While the past year triggered uncertainty in the global investment scene, Estonia managed to swiftly transform the pandemic-related challenges into opportunities. The country’s efforts were noted by many, among others – the United Nations that recognised the outstanding achievements of Invest Estonia (Estonian Investment Agency) for supporting the evolving needs of investors during the COVID-19 situation (read more here).
The country, which has been developing its digital infrastructure for decades, was one of the first in the world to switch to fully digital operations within a matter of days. Invest Estonia was notably among the first investment promotion agencies (IPAs) to implement solutions like online business lunches and virtual business visits to Estonia.
Kaspar Kork, Director of the Estonian Investment Agency, believes that many of the achievements are owed to the digital business ecosystem Estonia has created. “Investors often mark ease of doing business as a top reason to invest in Estonia. Smart location, a highly qualified workforce, and a competitive tax system are also at the top of the list,” he adds.
As a digital pathfinder, the Investment Agency strengthened the role of service robots in enquiry handling. As of 2020, three service robots – Suve chatbot, Emma (Electronic Multimedia Assistant) and Eia (Electronic Investment Advisor) – were implemented into Invest Estonia’s work processes. In 2020, Eia handled more than 1,500 enquiries and in total, different automation solutions helped the agency save more than 3,000 hours of work time, significantly reducing response times and allowing Estonia’s investment promotion to be more proactive.
From multinational companies to high-growth startups, Estonia remains a digital pathfinder with a solid track record of successful investments and innovations.
Top 10 foreign investments in Estonia in 2020, based on investment amount:
#1 MCF Group Estonia: €81 million
The last year’s biggest investment in Estonia was made from Finland and Sweden to build the largest data center of the region.
The data hub near Tallinn will be spacious. Altogether MCF Data Center is designed for 3,300 data cabinets with 135,000 servers and 42000 square meters of floor space. That’s comparable to an average European data center. When it’s completely ready, the center will cost up to 100 million euros.
The data center in Saue is close enough to the potential customers, but also excluded enough to be safe, and lies near the power lines of Elering, Estonia’s national Transmission System Operator for electricity and natural gas. The center will be directly connected to Elering’s network. The power needs of the center will be comparable to a whole suburb of Tallinn. The MCF team will use green energy, less energy and use the waste heat to warm up the houses nearby.
Saue’s mayor Andres Laisk happily welcomed the data center with both hands. Not because it would bring many jobs, but because he “always liked people with big visions”, as he noted.
Estonian government was interested in supporting the MCF group that brought with them one of the most important foreign investments in the IT field in recent years. Knowing they would have a safe place to keep their data in Estonia makes it a more attractive country for foreign companies with IT-sensitive activities.
“It’s extremely easy for a foreign investor to enter Estonia’s market,” said Pilvi Hämaläinen, the Investment Agency’s Director of Business Development in Finland. “Everything goes very fast, it’s all online.”
The first part of the largest Baltic data center will open its doors in March 2021.
#2 Van Oord
Dutch maritime contracting company Van Oord committed its interest to the construction of an offshore wind farm in the Saaremaa region. The new wind park with 100 windmills is capable of producing green energy at full capacity within this decade, the farm will contribute directly to Estonia’s 2030 green energy targets.
#3 Ensto Ensek AS
Ensto Ensek, a developer and producer of smart electric solutions, received Finnish investment to open new production line in company’s plant in Keila (near Tallinn) and hire an additional 60 people.
#4 JB Foods
Singapore’s investment in building a distribution center in Maardu (near Tallinn), where cocoa and other raw materials from Africa and Asia will be processed and forwarded to European markets.
#5 AFS IT Services Estonia (Arvato)
Arvato Financial Solutions (AFS) Innovation & Development center in Tallinn, a company of the worldwide Bertelsmann Group, which develops consumer payment solutions for e-commerce, uses German investment in the further expansion of IT center and hiring 31 more senior IT-specialists to grow its team to exceed 100 people.
#6 birkle IT
birkle IT is a relatively young German company offering technology and IT services. Initially, the company looked around Europe to advise its customers on possible outsourcing destinations, but then decided to open a unit in Estonia, which currently employs almost a quarter of a hundred employees and plans to expand further. According to the company’s manager and founder Jörn Halbauer, Estonia’s openness to new technologies and the local business climate led by the ease of doing business became decisive in expanding to Estonia.
“In recent years, German interest in Estonia has grown exponentially. Young technology companies are especially fascinated by the Estonian business climate,” says Riina Leminsky, the Investment Agency’s Director of Business Development in Germany. A good example of this is the German interest in establishing a company in Estonia through e-Residency (1,000+ companies established), which is primarily due to the bureaucracy and complexity of doing business in Germany and also Estonia’s good reputation as an e-state. As a result of the COVID-19 pandemic, Invest Estonia has started to receive more and more inquiries from German sole proprietors who, in addition to starting a company, are also considering moving to Estonia physically.
#7 3D Designs and Solutions Ltd
The company is engaged in large-format printing and digital signage (eg in airports, hospitals, sports fields), sales and maintenance of LED modules and digital screens. The British investment helps to expand the equipment park for 3D printing.
The Investment Agency was also able to assist Volkswagen in establishing a Tallinn-based subsidiary, tasked with operating VW’s software business product portfolio, managing its intellectual property, and legal support. The relatively young unit will be responsible for the development of the group’s vehicle software and digital ecosystems.
The Nordic Engineering Center (NEC) was established in Estonia, whose task is to provide central design and configuration services to the Siemens offices in the region. In addition, assistance with the installation of special equipment and work on the construction site. In order to meet the needs of the Nordic region, it is planned to increase the team in Estonia by approximately 20 people.
Siemens points out Estonia’s world-famous reputation as a digital pathfinder, the moderate level of engineers’ salaries compared to other Nordic countries, as their main arguments to invest in Estonia.
#10 CGI Eesti
The aim of the project is to expand the existing software development center in Tartu, Estonia into a globally important partner for other CGI units by recruiting new staff to deal with major IT projects with greater responsibility and social impact in the CGI Group, such as the space industry, energy and the public sector.
# VC investments in Estonian startups
In addition, Invest Estonia has been contributing to attracting venture capital to Estonia for some time. “We have been actively involved in introducing our success stories, startup environment and Estonia’s advantages to both private equity investors and corporate hedge funds,” said Kork. “Some of the bigger names where we see our role in helping the deals become a reality are Nordic Ninja VC and ITOCHU investments in Estonian startups.”
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