Estonian Startup & VC Ecosystem Report

Continuing the journey through the startup & VC ecosystems of Central and Eastern Europe, it is time to look closely at yet another country. After diving deep into the startup conditions in Lithuania and Latvia, today we will analyze Estonia.

*The sources for all the data are listed below.

Estonian startup ecosystem - overview

Macroeconomic indicators: 

• Currency: Euro
• GDP: 38,100,812.96M $
• GDP per capita: 46,697.4 $
• GDP growth (yoy, 2022): -1,3
• Real GDP is forecast to decrease by 0.4% in 2023 
• Population: 1,344,768
• Area: 45 339 km²

Startup ecosystem: 

• 1400+ startups, with a total of €36.3B in enterprise value according to Dealroom CEE 2022 report
• 14th ecosystem in the world according to 2023 Startup Blink Report
• The highest number of startups per capita in the world (1,090 startups per 1 million inhabitants)
• 10 Unicorns: Skype, Playtech.com, Wise, Bolt, Pipedrive, Zego, ID.me, Gelato.com, Veriff, Glia
• The biggest funding rounds in 2023: €122,1m in Series D for ID.me from Scout Ventures, CapitalG, FTV Capital, Moonshots Capital, Viking Global Investors, €54.0m in Late VC for Skeleton Technologies from Marubeni, Siemens and €18.5M in Series B for Rangeforce from KPN Ventures, Cisco Investments, Paladin Capital Group, Energy Impact Partners (EIP), LAPA CAPITAL
• The biggest funding rounds in 2022: €628M in Series F for Bolt from Sequoia Capital, Fidelity, Tekne Capital Management, Whale Rock Capital Management, Owl Rock Capital Partners, €89M in Series C for Veriff from Accel, Tiger Global Management, Alkeon Capital, Ivp, €51.81m in Series B for Ready Player Me from Riccardo Zacconi, Andreessen Horowitz, Sebastian Knutsson, Justin Kan, Endeavor
• VC investments per capita: €1,056 
• VC investments in Estonia's GDP - 3.59% in 2022
• Top international investors investing in Estonia:  Northzone, Atomico, Lightrock, Andreessen Horowitz, Konvoy Ventures, NordicNinjaVC, Accel, Bessemer Venture Partners, Molten Ventures, Sequoia Capital, Insight Partners, Creandum
• Top Estonian VC firms: Superangel, Tera Ventures, Trind VC, Change Ventures, Specialist VC, Karma VC, Metaplanet, Startup Wise Guys, Thorgate Ventures, The Better Fund

VC investments in Estonia 2014-2023 

The total amount of funding in the Estonian ecosystem* in the years 2013-2022 was as follows:

* companies founded or HQ in Estonia, source: Vestbee

Biggest funding rounds in 2023

• ID.me - Series D - €122.1M - Scout Ventures, CapitalG, FTV Capital, Moonshots Capital, Viking Global Investors
• Skeleton Technologies - Late VC - €54.0M - Marubeni, Siemens
• Hi - Early VC - €27.7m - Animoca Brands
• Rangeforce - Series B - €18.5M - KPN Ventures, Cisco Investments, Paladin Capital Group, Energy Impact Partners (EIP), LAPA CAPITAL
• Binalyze - Series A - €17,5M - Molten Ventures, Citi Ventures, Cisco Investments, OpenOcean, Deutsche Venture Capital

Biggest funding rounds in 2022

• Bolt - Series F - €628M - Sequoia Capital, Fidelity, Tekne Capital Management, Whale Rock Capital Management, Owl Rock Capital Partners
• Veriff - Series C - €92,5M - Accel, Tiger Global Management, Alkeon Capital, Ivp
• Ready Player Me - Series B - €51.8M - Riccardo Zacconi, Andreessen Horowitz, Sebastian Knutsson, Justin Kan, Endeavor
• Cryptosnacks - Late VC - €46,2M - GEM Digital
• BITLEVEX - Early VC - €46,2M - GEM Digital
• Glia - Series D - €41.6M - Insight Partners, RingCentral, Wildcat Capital Management

Introduction to Estonian Startup & VC Ecosystem 

Although small in size, Estonia has emerged as a powerful player in the startup and VC scene, not only in the CEE region but also throughout Europe. Many of us have likely used products or services that originated in Estonia and can recognize the names of prominent startup giants such as Skype, Bolt, or TransferWise. As the 2022 European State of Tech reports, Estonia leads Europe in VC investments per capita, with an impressive amount of €1,056 invested per capita, greatly exceeding the European average of €140. Additionally,

It holds the highest number of unicorn companies in the CEE, with 10 in total.

The Estonian startup scene is thriving, with over 1400 startups, including more than 100 newly registered ventures in the Estonian Startup Database during 2022 and Q1 of 2023. This dynamic growth is bolstered by a range of organizations, including tech incubators, accelerators, VC funds, public-funded initiatives, and government bodies, which not only foster the entrepreneurial spirit among Estonians but also actively seek to attract foreign founders and investors. The country's compact size facilitates the close-knit nature of this network. Involved policymakers, streamlined bureaucratic procedures, advantageous tax regulations (for founders and investors alike), and robust institutional frameworks supporting R&D further contribute to a favorable business environment in the country.

