Dec. 26 (Bloomberg) -- Icelandic singer Bjork is seeking investors in a venture-capital fund she helped start to finance new businesses and boost the struggling economy in her home country.

Audur Capital, a Reykjavik-based investment company founded and managed by women, will run the fund, which is named Bjork after the 43-year-old singer. It was started with an initial investment of 100 million Icelandic kronur ($790,000) and will close to new investors by March 2009, according to Halla Tomasdottir, Audur’s executive chairman.

The new venture, which was reported earlier this week by the New York Times DealBook, aims to boost Iceland’s economy after a five-year economic boom ended this year with the collapse of the U.S. subprime mortgage market and the resulting failure of the local banking system. Audur is hoping to raise as much as 1.5 billion kronur by the end of March and invest in environmentally friendly businesses and technologies.

“We are attracting a lot of interest from Iceland and abroad as increasingly more people are looking for investments whose returns aren’t only financial,” Tomasdottir said in an interview.

Bjork, whose swan dress at the 2001 Academy Awards ceremony earned her a place on Hollywood’s worst-dressed lists, intends to invest “in companies that create value through the uniqueness of Iceland’s nature and culture,” Audur said on the Web site.

Environmental Concern

Bjork’s last single, Nattura -- a call to respect Iceland’s environment -- was released in October.

Tomasdottir declined to give details about the singer’s personal investment in the fund.

The International Monetary Fund predicts Iceland’s economy will shrink 9.6 percent next year. The Washington-based IMF put together a rescue package for the country worth as much as $5.3 billion last month.

The krona has lost half its value in the past year, which Tomasdottir said is helping attract investors because “it represents a lower barrier to entry” in Iceland’s economy.

To contact the reporter on this story: Serena Saitto in New York at ssaitto@bloomberg.net.

Last Updated: December 26, 2008 13:25 EST