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Exploring the Estonian Innovation- and Startup-Ecosystem
Estonia, a dynamic blend of tech, talent & forward-thinking, is pushing forward in the startup & innovation space. I made a trip to Tallinn to see for myself. You can find my insights in this article.
This is MadeMeThink.xyz – A weekly newsletter for visionaries, innovators and critical thinkers exploring the world of tomorrow. Written by Prof. Thomas Metzler, Ph.D.
This MadeMeThink last week…
I’ve set up a course called "Innovation Ecosystem Explorers" at the Vorarlberg University of Applied Sciences. As part of the course, I travel with students to innovation hotspots and try to understand what's going on there and why. This year we were in Tallinn (Estonia) & Helsinki (Finland). In this issue of MadeMeThink.xyz I want to share some impressions and thoughts about Estonia/ Tallinn with you.
In the startup world, Estonia is quite well-known because of their e-residency. The Estonian e-Residency is a digital identity program offered by the Estonian government that allows non-Estonians access to services like online company formation, ease in administration, and taxation (ranked #1 on the tax Competitiveness Index for the last 7 years), regardless of their physical location.
Currently, there are over a hundred thousand e-residents worldwide (I am one of them) who have established almost 28k companies in Estonia.
But why is Estonia so digitally savvy? After regaining independence from the USSR in 1991, Estonia had the opportunity to redesign its structures from scratch and chose to pioneer a path towards a digital society. Today, 51% of eligible voters in Estonia cast their ballots via i-Voting, 99% of state services are now available online, getting a divorce is one of the few services that cannot be done online 🤷♂️ Every citizen of Estonia gets a digital ID directly with their ID card. This is one of the major differences between Estonia and other countries that offer the digital ID as an option, and therefore often make slow progress with regard to its adoption. Since everyone in Estonia has a digital ID and can sign documents online with it, there is a critical mass of users, which leads to companies also using the system for their applications, e.g. Estonian users log in to their bank with their state digital ID. Estonia even has a data embassy in Luxembourg to securely backup its critical digital infrastructure and data outside its borders and ensure the country's digital continuity even in times of crisis.
Compared to other European countries, Estonia's GPD is still comparatively low:
GDP in Austria: 53k euros per capita; 484 billion in total
GDP in Estonia: 29k per euros capita; 38 billion in total
Since Estonia is not and probably will not become a large industrial nation like Germany, it has understood that GDP growth must come via digital innovation and is acting accordingly. And the startup sector is growing at 30% a year, one out of every 56 jobs is related to it.
The success with regard to startups and innovation proves the Estonians right. Estonia is the country with the highest density of startups per capita and the second highest density of unicorns per capita in the world 👀🔥 Below you can find the ten Unicorns that were founded in Estonia, each in red with the founding date and in purple the year in which the startup became a Unicorn.
In the Estonian Startup Database you can lookup all of the 1536 startups in Estonia. Also interesting and very helpful: On their site you can download templates for typical legal startup documents, such as Founders Agreement, NDAs, Option Agreement etc. free of charge as Word files 👏👏👏
The theme of digitization runs through Estonia like a red line. Even the wine bar in the hotel is digital, at least when it comes to ordering… the wine is still drunk old school, but after the hotel bar is closed, the digital wine bar does a good job 😅🤷♂️
But Tallinn doesn't just have new digital business. The oldest pharmacy in the world is right on the market square in Tallinn. It was opened in 1422 and has been in operation ever since. This pharmacy, in operation for over 600 years, reminded me of a quote from Don Valentine, co-founder of Sequoia Capital: “Great markets make great companies.” It seems like selling pharmaceuticals was a good market over the centuries :)
Funny story: they used to prescribe living frogs to treat severe sore throats, which then had to be put in the mouth, whereby their secreted poison was supposed to relieve the pain.
A word of gratitude: Our trip to Tallinn could not have taken place without the support of Advantage Austria. For those who don't know Advantage Austria, it is the trade promotion organization of the Austrian Federal Economic Chamber. With over 100 offices in 70 countries, Advantage Austria supports businesses from Austria in their global ventures. After the United States, Austria has the second largest trade promotion organization in the world 👀🔥 Many thanks to Thomas Spazier, Kärt Kuum, Viivika Puik and Ingrid Valentini-Wanka for their fantastic support with this trip. By the way, below you see the group of master's students joining the trip to Tallinn and Helsinki, also many thanks to them!
Substack already tells me that this article is far too long and can lead to problems when sending it as mail 🙈 So I end the content part here and add only a few impressions of hotspots and culinary experiences in Tallinn below.
Hotspots in Tallinn (if you ever are on site)
In olden days, they fixed railway locomotives in TELLISKIVI CITY. Today, there is a community platform for the Estonian creative industry. The area has become a trend spot with restaurants, cafés, design shops, tech hubs and over 200 companies.
The ROTERMANN QUARTER, located in the heart of Tallinn between the Old Town, the port, and Viru Square. There are a lot of restaurants, bars and cafes there. I really enjoyed the architecture and the vibe of this area.
Because of its high concentration of high-tech companies, ÜLEMISTE CITY in Tallinn is also known as the ”Silicon Valley of the Baltics”. Many interesting startups/companies are based in this neighborhood.
Some more Highlights in Tallinn
A few culinary highlights I was able to enjoy.
And some more highlights from my trip to Tallinn. I particularly liked the Accelerate Estonia Hackathon with the question “If we gave you a country, what would you do with it?”.
The trip continues...
From Tallinn, the journey then continued by ferry to Helsinki. A good two hour cruise, which is quite entertaining with live music, bars and restaurants. But more about Helsinki and my impressions of it in the next issue of MadeMeThink.xyz (check it out).
To recap this trip, I created a short video with some impressions from my Innovation Ecosystem Explorers study tour to Tallinn and Helsinki. Have fun watching it :)
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Disclaimer: The thoughts published in this publication are my personal opinion and should not be considered as investment advice or a recommendation for any type of action. I am not a financial expert. The startups or corporates highlighted in the newsletter have caught my interest. This mention is not an endorsement or recommendation to engage with them. Readers should always do their own research.