Startup Genome, a leading innovation policy advisory and research firm, has published its annual global startup report.
In the section on emerging ecosystems, Estonia has made significant strides, positioning itself as an established power in the global startup community. Moving up 28 positions, Estonia now sits at an impressive #10 spot, highlighting its growth potential and attractiveness for startups and investors alike.
One of the key factors contributing to Estonia’s rise in the rankings is its increase in early-stage funding rounds. The availability of venture capital and angel investment has played a pivotal role in fuelling the growth of the country’s startup ecosystem, which is now valued at over $18B.
Estonia’s government has also been proactive in creating a favourable business environment by implementing policies that support entrepreneurship, innovation, and investment in early-stage companies. This commitment to fostering a startup-friendly ecosystem has undoubtedly attracted more funding and propelled Estonia’s rise in the rankings. The total amount of early-stage funding deployed in Estonia from 2020 to 2022 is estimated at $849M.
In terms of unicorn building, Estonia is playing in the world premium league, when measured in unicorns per capita. Estonia has been the birthplace of 10 unicorns: Skype in 2005, Playtech in 2007, Wise in 2015, Bolt in 2018, Pipedrive in 2020, Zego, ID.me and Gelato in 2021, Veriff and Glia in 2022. That’s 7.7 unicorns per million capita. According to Startup Genome, the inclusion of CRM and intelligence platform Pipedrive‘s partial buyout, which valued it at $1.5B, demonstrates the potential for Estonian startups to achieve substantial valuations and attract significant investments.
Another notable factor driving Estonia’s ascent is its increase in exits. These deals, such as acquisitions and initial public offerings (IPOs), not only provide significant returns for investors but also showcase the maturity and viability of the startup ecosystem. Estonia’s entrepreneurial spirit and innovative mindset have played a crucial role in its emergence as an attractive destination for startups. The country has fostered a culture that values entrepreneurship, creativity, and technological advancement.
Estonia has been a pathfinder in digital governance and in many other online services and concepts to make it easy for startups to establish and scale their businesses. Within 8 years, Estonia’s unique e-Residency program has contributed €130M to the state budget. Estonia’s tax system is the world’s best. Additionally, Estonia’s highly skilled and tech-savvy workforce has been instrumental in driving the growth of its startup ecosystem.
The rise of Estonia in the global startup landscape is a testament to the country’s commitment to nurturing innovation and supporting entrepreneurs. While it may be a relatively compact nation of just 1,3M people, Estonia has demonstrated that it can compete on a global scale when it comes to fostering a vibrant startup ecosystem.
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