It may seem that the Estonian market is too small to accommodate all these innovative ideas - and local institutions actually confirm this. Invest in Estonia even suggests that "Estonia isn't your market, but your accelerator," implying that local founders have to adopt a global mindset from the get-go. Bolt, an Estonian startup, is a good example of this approach - it became a unicorn in 2018, keeping its headquarters in Tallinn while expanding its operations to over 45 countries worldwide.

With favorable conditions, a global mindset, a tech-savvy government, and a well-connected network of supporting organizations and entrepreneurs, Estonian startup founders appear to be uniquely positioned for success. However, it is important to acknowledge that the local startup scene, like any other, is not immune to recent challenges and volatile political climate, and has been affected by global market fluctuations and continent-wide reductions in VC funding.

So without further ado, let's dive deeper into the Estonian startup scene and explore the details.

Estonian startup & VC ecosystem - a deep dive

In recent years, Estonia has emerged as a leading player in the CEE startup ecosystems, gaining recognition in various international rankings. Notably, in the StartupBlink 2023 report, Estonia secured the 14th position worldwide. Building on this success, the Global Startup Ecosystem Report 2023 propelled Estonia even further, moving it up by 28 places in comparison to 2022 and solidifying its ecosystem as the 10th best in the world. This rise can be attributed to the increase in early-stage funding rounds, more significant exits exceeding €46,2M, and the impressive acquisition of the CRM platform Pipedrive for €1.3B in 2020. In addition, Estonia was recognized as the third-best Emerging Ecosystem by the Strong Starters ranking for its robust early-stage funding activity. The ranking highlights Estonia's impressive growth, with a 46% increase in early-stage capital from 2021 to 2022 and a remarkable surge of 439% in the number of early-stage funding rounds from 2018 to 2022. Noteworthy among these rounds are the €37 million Series A for Eurora and the €24 million Series A for NPTPort, both secured in 2022.

Regarding innovation, the European Innovation Scoreboard 2023 classified Estonia as a Moderate Innovator, with a performance level of 98.6% of the EU average. However, Estonia demonstrated a remarkable growth in innovation level, which means that the country's performance gap to the EU is shrinking. The ranking highlighted Estonia's strengths in various areas, including attractive research systems, human resources, venture capital expenditures, employed ICT specialists, innovative SMEs collaborating with others, and trademark applications.

Institutional conditions

A highly favorable external environment and strong government support have significantly contributed to the global rise of Estonian startups. A good example is the Startup Visa program, which helps non-EU founders grow their startups in Estonia and makes it easier for Estonian startups to hire non-EU talent. Around 18% of all startups in the Estonian Startup Database were founded under the Estonian Startup Visa program. What further entices entrepreneurs is the business-friendly legislation and tax system that minimizes bureaucracy and supports entrepreneurship. A key element of this system is the structure of the corporate income tax, known as the Estonian CIT, which allows enterprises to reinvest their profits without paying income tax. Additionally, entrepreneurs in Estonia can leverage digital solutions to simplify their business operations.

What sets Estonia apart from many other CEE countries is the extensive government support for startups, particularly in science-based and deep-tech solutions. The Ministry of Economic Affairs and Communications has actively developed an action plan to foster research- and technology-intensive startup entrepreneurship, aiming to establish Estonia as a center of excellence for deep-tech startups.

However, it's important to consider a different perspective on Estonia's attractiveness to potential foreign founders, which is less optimistic. According to the 2023 OECD report assessing countries' appeal to startup founders, Estonia, despite its strong startup culture and ecosystem infrastructure, doesn't rank highly. The report identifies barriers to entry, particularly in migration policy frameworks, especially regarding the transition from a startup visa to permanent residency. This emphasizes the significance of migration policies in attracting global startup talent. Additionally, the report highlights the lack of diversity in the Estonian ecosystem, with low representation of women inventors and on company boards.

Ecosystem Funding Data

According to the European State of Tech 2022 report, Estonia has the highest number of startups per capita (1,090 startups per 1 million inhabitants), followed by Iceland and Ireland. In 2023, the combined enterprise value of Estonian startups reached €36.3B (as reported by Dealroom), making it the second-highest in the CEE region, with only Poland slightly exceeding it. Estonia accounted for around 20% of the entire CEE ecosystem, which had a total enterprise value of €190B this year.

In terms of VC funding, according to the above-mentioned report, Estonia attracted the most investor attention in the CEE region in 2022, with €1.27 billion, followed by the Czech Republic with €1 billion, and Croatia with €784.52 million. This represents a growth of approximately 40% compared to the previous year when Estonian startups raised around €890.91M in funding. Despite the overall decline in investment in Europe in 2022, Estonia stood out as one of the few countries to experience year-on-year growth in capital investment, defying macro headwinds. This growth was evident, as Vestbee reports that 150 transactions were made, with 54 of them exceeding €1 million. 

The upward trend in Estonian VC investment has been consistent since the inception of the ecosystem, gaining momentum in recent years. According to Dealroom and the community-sourced database, in 2019, 72 startups raised €263 million, with an average deal size of €3 million. Notably, around 10% of the funding came from local investors, a significant proportion compared to subsequent years 2020-2022 when only approximately 6% of capital originated from Estonia, with the majority coming from international investors.

