what makes estonia a great place to build your startup?

Andy Stofferis • Mar 12, 2024 • 8 min read

According to angel investor and startup expert Martin Goroško, there is something "magical" happening here - so come and build your startup in Estonia now!

Woman working while in Tartu — Photo: Renee Altrov

What do you need in a business ecosystem to build your startup with success? Is it ease of getting started and low running costs? Perhaps it's a supportive network of mentors, investors and founders. Maybe you want to enter a large market to find new customers. Or entrepreneur-friendly business regulations. Whatever your main motivation, you'll find plenty to get excited about in Estonia.

Estonia is one of the world’s top ranking countries when it comes to startup ecosystems. From its business-friendly environment, government e-services, and tax competitiveness, to being ranked one of Europe’s best startup economies - Estonia has a reputation as being a great place for entrepreneurs to establish startups.

Martin Goroško, Head of Business Development at Tallinn Science Park Tehnopol and an expert on Estonia’s tech startup ecosystem (as well as being an angel investor), says that “Estonia has become an attractive destination” for entrepreneurs looking to build their startups. In fact, Martin says “something magical” is happening in Estonia, given its comparatively large number of startups and unicorns.

Below we explore Estonia’s growing startup scene and some of the key opportunities presented by Estonian’s e-⁠Residency programme.

Estonia’s burgeoning startup ecosystem

According to the Startup Blink’s Global Startup Ecosystem Index 2023 report, Estonia’s startup ecosystem is among the top globally, ranking in 14th place overall, and 6th in the EU. Not bad for a compact country of only 1.3 million people! And within Europe, Estonia ranks 8th regionally out of 410 startup economies in the global top 1000 cities.

It’s clear that Estonia is a startup-driven economy that provides a range of opportunities to entrepreneurs and businesses keen on building and expanding their startups in a European country.

Source: Global Startup Ecosystem Index 2023, Startup Blink

Estonia’s capital city, Tallinn, ranks impressively high for its startup ecosystem when compared with 1000 cities globally. Tallinn, which makes the list of top 60 cities, places just behind Portland (USA), Copenhagen (Denmark), Dubai (UAE), and Detroit (USA). The capital also ranks high compared with other EU startup ecosystems. Tallinn ranks 10th in the EU, showing the city is a powerhouse for entrepreneurship and startup success.

According to the Startup Blink report, some of the most well-known unicorn successes come out of the Estonian startup ecosystem. They include Skype, Wise, SpaceApe, Veriff, Bolt, Estateguru, and e-⁠Residency, which it describes as part of Estonia’s “pantheon”.

The special startup culture and mindset that sets Estonia apart

Martin Goroško echoes these insights about the success of the startup ecosystem in Estonia. He acknowledges the entrepreneurial “mindset” that sets Estonia apart from many other countries. About the country's entrepreneurial culture, Martin says:

“If you want to become a successful person, you need to become an entrepreneur”.

Martin Goroško

In addition to many people in Estonia being involved in startups, Estonia is also a “perfect testing environment”. The burgeoning startup ecosystem is especially good for DeepTech startups, says Martin.

It's easy to do business and establish a company in Estonia through e-⁠Residency (which includes being able to hire service providers). Plus, you get easy access to the EU market in contrast to other competitive business environments, remarks Martin. Plus, there is a supportive startup community and network, as well as significant investment available from venture capitalist firms and business angels. All of this makes it relatively straightforward to validate a startup venture and fundraise pre-seed and seed stage capital.

When it comes to advice for entrepreneurs wanting to establish businesses in Estonia, Martin Goroško says that there are three main startup trends where Estonian companies are most competitive. Focusing on any one of these can open opportunities for success.

Martin Goroško is an angel investor and experienced builder of startups in Estonia — Martin Goroško

According to Martin, these trends are DeepTech (including cybersecurity, AI tech, space tech, defense, etc.), HealthTech, and GreenTech. So if you are focused on any of these areas, there’s a good reason to build your startup in Estonia.

