In the fast-paced world of technology and startups, Estonia has emerged as a shining star on the European map, boasting remarkable data that place it at the forefront of entrepreneurial innovation in Europe. This small Baltic nation, with a population of approximately 1.3 million, has continually defied its size, becoming a heavyweight in the European tech ecosystem. The State of European Tech 2022 report by Atomico has recently highlighted Estonia's remarkable achievements, solidifying its position as the most entrepreneurial European country for tech startups.
Despite its diminutive size, Estonia is flexing its muscles in the European tech ecosystem.
As of December 2022, the Estonian Startup Database proudly displayed 1,452 startups founded in the country. What's even more impressive is that this number continues to rise, reinforcing Atomico's prediction that Estonia is on a trajectory of unparalleled growth in the tech startup arena.
The Unicorn Factory
Estonia's prowess doesn't stop at startups: it extends to unicorns, those rare billion-dollar companies that emerge like mythical creatures in the tech world. This small country has already birthed ten such unicorns, and with 7.7 unicorns per million capita, Estonia leads the pack in Europe, leaving competitors like Luxembourg, the UK, and Germany far behind. Some of the most notorious unicorns from Estonia include:
- Skype: A household name in the world of digital communication, Skype is a company that few have not heard of, thanks to its global impact on how we connect and communicate. Founded in 2003 by Niklas Zennström and Janus Friis, Skype revolutionized global communication by introducing a groundbreaking technology that connected people worldwide, ultimately reshaping how.
- Playtech: This global gambling software and technology company develops and provides software solutions for online casinos, sports betting, and other gambling-related businesses and was founded in 1999 by Israeli entrepreneur Teddy Sagi in Tartu, Estonia. Since then, Playtech has managed to struck multiple metaphorical jackpots in its field, solidifying its position as one of the nation's most triumphant and influential companies to date.
- (Transfer)Wise: TransferWise, now known as Wise, has gained popularity for its transparency and customer-friendly approach to international money transfers, making it a popular choice for people looking to move money internationally. It offers a peer-to-peer international money transfer platform that enables individuals and businesses to send and receive money across borders at lower fees and more competitive exchange rates compared to traditional banks.
- Bolt: With its user-friendly app and efficient service, Bolt has become a household name in urban mobility quickly after its establishment in 2013. Offering convenient and reliable transportation solutions to millions of users worldwide, Bolt has become synonymous with green scooters for many.
The six remaining Estonian unicorns are:
Estonia's ability to attract investments is nothing short of remarkable. According to reports from Sifted and Crunchbase, Estonia has consistently managed to pull in substantial investments. In 2022, investments reached a staggering 3.6% share of GDP, a feat achieved by only one other European country, Croatia (the only country to join the "above 1% of GDP" category).
Estonia's exceptional performance in VC (venture capital) investments per capita, at €1,967 per capita raised and one startup per 1,048 people, sets a high standard for its European peers. In addition, Estonia is currently at $1,056 invested per capita, completely smashing the European average of just $140. The country’s closest competitors are Iceland ($543) and Sweden ($477).
Estonia's Secret Sauce
What's the secret to Estonia's remarkable success? Many attribute it to the country's advanced digital capabilities and entrepreneur-friendly environment. Estonia's commitment to digitalization is evident, with 99% of government services available online, including digital signatures and paperless communication.
Estonia also boasts a tax-competitive environment, featuring a 0% income tax on retained and reinvested profits, clear stock options regulations, and double taxation treaties with numerous countries. Additionally, Estonia offers an affordable high quality of life, top-notch human capital, and a trustworthy legal system, creating a favorable and thriving business climate.
The country's commitment to fostering entrepreneurship is further exemplified by its Startup Visa program, initiated in 2017, which allows startup founders to relocate their businesses to Estonia, benefit from e-Residency, e-voting, and hire talent from outside the European Union. Over 2,700 applications have been received since its inception, resulting in a diverse ecosystem where 25% of startup founders are foreign citizens.
Estonia's startup scene thrives on collaboration and mentorship, creating an environment where innovation knows no bounds. As the world continues to witness Estonia's impressive achievements, it is evident that this small Baltic nation is on an upward trajectory to becoming a global tech powerhouse.