The ecosystem witnessed substantial growth in 2020, with €464 million invested across 69 deals, marking a remarkable 76.0% year-on-year increase. This growth was reflected in a higher average deal size of €6.7 million. The following year experienced rapid expansion, with a staggering 107% increase in total raised capital to €962 million, and a record-breaking 95 deals. However, it was in 2022 that Estonia achieved its best performance so far, surpassing the €1 billion mark in total funding, reaching €1.3 billion across 78 deals, with an average ticket size of €17 million.

However, in 2023, a decline has been observed in both the quantity and frequency of investments, reflecting the impact of the global economic downturn. Although the country registered 108 transactions, the total funding plummeted to €400.05m. The overall trend indicates a decline in funding activity.

The 2022 edition of the European State of Tech report also highlights Estonia as the European leader in venture capital investments as a share of GDP, followed by Croatia, the UK, and Sweden. This indicates that VC activities have a significant impact on the overall growth of the Estonian economy, surpassing other European countries. Moreover, this impact continues to grow, with the share of VC investments in Estonia's GDP increasing from 1.3% in 2020 to 2.49% in 2021 and further to 3.59% in 2022.

The report also reveals that Estonia's cumulative capital invested from 2018 to 2022 amounted to €2.78 billion, positioning Estonia as the 15th country in Europe and the leader of the CEE region.  Moreover, Estonia captured approximately 1% of the overall capital invested in European startups between 2018 and 2022, outperforming other CEE countries, with the Czech Republic and Poland each receiving around 0.5%.

In terms of startup turnover, according to Startup Estonia, local startups generated €2.1 billion in turnover in 2022, experiencing a year-on-year growth of 49%. However, it's important to note that a significant portion of this economic value is created by a small number of large startups. Notably, Bolt generated €1.1 billion in turnover, accounting for over half of the sector's total. Other significant contributors include Veriff (€71 million), Swappie (€58.4 million), Comodule (€36.7 million), and Starship Technologies (€31 million).

Relocations

In smaller markets like Estonia, it is common for founders to relocate abroad or establish satellite offices in remote countries following their business success and the emergence of new opportunities. According to the State of Tech report, around €19.61 billion of the total €32.93 billion enterprise value created by Estonia-founded companies comes from those that relocated outside of Estonia. Additionally, as Dealroom reveals in the CEE 2022 report, 42% of Estonian founders and leaders have chosen to relocate abroad. On another note, these founders often maintain strong connections to Estonia, with large teams still operating within the country. This ensures their continued involvement in the local ecosystem and shows how interconnected the European countries are. Importantly, the success of a company originating in Estonia can have positive ripple effects across the entire continent.

Market segments

The Estonian startup ecosystem is diverse and thriving across many verticals, with the largest sectors being business software & HR (17% of startups), FinTech (13%), and consumer products & services (11%). In terms of turnover, transportation & logistics leads with €1.2 billion generated, largely driven by Bolt's contributions of €1.1 billion. FinTech follows closely with €196 million in turnover and business software & HR generated €162 million. Other notable turnovers include CyberTech (€142 million) and consumer products & services (€83 million).

The Estonian startup ecosystem also showcases a strong focus on deep tech, with many initiatives and public discourse centered around this segment. Within the Estonian Startup Database, there are 123 Deep Tech startups, contributing significantly to the sector. In Q1 2023 alone, these startups generated €41.9 million in turnover and also demonstrated their ability to secure funding. In Q1 2023, they successfully secured 6 funding deals, totaling €22 million. Notably, the largest investments were raised by EFENCO (€12.3 million), Roofit.solar (€6.45 million), and VOOL (€1.7 million).

Additionally, Estonia has demonstrated its strong position in the digital economy, ranking 4th in Europe in terms of the digital economy's contribution to gross value added. With an 8.7% share of GVA derived from the digital economy, Estonia falls behind Sweden, Bulgaria, and Cyprus. This highlights the vital role of technology in Estonia's economy.

Startup workforce: employees and demographics

According to Statistics Estonia, in 2022, Estonian startups employed 13,694 people, representing around 1 out of every 56 workers in the country. The top 20 startups accounted for 59% of the sector's jobs, with leading employers including Wise (1,785 employees), Bolt (1,270 employees) and Swappie (487 employees), Veriff (411 employees). The average monthly gross salary in Estonian startups was €2,923, 1.9 times higher than the national average.

Regarding demographics, women represented 40% of the Estonian startup workforce at the end of 2022, marking a slight increase from 37% in 2021. The proportion of female startup founders also saw a slight increase, reaching 17% compared to 16% in 2021 and 15% in 2020.

Of the startup employees, 62.8% hold Estonian citizenship, while 29.3% possess foreign citizenship. Among the foreign citizens, 16% are from the European Union, and 84% are non-EU citizens. Furthermore, 32% of Estonian startup founders have a foreign origin.

