Solving the tech gap between the US and Europe has become a major priority for European policymakers and investors. Amid the overall need to speed up the adoption of new technologies and investment practices in the EU, one country is already standing out: Estonia.
According to Atomico’s latest State of European Tech report, Estonia is now a global leader in venture capital investment relative to GDP.
The report, which provides a comprehensive analysis of Europe’s tech ecosystem, reveals that the continent has undergone a remarkable transformation over the past decade, growing fivefold to reach a valuation of €3.2 trillion in 2024. With over 35,000 early-stage companies and a tech workforce of 3.5 million professionals, Europe has all the necessary ingredients to compete on a global scale.
Estonia’s standout performance
Estonia has established itself as the world leader in venture funding relative to GDP, with VC funding accounting for an impressive 1.17% of GDP over the past decade — the highest ratio globally, surpassing tech giants like Singapore, Israel, and the US.
Estonia’s tech workforce has seen extraordinary growth in the past decade, increasing almost tenfold. The country now has nearly 11,000 tech employees per million inhabitants, second only to Finland in Europe. A more detailed picture can be seen here. The report also points out that Estonia’s ecosystem has produced several global success stories, including Bolt, now valued at €8.4 billion and counted among Europe’s most valuable tech companies. With nearly two times the number of unicorns per capita compared to runner-up Luxembourg, Estonia snags the top spot for the highest number of unicorns per capita.
The report highlights several key strengths of Estonia’s productive tech ecosystem:
Startup-friendly policies
- Zero corporate tax on reinvested profits;
- Digitised processes for company incorporation;
- Strong government support for innovation.
Talent development
- Estonia has successfully created a self-reinforcing talent cycle, with experienced professionals from successful companies going on to found new startups or invest in the next generation of entrepreneurs.
Cross-order success
- Estonian companies have demonstrated a strong ability to scale internationally, with Bolt preparing for a potential IPO in 2025.
As Europe works to close its €75 billion growth funding gap and strengthen its position against global competition, Estonia’s ability to consistently punch above its weight demonstrates how focused policies, digital innovation, and strong talent development can create impact in the global tech landscape, regardless of population size.
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