Estonia, a small country with only about 1.3 million inhabitants and located in Northeastern Europe, once considered a part of the Soviet Union and under the rule of the communistic regime, has now turned itself into an advanced digital society and a paradise for startups in the 21st century.
With its cleaver e-Residency program, online services, easy company registration and management process, Estonia has become like a beacon of light that is leading us into a new era of doing business globally and online.
Founders founders from all over the world enjoy Estonia because of the national IT infrastructure, known as e-services, where you can do everything online, from creating your company in one day to doing your taxes in three minutes while being on the beach.
Estonia is the leading country for startups in Europe
One might be caught by surprise about the fact that Estonia is a digital society and that its startup-ecosystem is arguably the best of its kind in Europe.
As of May 2022, there are 1365 start-ups in Estonia. This number might not be huge by itself, but when comparing it to the population, that is over 105 startups per 100,000 people! Despite the complications that the coronavirus and the war in Ukraine has caused all over the world, these companies are continuing to grow.
Only in the first quarter of 2022, the startup companies in Estonia received a combined funding of €906.6 million and generated over €417 million of revenue. Month after month, new ambitious companies are being founded.
The main ingredient that fosters these highly successful start-ups and sets them up for that success is government support and innovative technological solutions. The Estonian government works together with over 100 companies and institutions that have created this startup heaven in the first place, and they help founders out in every step of the way – from idea to scaling.
If you are an entrepreneur, and are thinking about establishing your startup business in Estonia, we strongly encourage you not to miss out!
Why so many entrepreneurs their startup business in Estonia?
There are several reasons why one might want to launch and start a startup business in Estonia. It might be because of the ease of running the company and the zero corporate income tax policy on reinvested . Some might say it is because of the help from the government that helps them grow, and because of the highly skilled professionals residing in Estonia.
Others choose to do so because of the endless number of venture funds and funding opportunities that can boost their innovative idea. Matter of the fact is that all these reasons are valid. Let me tell you why.
The ease of starting and managing a startup business in Estonia
The story begins nearly 10 years ago, in 2014, when the government was thinking of new and innovative ways to put Estonia on the map and making it more attractive for foreign investors and entrepreneurs. Hence, they created e-Residency, which allows a foreigner to be a part of the economy and the national information system.
Since then, over 90,000 individuals from 173 different countries have joined the Estonian e-Residency program, and together they have founded nearly 22,000 different companies. Our most famous e-residents are Barack Obama and Bill Gates.
To create and manage your own EU company, all you need is the e-Residency card, which also serves as an ID card for the locals. That card makes the company registration process entirely location independent and its management easy for remote teams by letting you authenticate yourself and sign documents digitally.
Several services on the market can make your life easier by helping you to establish the business and manage your company. These corporate service providers help to navigate you within the Estonian legal landscape and do everything from attaining financial service licenses, VAT registration, accounting and tax compliance to legal advice.
Using these services enables founders to focus on the most critical factors – their product/service, revenue generation and finding experienced professionals.
Access to the European Single Market
Estonia is a great place to establish your startup business in case you are interested in expanding your customer and partner targeting across the European Union. Besides being a jurisdiction with one of the lowest entry costs, it offers access to the whole EU.
EU is the largest international single market in the world, and by having your business in Estonia, you will have easier access to EU customers and partners. Businesses in the EU enjoy high levels of economic freedom and removed trade barriers that simplify the sale of goods and services between all EU states.
Also, having a shared currency (euro) in many countries, harmonized corporate and business laws further empower businesses to grow and cooperate.
Besides, Single Euro Payments Area (SEPA) makes electronic payments within the EU quick and easy. In terms of speed, it can be compared to cash payments and transfers between bank accounts happen fast. As Estonian businesses can have their bank account in any EEA bank, many entrepreneurs enjoy the ability to establish their business bank account online and the ability to have control over its finances remotely.
Estonian Startup Visa – made for non-EU founders
In case you want to feel the Estonian startup scene on your own skin, but you are not an EU citizen, you must note that just having a company there does not give you residency, tax residency, nor permission to enter the European Union automatically.
However, in 2017 the government launched a new program that solves this issue and enables all non-EU founders to attain a visa and to build their innovative ideas in Estonia.
Luckily, obtaining the Startup Visa is not complicated at all. Here is what you need to do:
- Start a technology-based, innovative, and scalable company in Estonia.
- Create a profile and file your application to the Estonian Startup Committee by submitting the necessary information and documentation.
- Get approval from the Committee, where experts will evaluate your request within ten working days.
- Once your company is approved, go to your nearest Estonian Embassy, Consulate, or the Police and Border Guard office, and file your Visa application.
Furthermore, the Estonian Startup Visa permits you to travel freely within the Schengen area and allows you to legally work for local companies in case you need to bootstrap your new company.
High level IT industry and skilled professionals
Estonia, also known as e-Estonia, ranks as one of the best in the world with its IT industry and its students ranked as first in Europe in the OECD PISA tests. This plays plays a massive role in the structure of the local infrastructure, economy, and everyday life.