Tallinn as the growing tech hub of Estonia

In terms of growth rates at the city level, According to the State of Tech report, Tallinn stood out in 2022 with a year-on-year growth of 55%.  This positioned Tallinn as one of the leading cities in Europe, alongside Helsinki, Milan, and Stockholm. While Estonia may not have been among the fastest-growing countries overall, Tallinn's remarkable growth stands out. It far exceeds all the other Estonian cities, capturing the lion's share of all business activity in the country. In terms of the amount of invested capital, Tallinn ranked as the first city in the CEE region and 10th overall in Europe, attracting €1,23 billion in 2022 and €841,60 million in 2021.

The Startup Heatmap Europe Report 2022, which assesses the potential of European cities for establishing and nurturing successful startup companies, also recognized Tallinn as one of the major startup centers in Europe. It climbed three positions from the previous listing, securing the 6th place. Tallinn excelled particularly in the "Ease of Doing Business" category, as local founders highly rated the city for its favorable business regulations.

Estonian Unicorns 

Estonia has emerged as a leader in Europe for producing unicorns, with 10 companies founded in the country, which had exceeded a valuation of 1 billion dollars. This significant achievement reflects Estonia's strong entrepreneurial ecosystem. Let's take a closer look at these top companies and their notable accomplishments.

Company: Skype
Founded: 2003
Became unicorn: 2005

Skype played a pioneering role in the development of video conferencing, significantly influencing the way we communicate virtually today. In 2005, eBay acquired Skype for €2.4 billion, marking the largest tech exit globally since the dot-com crash and the most substantial exit in European tech history at the time. Following the acquisition, many of Skype's original co-founders and high-ranking employees ventured into other successful tech endeavors, earning them the nickname 'Skype Mafia.' As an example, Niklas Zennström, one of Skype's founders, later founded the VC fund Atomico.

Company: Playtech.com
Founded: 1999
Became unicorn: 2005

Playtech, founded in 1999, is a leading gambling software development company that offers a comprehensive suite of software solutions for the online gaming industry. Their products cater to a wide range of activities, including online casinos, poker rooms, bingo games, sports betting, scratch games, mobile gaming, live dealer games, and fixed-odds arcade games. In March 2006, Playtech achieved a successful IPO on the AIM market, garnering a valuation of approximately €878,88 million. The company also holds a position in the FTSE 250 Index.

Company: Wise
Founded: 2010
Became unicorn: 2015

Wise, founded by Kristo Käärmann and Taavet Hinrikus in 2010, is a fintech leader that has revolutionized the industry. Rather than relying on banks as intermediaries, Wise prioritizes finding the most efficient and cost-effective means of transferring funds between countries. Its platform caters to over eight million users globally, disrupting fintech practices and operations with its dominant unicorn status valued at €4,63 billion according to the latest report. Wise's features, including automatic identification verification, online and in-app technical support, and estimated transfer times, cater to the demands of its customers.

Company: Bolt
Founded: 2013
Became unicorn: 2018

Bolt was established in 2013 as a solution to taxi transportation issues and delays, driven by the necessity for change in the industry. This mobility platform offers day and night transportation solutions, catering to the needs of its customers with affordable and convenient ride-hailing, micro-mobility, and food delivery options. Through the app, users can easily search for and book various vehicle types based on their preferred location, date, cost, and rating. Bolt's commitment to enhancing convenience, affordability, and safety makes it a significant contributor to the mobility industry.

Company: Pipedrive
Founded: 2010
Became unicorn: 2020

Pipedrive, a sales pipeline management solution, was developed in 2010 by Timo Rein, Urmas Purde, Ragnar Sass, Martin Henk, and Martin Tajur. The platform was designed to empower customers to manage their sales pipelines more effectively and efficiently. It caters to salespeople at small firms, offering features such as email tracking, seamless data importing and exporting, and drag-and-drop functionality on the sales pipeline. With these powerful tools, sales professionals can easily organize their actions, manage deals, and maintain conversation history, leading to improved productivity and streamlined sales processes.

Company: Zego
Founded: 2016
Became unicorn: 2021

Zego is a prominent player in the insurance industry, specializing in vehicle insurance policies. The company's coverage extends to more than 400,000 vehicles for various companies, including well-known delivery and transportation leaders like Uber, Uber Eats, Bolt, and Freenow. Zego, founded in 2016 by Harry Franks and Sten Saar, takes an innovative approach to determining price ranges by considering industry-standard factors, driver behavior, and working practices. Zego stands out as an insurance provider, collecting over five times more data about each vehicle compared to its competitors. As of the last company valuation in 2021, Zego's value was estimated at €1,02 billion.

Company: ID.me
Founded: 2010
Became unicorn: 2021

ID.me,  co-founded by Tanel Suurhansis, is a digital identity network that simplifies user indication verification. They provide identity proofing, authentication, and group affiliation verification for organizations across sectors. ID.me has seen big growth amid the pandemic as consumers shift more of their activities online, from shopping to banking to healthcare. Its headquarters are currently located in the USA and there have been some talks about going public in the next few years. 

Company: Gelato.com
Founded: 2006
Became unicorn: 2021

The dynamic digital landscape of the 21st century has driven the necessity for print-on-demand services among companies, organizations, and independent actors. In response to these demands, Gelato was founded in 2010 by Mike Arbuzov. The platform offers a wide range of printing services and options and has established a network of over 100 production partners in 32 countries, relying on high-quality printing practices and exceptional designs.

