If you want to understand the success of Estonia’s startups then Kaidi Ruusalepp is a good person to speak to.

In the mid-90s, not long after Estonia regained its independence, she began her career as Estonia’s first (and for a while, only) IT lawyer. After helping shape the laws that aimed to help startups flourish, she joined the Tallinn Stock Exchange – later renamed as Nasdaq – and worked her way up to CEO. After that, she decided to start her own company. Her idea was to create a new type of stock exchange where shares could be exchanged more easily than ever before.

And Estonia’s startups did indeed flourish during that time.

This northern European nation of just 1.3 million people has become a unicorn factory. It’s the birthplace of five unicorn startups valued at more than $1 billion. Skype was first, then TransferWise, Playtech, Bolt, and now Pipedrive. Beyond that, Estonia has a thousand more promising startups – nearly five times the European average per capita – eager to be the next unicorn.

Ruusalepp has a few explanations for this.

“Estonia is a country of smart thinking, a very strong work attitude and ethics, pragmatic thinking and,” she explains, “…a non existent home market.

Estonia’s small population has been useful for startups as a testing ground. It enables them to roll out products and services across a national market at a cost effective rate while still developing improvements. This market won’t help many of them turn a profit though. That’s why Estonia’s startup ecosystem is focused beyond our borders and also why national policy frameworks, like those first written by Ruusalepp, aim to make the country a springboard to help startups reach customers globally.

Despite a small population, however, many people are surprised to discover that Estonia isn’t actually that small a country. Estonia is bigger, for example, than Denmark just over on the other side of the Baltic Sea. This leads to one more explanation that Ruusalepp offers for the success of Estonian companies. Their founders and employees simply have more space to recharge their creative juices, whether by walking through nature, tending to their gardens or fields, relaxing at their summer homes, or unwinding in their saunas.

Estonia’s next unicorns

So which startups in Estonia are most likely to emerge as the next unicorn? Ruusalepp named three promising possibilities.

“I think that Cleveron has potential because of the people who drive their innovation and the way they solve the future,” first explains Ruusalepp.

Cleveron, based in the idyllic central Estonian town of Viljandi, aims to radically lower the hassle and cost of ‘last mile’ deliveries with innovative parcel lockers and robots that can deliver to them.

“I’d also play my cards on FoodDocs,” adds Ruusalepp, “because of the ladies who run this business close to their values.”

Tallinn-based FoodDocs was established by Katrin Liivat and Karin Repp. They knew from working in the food industry themselves that the admin and processes that govern how food should be handled safely are important but also too complicated for a lot of businesses. So they created their own software to help food handlers manage their food safety system.

Ruusalepp’s final startup to watch is her own company, Funderbeam, that she left Nasdaq to create. Funderbeam is now a successful equity funding and trading platform for startups in Estonia and around the world. They are disrupting traditional stock exchanges by lowering the barriers for small investors and enabling greater liquidity for when they need to cash out. This provides investment opportunities for people who’d never previously have the ability to do so, and also more fundraising opportunities for companies.

As a result, their platform is now being used to trade more than €1 million worth of private company shares per month.

“Our next big thing,” adds Ruusalepp, “is to list a unicorn on our platform because as much as unicorns are the new age Fortune500 companies, Funderbeam is the new global stock exchange for them.”

But how can investors decide which startups to back? Ruusalepp has one simple piece of advice for this.

“Ask what drives the founder. The key is there.”

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