Estonia, a small country with only about 1.3 million inhabitants and located in Northern Europe, once considered a part of the Soviet Union and its depressive communistic regime, has now turned itself into an advanced digital society and a startup paradise. With its cleaver e-Residency program and easy company registration process, Estonia has become like a beacon of light that is leading us into a new era of doing business globally.
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. The main ingredient that fosters these highly successful start-ups and sets them up for that success is government support. The Estonian government works together with over 100 companies and institutions that have created this heaven for startups in the first place, and they help founders out in step of the way- from idea to scaling. Many new founders 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.
As of August 2020, there are 1051 start-ups in Estonia. This number might not be huge by itself, but when comparing it to the population, it is- around 79.1 startups per 100,000 people- that is a lot! Despite the complications that the coronavirus has caused all over the world, these companies are continuing to grow. Only in the first quarter of 2020, the startup companies in Estonia had combined revenue of 196.5 million Euros. Month after month, new ambitious companies are being founded, and if you are an entrepreneur, we strongly encourage you not to miss out!
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. Some might say it is because of the help from the government that helps them grow, and because of the highly skilled professionals. 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 story begins just six 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. Hence, they created E-Residency, which allows a foreigner to be a part of the economy and the national information system. Since then, over 70,000 individuals from 173 different countries have joined the e-residency program, and together they have founded over 13,000 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. Several services on the market can make your life easier by founding and managing your company for you. These companies do everything from attaining financial service licenses and VAT registration to accounting and tax compliance. Using these services enables founders to focus on the most critical factors- their product and revenue generation.
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. 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 grow their ideas in Estonia.
Luckily, getting the Startup Visa is not complicated at all. Here is what you need to do:
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.
Estonia, also known as e-Estonia, ranks as one of the best in the world with its IT industry, which plays a massive role in its infrastructure, economy, and everyday life. It is a country that partly lives in the cloud, and everything is almost paperless and without bureaucracy. For example, as a resident, you were able to vote online since 2005, and all your health details are stored in the cloud since 2008.
The IT sector in Estonia has a total turnover of 3.6 billion Euros and employs 5,9% of the country’s workforce. 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. There are also several IT institutions and an IT college, where you can find very talented people.
The local startup community also plays a significant role in the local startup ecosystem. They are places where one can connect, network, make friends with likeminded 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:
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.
Both these places host many events that any founder might be interested in participating, so make sure to see what they have on their schedule.
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:
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:
Many of the new Estonian companies are considered innovative and 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 the current top 5 local startups according to the database:
TransferWise is a fintech company, founded in 2010, that has had a massive impact on the financial sector. TransferWise 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, TransferWise 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 and their clients safe from scammers.
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