Company: Veriff
Founded: 2015
Became unicorn: 2022

With the increasing threat to the digital world these days, the demand for cybersecurity solutions rises, and Veriff provides an innovative response to these challenges. Veriff, established in 2015 by Kaarel Kotkas and Janer Gorohhov, offers a range of cybersecurity solutions, including digital identity verification. Veriff employs automation technologies based on machine learning and AI to minimize and eliminate fraud risk. In this system, a local device captures images of the customer, which are then compared with the identity information stored in government databases. This comparison is based on the ratios between various points on the person's face.

Company: Glia
Founded: 20102
Became unicorn: 2022

Carlos Paniagua founded Glia in 2012, and the company has since facilitated over 10 billion digital customer support engagements. Glia specializes in Digital Customer Service (DCS), enhancing online and mobile interactions through on-screen collaboration, digital communication features, and AI-enabled support. With a global presence in 12 countries, Glia continues to expand its reach and attract a diverse clientele. Glia's commitment to enhancing client experiences and driving business outcomes is evident in its partnerships with over 250 financial institutions, including banks, credit unions, and insurance companies worldwide. The company's success has garnered significant investor interest, securing over €138,77 million in funding from key investors.

Estonian Top funding rounds

To get a better understanding of the Estonian ecosystem and its growth let’s take a closer look at the biggest and most prominent funding rounds secured by top startups. 

As Vestbee’s quarterly reports showcase, the biggest Estonian funding rounds in 2022 were as follows:

Startup: Bolt

Industry: Mobility, Ride-hailing, Food and grocery delivery
Funding: €628m SERIES F
Investors: Sequoia Capital, Fidelity, Tekne Capital Management, Whale Rock Capital Management, Owl Rock Capital Partners

Startup: Veriff

Industry: AI-powered identity verification, KYC solutions
Funding: €92,5m SERIES C
Investors: Accel, Tiger Global Management, Alkeon Capital, Ivp

Startup: Ready Player Me
Industry: Multi-game Avatar platform
Funding: €51.8m SERIES B
Investors: Riccardo Zacconi, Andreessen Horowitz, Sebastian Knutsson, Justin Kan, Endeavor

Startup: Cryptosnacks
Industry: DEX iGaming Token
Funding: €46,2.0m LATE VC
Investors: GEM Digital

Startup: BITLEVEX
Industry: BTC derivative platform
Funding: €46,2.0m EARLY VC
Investors: GEM Digital

Startup: Glia
Industry: Digital customer communication
Funding: €41.6.0m SERIES D
Investors: Insight Partners, RingCentral, Wildcat Capital Management

Startup: Starship Technologies
Industry: Robotics, Autonomous delivery
Funding:€38,86m
Investors: NordicNinja VC, TDK Ventures, Goodyear Ventures, Taavet + Sten

Startup: Skeleton Technologies
Industry: Supercapacitor energy storage
Funding: €37.6m SERIES D
Investors: EIT InnoEnergy, Taavet Hinrikus, Nidoco group, Taavet + Sten, Bengt Wahlqvist

Startup: Eurora Solutions
Industry: AI-based trade and compliance solutions
Funding: €37.0m SERIES A
Investors: Change Ventures, Connected Capital, Marko Lastik, Equity United

Startup: 3Commas
Industry: Crypto-asset management tool
Funding: €34.23m SERIES B
Investors: Target Global, Dmitry T., Alameda Research, Jump Capital, Jump Crypto

Startup: Katana
Industry: Manufacturing and inventory software for scaling businesses.
Funding: €36M
Investors: Northzone, Lightrock, Atomico, 42CAP, Sergei Anikin, Sten Tamkivi, Ott Kaukver

Startup: Monese
Industry: Digital banking option that provides mobile-only, multi-currency accounts in countries across the European Economic Area.
Funding: €35M
Investors: HSBC

Some of the biggest 2023 funding rounds were as follows: 

Startup: ID.me
Industry: Security, Identity & Access
Funding: € 122.1 million (Series D)
Investors: Scout Ventures, CapitalG, FTV Capital, Moonshots Capital, Viking Global Investors

Startup: Skeleton Technologies
Industry: Energy, Transportation, Vehicle Production, Energy Storage
Funding: €54.0 million (Late VC)
Investors: Marubeni, Siemens

Startup: hi
Industry: Not-for-profit Financial Services
Funding: €27.7 million (Early VC)
Investors: Animoca Brands

Startup: Rangeforce
Industry: Security, Public Safety
Funding: €18.5 million (Series B)
Investors: KPN Ventures, Cisco Investments, Paladin Capital Group, Energy Impact Partners (EIP), LAPA CAPITAL

Startup: Binalyze
Industry: Security, Enterprise Software
Funding: €17,5 million (Series A)
Investors: Molten Ventures, Citi Ventures, Cisco Investments, OpenOcean, Deutsche Venture Capital

Startup: Sisu Tech
Industry: Gaming
Funding: €14.0 million (Early VC)
Investors: Level Up Entertainment, Jan Svendsen

Startup: Verge Motorcycles
Industry: Transportation, Vehicle Production
Funding: €12.0 million (Early VC)
Investors: Springvest

VC firms 

The Estonian investment landscape is full of both regional as well as foreign VC firms. 

