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Estonia leads the Baltic region in startups, says a report commissioned by Google

Consultancy company Civitta published a report covering the startup and venture ecosystem in the Baltic region in the last five years. Commissioned by Google, it highlights Estonia as the winner by almost any metric, with bright prospects ahead.

To better understand the startup scene, Civitta dug into four pillar market segments: general dynamics, industries focus, funding situation and success funnels. The authors also used over 7500 data points supplied by Dealroom and Orbis, surveyed 108 startups and 1798 employees and conducted 25+ interviews. The result — tagged as the most extensive startup report ever produced in Baltics — puts Estonia in the first place not only in the region but far beyond it.

Today’s realities, tomorrow’s possibilities

With data locking in 2021, the authors counted 1,293 startups and 10 unicorns in Estonia, significantly surpassing both Lithuania and Latvia. In fact, Estonia holds the status of the most entrepreneurial country in the world by startups per capita, beating Israel and Singapore. Fintech, enterprise software and marketing tech are the most popular niches. The most recent estimation of the startup industry puts the number of startups at the 1,451 mark.


In 2021, Estonian startups employed over 8,200 people and produced north of €1.4B in revenue, bringing in €125M in taxes for the state. What’s equally important, the industry attracted €928M in investments, which is more than Lithuania and Latvia combined. Estonian startup employees, who make up 0,9% of the country’s total workforce, are also much better compensated with €41,600 in annual gross salary — or 1.9X the average.

Estonian startup industry involvement in the national labour market now matches those of Germany, the biggest European economy. The next frontier would be to take on the more mature ecosystems, such as Sweden (2.1%) and the world’s leader, the US, where 8,4% of jobs are attributed to the startup industry. This is not out of reach, as the report envisions up to 4,000 startups in Estonia by 2030.

The odds of forming such a vibrant ecosystem are increased thanks to the extensive support enjoyed by entrepreneurs. So far, Estonia has raised the most VC funding per capita in Europe, staying behind only Israel and Singapore, globally. Local investors contribute the majority (81%) of early-stage funding. Estonian early-stage VC funds have significantly more resources to support startups financially, concludes the report. It’s an important factor, as startups with VC money onboard are twice as likely to succeed.

The situation is increasingly evident upon looking at exit data — so far, Estonian startups have produced 44 exits with €13.7B in disclosed value. The flow of capital, which in the early 2000s produced the famous “Skype mafia” phenomenon, has been repeated many times. It also created an ecosystem of angel investors — Estonia has more than 250 of them, comparable to Lithuania’s and Latvia’s combined number.

Making startups easier, in a smart way

There are still many things that could push the industry even higher and speed up the transformation of the economy in the region. Talent shortages — a global phenomenon — also affects the Baltic states, concludes the report.

Estonia has the best access to highly-skilled talents among its neighbours, even though some positions — especially those in data analytics, AI, software and development and sales — are in higher demand. Estonian companies also enjoy the highest skill set level from applicants and report fewer difficulties in finding ambitious and like-minded people.


The employees are also not left behind — almost a quarter of respondents in Estonia consider stock options as the main reason to join the company. Considering the high success rate for Estonian companies, that sets the scene for the next wave of angel investors to appear. Other important factors for those working in the startup sector are flexible working policy, compensation, and career growth perspectives.

Building your own startup is still far from being a safe bet, but a number of factors could make this process easier, concludes the report. Having a co-founder and raising venture capital are among the most influential ones, as well as choosing the right location to start from. Estonia, with its vibrant ecosystem and proven track record, is best positioned for such ventures — and thanks to e-Residency, those benefits are accessible globally.

If you want to contribute to the most competitive IT sector in the region and look for investment targets, just book a time via our e-Consulting to speak to your personal advisor.

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