived abroad for over a decade, you can get a 25% reduction on income tax for up to three years. We’ve seen a surge in applications for this in the last 18 months.
Who do you want to partner with on an international level?
Since 1994, when we entered the EEA, we’ve had access to European Union cooperation programs. We have been quite successful in research, innovation and education programs and this has really supported the science and innovation side and has been particularly good for companies. We are very involved in European cooperation and that this is the way to go. We clearly get more out than we pay in.
The level of engagement with Europe is very high and we often benefit from being peripheral: we’re seen as somewhat exotic, and others want to have us in their consortium. European cooperation has been the focus because that comes with money, but we are also committed to Arctic collaboration for geopolitical reasons.