According to Invest in Estonia (data from the year 2021), around 94% of venture capital in Estonia comes from foreign funds, the most active amongst them include: 

• Northzone (UK)
• Atomico (UK)
• Lightrock (UK)
• Andreessen Horowitz (USA) 
• Konvoy Ventures (USA)
• NordicNinjaVC (Japanese fund investing in in the Nordic-Baltic region) 
• Accel (USA)
• Bessemer Venture Partners (USA)
• Molten Ventures (UK)
• Sequoia Capital (USA)
• Insight Partners (USA)
• Creandum (Sweden)

Top Estonian VC firms

Superangel

Superangel, an Estonian early-stage VC fund, invests primarily in early-stage companies with ticket sizes from 100K € to 1M €. Their portfolio includes 100+ startups, with four reaching billion-dollar valuations. Recently, they have introduced their second, Nordic-based VC fund, with the aim to invest 50M€ in the builders of world-changing technology in the Baltics and Nordics. With their second fund, Superangel introduces tokens in its fund to reward everyone contributing to the portfolio startups' success.

Tera Ventures

Tera Ventures is an Estonian VC firm specializing in early-stage investments in digital startups with a global focus. With EUR 45 million in their 2nd fund, their mission is to support world-class founders in tackling significant challenges and becoming industry leaders. Tera Ventures takes a founder-friendly approach, offering more than just financing. They provide valuable time, effort, experience, and access to a global network, nurturing exceptional companies. While operating in Estonia and other countries, they remain industry agnostic, although they have a preference for Fintech and automation and have a decade-long history of investing in AI/ML. As a hands-on investor, Tera Ventures is committed to supporting portfolio companies through follow-on investments in their early rounds.

Trind VC 

Trind Ventures, a seed-stage venture fund, focuses on startups with a consumer or community component. They invest primarily in enthusiastic and motivated teams, software solutions benefiting end-users (B2C, C2C, consumerized B2B, marketplaces, platforms), and community-driven or consumer-driven business models. Their investments span Northern and Central Europe, and they are open to opportunities beyond. Trind Ventures offers initial tickets ranging from €0.1 to €1.0 million and has the capacity for follow-on investments of up to €5 million per company.

Change Ventures

Change Ventures is a venture capital firm that provides startups with pre-seed capital ranging from €100k to €500k, along with hands-on support to achieve product-market fit. They back ambitious teams with the potential to build global-scale businesses. Focusing on the Baltic region, they support local founders in Estonia, Latvia, and Lithuania, as well as the Baltic diaspora worldwide. Their main investment criteria revolve around the founders' grit and determination to succeed. Change Ventures makes early-stage tech investments of €25k to €300k in strong teams with promising technology or traction, particularly in the B2B sector. They are open to investing in pre-revenue or pre-product startups and are equally willing to join larger rounds at the seed stage. 

Specialist VC (previously named United Angels VC) 

Specialist VC specializes in offering pre-seed to series A investments to companies in various sectors, including B2B, SaaS, fintech, platforms, software-enabled hardware, and deep tech. Their preferred investment regions are Estonia, Latvia, Lithuania, Finland, and Ukraine. Specialist VC Primary and Secondary Fund II is supported by BIF 2, a joint initiative involving the Republic of Estonia, the Republic of Latvia, the Republic of Lithuania, and EIF.

Karma VC 

Karma VC, managed and led by Skype's original team members, is a venture fund that focuses on late seed and Series A investments in ICT startups across Europe and the Baltics. Their main focus lies in the deep tech sector. They are committed to guiding entrepreneurs in all aspects of growth, including commercial, strategic, and technical aspects. They mostly seek early-stage companies with innovative ideas backed by unique technology, customer traction, and global ambition. 

Metaplanet 

Metaplanet is an early-stage investment firm making long-term bets on contrarians and leveraging the knowledge and network across sectors. It backs mission-driven founders working on positively disruptive deep technologies. The firm seeks to invest in artificial intelligence, biotech, cryptocurrency, healthcare, and transportation technology sectors.

Startup Wise Guys

Startup Wise Guys is a highly active venture investor and accelerator with a strong presence in Europe. Since 2012, they have leveraged their expertise, skills, and funding to propel numerous early-stage startups toward significant growth. As a leading investor in underserved markets, Startup Wise Guys focuses on identifying and investing in exceptional technical B2B founders at an early stage. Through their acceleration program, which has been running since 2012, they fast-track the growth of these startups. Additionally, they make follow-on investments in top-performing teams from their accelerator program. Diversifying their investment portfolio across hundreds of companies in Europe, Africa, and other regions, Startup Wise Guys allocate funds to various verticals, including SaaS, Fintech, Cybersecurity, Cleantech, Industry 4.0, and Extended Reality.