Estonia is a country that partly lives in the cloud, and everything is almost paperless and without bureaucracy. For example, as a resident, one was able to vote online since 2005 by authenticating themselves remotely, and all health details are stored in the cloud since 2008.
Many businesses like the local banks have also integrated the remote authentication systems which makes their online services even more secure. This means that all state-related operations can be done online 24/7.
Nowadays, no Estonian or long-time local resident cannot even imagine living without these online public services.
The IT sector in Estonia has a total turnover of +€3.6 billion and employs aroung 6,5% of the country’s workforce. There are also several IT institutions in Estonia where you can find IT related talents and communities – the local IT college in Tallinn and a newly founded school in Jõhvi called Kood (which means “code” in English).
These shcools educate local students by providing them necessary knowledge to enter the sector’s job market or to go on a start-up journey on their own.
Tech entrepreneurship and mobile app creation are one of the mayor keywords here since they make up for the highest number of newly founded companies in the country.
Estonian startup community/ecosystem is strong
The local startup community also plays a significant role in the local startup ecosystem. There are places where one can connect, network, make friends with like-minded people, and maybe even embark on a journey of a lifetime. If you want to create your company, or you already have a million Euro idea, then these are the places you must know:
Lift99 is an international community of fast-growing tech companies and global entrepreneurs that help each other grow by bringing them all together. Lift99 is established and supported by entrepreneurs from Skype, Bolt, Pipedrive and GungHo. Lift99 has office spaces in Tallinn and in Kyiv where one can network with other founders.
Tehnopol Science Park itself is a science and business campus for innovative tech companies where a company can rent an office and get help with different business and innovation services. Besides all that, it has all the essential services you might need- restaurants, cafes, a gym, a hostel, daycare for children, and even a beauty salon.
Garage 48 Hub is like Tehnopol in the way that you and your team can rent an office where you can work on your product, meet new people, and get help if needed. You can buy a subscription package so that you have all that you need to succeed with your team. The Garage also hosts hackathons, where all the tech people like to hang out. There, some of the most famous and known ideas today have had its beginning. At Garage 48, you can turn your idea into a working prototype in only 48 hours.
All three of these places host many events that any founder might be interested in participating for various reasons, so make sure to see what they have on their schedule when visiting.
Incubators, accelerators, venture funds, and business angels
The country has a lot to offer when it comes to growth opportunities for new entrepreneurs; therefore, there is no shortage of environments that help them grow.
Incubators help new companies out with advice and collaboration from experienced mentors, raising funds, discounts on different services, and office space. Many of them will even buy a percentage of your company.
Here are some accelerators in Estonia:
- Startup Wise Guys
- Garage 48
- Tallinn Business Incubators
- Cleantech Estonia
- Beamline Accelerator
All accelerators also have some connections with venture funds and angel investors, where your company could get a potential investment. The fact is that getting startup funding for your company is hard – that is no lie – usually, only the best startup ideas in Estonia end up raising money and turning itself into a real international business.
However, if you have a great team, a good idea, and the spirit to fight, you will eventually get funded. Besides the incubators, there are independent investment funds and companies out there.
Here are some of the most famous startup funding organisations:
Famous startup businesses in Estonia
Estonia officially has 10 unicorn companies, however, it is not there that innovation has stopped. Many of the new Estonian companies are considered disruptive in different industries, starting with transportation and finance and ending with gaming.
Most of them have already gained international fame and are being used globally, and some are on their way there.
Here are some of the most famous startups from Estonia:
Wise (Get first 3 transfers up to €5,000 for free) is a fintech company, founded in 2010, that has had a massive impact on the financial sector. Wise has virtually cut off the banks as middlemen and focuses on providing the cheapest and the quickest way to send money across countries and different currencies. According to data, Wise can currently be considered the best startup in the country.
Bolt is an innovation that changes the idea of current urban and taxi transportation, making it more efficient, quicker, safer, and reliable. Instead of waiting for a bus or calling for a cab, you can order your transportation using their app within minutes. The company started its journey in 2013, and since then, it has been rebranded from Taxify to Bolt and reached almost global notoriety.
Pipedrive, founded in 2010, is a cloud-based customer relationship management system that allows its users to keep track of their deals and manage their sales pipeline visually and more efficiently. Pipedrive is had such success over the last ten years that it has nine offices, on different continents, all around the world.
Paxful is a peer-to-peer platform, where its users can safely trade the cryptocurrency called bitcoin. The foundation for this idea was laid in 2016 when the founders wanted to create the ability for everyone to have access to financial services. Since then, the company has served over 3 million customers worldwide.
Veriff is a CyberTech solution that offers digital identity verification methods. The company itself is relatively new, founded in 2015; nonetheless, it is innovative and disruptive. It uses machine learning and AI automation technology, which keeps companies in compliance with KYC requirements and their clients safe from scammers.
Incorporate is here for you
If you need any assistance with establishing or managing your startup company in Estonia, you can rely on our experienced professionals to help you out – please feel free to contact us in all matters related to an Estonian company!