In addition to trending growth prospects, initiatives like the Estonian Startup Visa helps startup founders who are not from the EU to grow their startups in Estonia. When looking at all the startups that are part of their ecosystem, it’s clear that many focus on DeepTech, AI, machine learning, block chain, big data augmented reality, nanotech, and mobile apps.

Martin predicts that over the next few years, there will be an increasing number of DeepTech companies established in Estonia (around 500), with support from accelerators and investment capital.

The role of e-⁠Residency in the Estonian startup ecosystem

It’s evident that Estonia is a top place in which to start and operate a successful startup company. Thanks to its vibrant entrepreneurial culture and business-friendly government, there are many home-grown Estonian startup unicorns. And thanks to e-⁠Residency, foreign entrepreneurs are increasingly attracted to building their startups in Estonia.

“E-Residency is the perfect tool to set up the operations in Estonia and test and try the ecosystem.”

Martin Goroško

It’s so easy to start a company in Estonia. For foreign founders, this plus e-⁠Residency equals the ability to conveniently “validate” their businesses, says Martin Goroško. In addition, the Estonian e-⁠Residency programme helps “bring entrepreneurs closer to the local investment community” in Estonia, he says.

This is because e-⁠resident companies are equivalent to those locally founded by Estonian entrepreneurs, which is appealing to the local angel community and VC firms. Business angels and VC firms typically prefer investing in companies that are geographically close to them and that operate within the same legal framework. So, being based in Estonia can help startups engage the local investment community and secure funding for their business ventures. Indeed, it's a financially sound reason to build your startup in Estonia. Check out some of the current business programmes in Estonia right now:

Founders of Glassity awarded top 20 team in Ajujaht accelerator programme

The 9 best funding and mentoring programmes in Estonia

E-residents can apply and participate in a variety of mentoring programmes, incubators, accelerators and paths to funding: here are the best in 2024!

Business opportunities of Estonian e-⁠Residency

The Estonian e-⁠Residency programme is a significant player in the Estonian startup ecosystem. It assists people to easily start and operate their startup business in Estonia. It also provides various other benefits, making Estonia an even more attractive business destination for startups.

Here are four of the main benefits and business opportunities associated with Estonian e-⁠Residency:

Estonian e-⁠Residency provides access to the EU and a business-friendly environment
Estonia actively supports innovation, entrepreneurship and startups
Estonian startups can access a wide range of funding opportunities and supportive business networks
Estonia has the most competitive tax system in the world

Given these many benefits, it’s not surprising then that there are so many successful startups in Estonia.

To date, over 111,700 people have registered as e-⁠residents. Over 29,800 Estonian companies have been established by e-⁠residents, with numbers increasing each year.

It’s always inspiring to hear stories about how Estonian e-⁠resident startup companies have achieved success. Here are just a few shining examples of business success to illustrate the business potential of becoming an Estonian e-⁠resident.

E-resident startup, Glia, became Estonia’s 10th unicorn in 2022, after they secured $45 million in funding. As a digital communications services company, Gila’s CEO, Dan Michaeli, credited part of their success to e-Residency and the ability to run their company remotely. Roadmape is another example of founders choosing e-Residency as a way to access a European market. The startup Glassity was founded by e-⁠residents. Last year, they achieved the title of being in the top 20 startups at the Ajujaht accelerator programme.

photos of e-residents who have just received their e-Residency card

Read more e-resident stories on the blog

Find out about Estonia’s e-resident population, how Estonia has become their digital home, and more about their businesses and entrepreneurial journeys.

Final thoughts: reasons to consider building your startup in Estonia

Do you have an early stage business idea, particularly one based on DeepTech, HealthTech or GreenTech? Then the Estonian startup ecosystem may be one of the best places in the world to test, grow and operate your business.

Establishing and operating tech companies and startups is relatively easy in Estonia, thanks to its digital transformation, and tax competitiveness - as well as being a place where entrepreneurs can easily test the startup ecosystem.

Estonia is also well-known for its close-knit startup community and ability to attract significant investment for startups through VC firms and business angels. This is evidenced by its comparatively large number of startups and unicorns.

This article was written by guest contributor and seasoned digital nomad Andy Stofferis (www.andysto.com).