Thorgate Ventures

Thorgate Ventures, as the seed-stage venture capital arm of Thorgate, focuses on investing in scalable B2B solutions, offering up to €50,000 in funding, accompanied by personalized mentorship, access to hands-on developers, and a robust network of passionate advisors. Rooted in their own experience as startup entrepreneurs, Thorgate Ventures aspires to leverage technology to make a positive impact on the world, seeking out teams that embody a harmonious blend of strong culture, passion, rationality, and execution power. Their extensive startup know-how allows them to provide practical guidance and valuable support, cutting through unnecessary "fluff" to empower startups with the right resources, network, and advice for success.

The Better Fund

The Better Fund is a purpose-driven venture capital fund focused on promoting ESG principles and empowering female founders and gender-balanced teams in the BaltiNordics and CEE region. By providing essential access to capital, they enable the scaling of world-changing ideas. With a strong commitment to power women-led innovation across Central & Eastern Europe, The Better Fund recognizes the exceptional revenue generation and capital productivity of women-founded startups. Their investment focus extends to scalable projects with global potential, emphasizing sustainability, smart technology usage, and gender-balanced founding teams. While remaining industry agnostic, they prioritize technology, wellness, environment, and education sectors, reflecting their mission to foster a brighter, more inclusive future.

Taavet Sten 

Taavet Sten is a partnership that brings together two highly influential Estonian investors, Taavet Hinrikus and Sten Tamkivi, whose impact on the Estonian startup ecosystem cannot be underestimated. With a strong track record, including the co-founding of Skype, Wise, Teleport, and several other companies, they have become key players in the tech industry. Currently, they manage an extensive portfolio of tech companies and VC funds, while also leading early-stage tech deals with Plural Platform. Their significant contributions to the startup community undoubtedly earn them a spot on this list.

Newly raised regional funds: 

• In February 2023 VC and accelerator Startup Wise Guys made the first, €25M closing of its €45M fund. The firm will back early-stage startups across B2B SaaS, Fintech, cybersecurity, XR, and sustainability spaces throughout CEE, Italy, Spain, and Africa.
• In September 2022, Trind Ventures opened its second €55M fund, which is to be deployed to invest in startups from Northern and Central Europe, developing B2B and C2C software solutions.
• In the last quarter of 2022, Female founder-focused VC The Better Fund registered the fund and kickstarted the fundraising. The team will back CEE companies within any sector or industry that have a special preference towards female founders building within wellness, environmental, edtech and emerging technology spaces. 
• In June 2022, Superangel announced its new €50M fund, planning to invest in deep tech startups in the Baltics and Nordics. Additionally, it introduced tokens to reward those contributing to the success of the portfolio startups. 
• At the beginning of 2022, Specialist VC had announced a new €50M fund to focus on pre-seed to seed startups across the Baltics and Ukraine/Finland. The core interest areas of the firm lie within B2B, SaaS, fintech, platforms, software-enabled hardware, and deep tech but the team is not opposed to proposals outside of their scope.

Startup Organisations

Estonian Business Angels

Estonian Business Angels Network (EstBAN) serves as an umbrella organization, uniting business angels and groups seeking investment opportunities in Estonia and its neighboring regions. With over 10 years of experience in growing the local startup ecosystem, EstBAN's mission is to expand the quantity and quality of seed-stage investments. Its members consist of angel investors, entrepreneurs, and business leaders. Supported by an extensive network of partners, including local and international business angel organizations, venture capitalists, startup ecosystem key players, and advisory services providers, EstBAN focuses on supporting seed and early-stage startups in sectors like Fintech, Business Software & HR, HealthTech, CleanTech, DeepTech, or SpaceTech. They provide investment capital ranging from 20k€ to 500k€ and seek passionate teams with disruptive new ideas, excellent growth potential, and a clearly articulated exit strategy.

Estonian Private Equity and Venture Capital Association

The Estonian Private Equity and Venture Capital Association (EPVCA) is a proactive organization focused on managing industry public relations, increasing awareness of Private Equity and Venture Capital, and fostering professional growth. They promote the implementation of professional standards, advocate for regulatory changes, and publish industry statistics in Estonia. EPVCA actively enhances international cooperation, attracting investors and facilitating valuable networking opportunities for industry players and decision-makers.

.Cocoon

Cocoon is a results-driven, 1-year self-discovery and company growth program designed to empower startup founders through personalized mentoring. It has originated in Estonia, with the aim to leverage the business challenges of startup founders and identify the links between them and individual perceptions, approaches, attitudes, and behaviors. Their experienced mentors skillfully guide participants, fostering a transformative shift in perception and heightened self-awareness. 

Estonian Founders Society 

Estonian Founders Society aims to boost the local startup community, foster direct relationships between founders, and empower young entrepreneurs. With a significant portion of its members already experienced startup founders, the society actively engages in daily information and experience sharing. The close-knit network often leads to joint startup ventures and collaborations, as many successful startups are founded by individuals who have previously worked together. In its pursuit to keep more startup headquarters in Estonia, the society advocates for a favorable business environment and government incentives. 

Science Park Tehnopol 

Science Park Tehnopol is a research and business campus with a mission of helping startups and SMEs to grow more quickly. They have a large and strong network both in Estonia and all over the world which is a great asset for up-and-coming entrepreneurs. They also assist them with resources and help in areas such as product development, innovation, resolving investment issues, or finding a key team member in the areas of GreenTech, HealthTech and ICT.

