“We are widely considered one of the best tech ecosystems in the world,” Maarja Pehk, head of investor relations in the UK at Invest Estonia, tells Global Corporate Venturing.
It is a bold statement to make about this small, Baltic country with a population of just 1.3m. But there are unique aspects of Estonia that may surprise investors.
For one, it has the most unicorns per capita of any nation. Ten unicorns have Estonian founders. A few of the well-known ones include voice and video calling platform Skype, online payment transfer company Wise, and ride-hailing app Bolt.
It also has some promising, new deep-tech startups that have attracted corporate backers and partners. These include GScan, a developer of 3D scanning technology; Fyma, an AI-driven video data analytics company; and Starship Technologies, a maker of autonomous delivery robots that has the backing of TDK Ventures.
If you are interested in investing in Estonian startups, here are five unique aspects of the country’s tech ecosystem you should know about:
1. Estonian startups are born with a global outlook
With such a small population, companies don’t have the luxury of being able to rely on home markets like US startups do. “They have to be global from day one,” says Pehk. “They are globally minded. They solve global problems. This makes them attractive to corporate investors. They can tap straight into the problems that [corporates] are solving.”
2. The Baltic nation has the most startups per capita
It also has the most VC investments per capita in Europe. Its startup community is highly international, with one-third of founders originating from outside of the country. It was also one of the first countries to launch a visa specifically for people seeking to start a company.
3. It has a burgeoning cleantech sector
Estonia is famous for fintech startups, but energy and climate tech are big growth areas, too. The government has launched initiatives to transition to clean energy given the country’s previous reliance on highly polluting shale oil for generating electricity. SmartCap, a sovereign wealth fund, recently launched two €20m clean energy funds that will support early-stage green technology companies. Beamline Accelerator, an offshoot of Cleantech Estonia, has provided seed financing to 89 cleantech startups that have attracted more than €115m in venture capital.
4. It has a tight-knit tech ecosystem
Estonia’s closely knit tech ecosystem helps make it successful, says Pehk. “We have a successful founder base here, who have their connections. If there is a new company coming up, everyone helps it make connections.” Supporting the ecosystem is the Estonian Private Equity and Venture Capital Association, a trade group whose members have a total of €2.88bn in assets under management. Estonia is the birthplace of one of Europe’s oldest accelerators, Startup Wise Guys, which has been investing in startups since 2012. Bolt; Estateguru, a Nordic peer-to-peer lending platform; and Fractory, a cloud manufacturing platform, are among its portfolio companies.
5. Estonia has one of the most digitised economies in the world
Almost everything can be done electronically in Estonia. Virtually all government services are online. Filing taxes, for example, can be done online in three minutes, claims Pehk, and has become a “national sport” in Estonia. The only thing you can’t do electronically is get a divorce. The country’s highly digitised economy benefits business formation, with 98% of companies established online.
