Estonia ranked among the world’s top startup ecosystems

Estonia has been ranked sixth among the world’s emerging startup ecosystems in the recently published Global Startup Ecosystem Report 2021, one of the world’s most comprehensive and widely-read researches on startups.

The report, covering 275 startup ecosystems from around the world, has highlighted Estonia’s market reach as its strongest feature.

Andres Sutt, Estonia’s minister of entrepreneurship and IT, attributes the country’s high ranking to the proactive attitude of Estonia’s booming startup community.

“Tapping into growth potential is an integral feature of startups. Estonia is large enough for testing the viability of business ideas, but also small enough for venturing out beyond the local market,” Sutt said in a statement.

“Being recognised among the world’s top startup ecosystems is sure to accelerate our transition to the economy of the future through the establishment of many more innovative and research-intensive businesses in Estonia. Today, revenue from labour taxes alone brings in €100 million to the state budget, and this figure is sure to increase in the future.”

The report, compiled by Startup Genome and the Global Entrepreneurship Network, indicates that half of the top ten emerging startup ecosystems are in Europe. While other European top performers were commended for their success in attracting international talent, that aspect was identified as Estonia’s biggest challenge.

E-residency supports the growth of the startup ecosystem

According to Lauri Haav, the managing director of the Estonian e-residency programme, the scheme continues to support the growth of Estonian startup ecosystem.

“International experience is the key to achieving global reach, and that’s exactly what e-residents bring to the table. In addition, they greatly enrich the local startup scene and constitute a strong presence, accounting for nearly a third of all Estonian startups.”

“This demonstrates that people from around the world see Estonia as a thriving innovation hub for launching novel business ventures,” Haav said, adding that e-residents help amplify Estonia’s messages globally, thereby boosting the country’s international competitiveness.

An Estonian e-residency kit.

“Majority of the companies established by e-residents focus on business software development and fintech solutions, helping spread the message about Estonia’s e-governance system far beyond our borders. When it comes to the local business environment, e-residents seem to really appreciate its overall transparency, minimal red tape and the simplicity of the tax system. In return, they contribute to the Estonian economy with their knowledge, skills and experience,” Haav added.

One in five startups in Estonia founded by startup visa holders

Eve Peeterson, the head of Startup Estonia, believes decisiveness is the keyword that best describes the local entrepreneurial ecosystem. In 2017, Estonia launched its startup visa programme, allowing non-EU citizens not only to be employed by local startups, but also to relocate or set up their own businesses in Estonia.

“Today, one in five Estonian startups is established as a result of this visa programme, and one in ten companies have used it to attract international talent. We launched the programme four years ago and today all the major startup hubs in the world are following our lead by adopting similar schemes,” Peeterson noted.

Eve Peeterson.

Startup Estonia is the national programme for the development of the local startup ecosystem by facilitating their establishment and spurring them on to become international success stories. It is funded by the European Regional Development Fund and implemented by KredEx.

The Estonian e-residency programme was launched in December 2014 with the aim of providing foreign nationals safe access to e-services offered within the Estonian e-governance ecosystem. To date, Estonia has welcomed approximately 85,000 e-residents who have, in turn, established more than 18,000 companies in Estonia.

In addition to the indirect economic impact (ie, growth among and investments into Estonian companies offering a wide range of services to e-residents), the e-residency programme has generated direct revenue for the Estonian state budget in the amount of more than €70 million.

Cover: A startup hackathon in Tallinn. Photo by Renee Altrov.

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