Nestled among the verdant slopes of the South of Estonia, Tartu has long been known as the country’s intellectual capital. Home to the prestigious University of Tartu, the city blends its unique academic heritage with cutting-edge innovation. Often referred to as the “city of students,” with every fifth resident still studying, Tartu is now also swiftly building up its reputation as a startup city and proving that Estonia’s knack for building world-leading startup ecosystems extends well beyond the capital, Tallinn.
The tech sector in Tartu and the surrounding Tartu County has been on the rise in the first half of 2024. According to Startup Estonia data published by Lõunaeestlane, the turnover of local startup companies increased by 8% compared to the previous year, reaching €111.7M. As Estonia’s second-largest city, Tartu offers founders and investors its own unique blend of talent, infrastructure, and community support.
Talent magnet
Tartu and Tartu County are now home to 135 startup companies, with established players leading the pack. When it comes to revenue, Playtech topped the charts at €24.3M, followed by Messente Communications at €13M, and Glia at €7.2 M.
The average gross salary in Tartu’s startup sector reached €3,292, outpacing the Estonian national average of €1,831. Competitive pay has helped attract and retain top talent in the region. The cost of living is also more affordable in Tartu than in Tallinn, making it an attractive location for high-skilled workers.
Tartu from above
And the workers are coming, steadily. Tartu’s startup scene has become a major contributor to local employment. In the first half of 2024, 2,272 people worked in Tartu County startups, representing 14% of all startup employees in Estonia. This is a significant increase from just a few years ago when Tartu accounted for less than 10% of the country’s startup workforce.
The economic impact of these startups reaches beyond direct employment. In the first six months of 2024, Tartu’s startup companies paid €24M in national taxes and €22.5M in labour taxes. The latter accounts for 13% of all startup labour taxes paid in Estonia.
Playtech stands out as the largest employer, with 677 employees as of June 2024. Glia and Xolo follow with 128 and 77 employees, respectively. Notably, while 85% of Tartu’s startup sector employees are Estonian citizens, the remaining 15% are international talent, creating a diverse and global-minded community.
When it comes to investments, the majority of dealmaking in Estonia still happens in Tallinn (for now). Still, in the first half of 2024, Tartu saw four investment deals into local doers totalling €1.25M, with Crespect netting the largest investment of €700,000.
Now it’s time to double down and support the continued growth. Startup Estonia has launched a free expert consulting program for early-stage startups and aspiring entrepreneurs across different regions of Estonia, including Tartu County. If you’re thinking of setting up shop in Estonia and making the most of this thriving ecosystem, see details and contact your expert via this one-pager.
Want to join the ecosystem? Learn more about South Estonia and send us a request for 1:1 e-Consulting to connect with our advisors.