Startup Estonia 

Startup Estonia is a government initiative with a clear mission: to foster success stories of startup companies in Estonia. Through three crucial building blocks - access to human resources and capital, a vibrant and connected community, and a transparent regulatory infrastructure - their goal is to make Estonia one of the world's most favorable environments for startups. They achieve this by collaborating with the best of startups, incubators, accelerators, as well as private and public sectors.

Tehnopol

Tehnopol Science and Business Park, the largest science park in the Baltics, aims to support state-of-art technology entrepreneurship in Estonia and help it expand to the world. Their vision is to make the Estonian economy more sustainable by helping startups and SMEs to grow more quickly.They provide enterprises with everything they need for growth, development, and real-life test environments – from modern office spaces to top-notch business counseling and innovation testing.

Latitude59

Latitude59 is the flagship startup and tech event of e-Estonia - the world’s first digital society. During the international conference, which happens in Tallinn, they bring together the Baltic, Nordic, and Northeastern Europe’s tech ecosystem and provide a platform for entrepreneurs, investors, and leaders to learn, connect, and network.

Accelerate Estonia

Accelerate Estonia is a government-led innovation lab aimed at implementing impactful moonshot ideas for systemic change. Estonia's history of swiftly embracing audacious concepts positions it as an ideal testing ground for national-scale innovations. Launched by the Ministry of Economic Affairs and Communications and Science Park Tehnopol, AccelerateEstonia fosters collaborative efforts between the private and public sectors to enhance the business and regulatory environment, enabling the more efficient creation of new business models, products, and services.

Tartu Science Park

Tartu Science Park, the innovation hub of South Estonia, is dedicated to nurturing start-up companies and propelling them into a global success. With a 25-year track record, they actively support business innovation by fostering strong networks with universities, public, and private sectors, locally and globally. Their focus lies in empowering research and technology-intensive enterprises, providing essential infrastructure and business development services in Southern Estonia

Accelerators and Incubators

Startup Wise Guys

Founded in Tallinn in 2012, Startup Wise Guys has helped over 800 founders elevate their startups. With a success rate above 77%, it was named Best Accelerator at the 2023 Global Startup Awards. The accelerator manages programs in SaaS, Fintech, Cyber, Sustainability, Extended Reality, Proptech, and Web3. Startups can receive up to 100K EUR convertible investment and benefit from a hybrid program with 2 onsite modules. Focus areas include Company Building, Sales and Marketing, Fundraising and Pitching, and Product Building. 

Buildit

Buildit is an accelerator that is based in Latvia but is very active also in Estonia. It focuses mainly on groundbreaking hardware ideas that are going to shape the future, from the fields of IoT, mobility, smart living, health tech, or energy. The program includes three stages: Build Up focused on establishing legal entities and networking, Build It which stands for the main part of the program as it is concentrated on close work with mentors, idea validation, design thinking, product development, marketing, and many others, last but not least, Build Out which is a follow-up program for teams that have demonstrated the biggest progress and engagement as it involves support with fundraising and ongoing use of workspace together with Buildit facilities. 

Ajujaht

Ajujaht is the leading non-equity startup accelerator that admits 20 teams from various sectors every year to help them develop their ideas with boot camps, training, experience stories, personal mentoring, and social events that allow participants to get to know the startup ecosystem a little better. Besides traditional workshops that cover all the subjects that a young entrepreneur should know, Ajujaht also runs a TV show consisting of eight episodes where the best teams have a chance to introduce the products and founders to the general market. What is more, the winning startup receives a 30 000 euro prize.

Prototron

The main goal of Prototron is to turn untraditional and innovative ideas into phenomenal prototypes and then grow them into successful businesses. The program itself is very inclusive as it allows both individuals with ideas as well as businesses with established projects to apply. Its main focus is on the green and cleantech sectors, especially energy, agriculture, transportation, and forestry. The program consists of mandatory activities among which we can distinguish seminars, mentor days, the art of public speaking workshops, expert panels, and final pitching sessions for the best 10 out of 50 startups.

Tallinn Creative Incubator

Tallinn Creative Incubator offers a tailor-made development program for design companies that are registered in Estonia and have less than 2 years of operating history. Founders are expected to be highly-skilled professionals in the selected domain,  have service with a distinct value proposition, and validated market demand as well as the ambition of growing globally. The program itself lasts for 24 months and comes with personal business consulting, mentoring sessions, and workshops with a half-year goal establishment. What is more, all participants are encouraged to visit fairs and conferences taking place during the program which allows them to enlarge their network and gain knowledge from more experienced entrepreneurs.

Tallinn Business Incubator

Tallinn Business Incubators (TBI) is a hub for creative start-ups which helps to accelerate the growth of young enterprises and supports their expansion to international markets. It unites Tallinn Creative Incubator and Tallinn Design House, offering entrepreneurs a tailor-made 24-month development program, including a personal business consultant and business mentors. TBI has contributed to the success of over 500 companies.  

Tehnopol Startup Incubator

The Tehnnopol incubation program provides six months of support to early-stage technology startups in Estonia, from the idea level to MVP. The program is focused on helping startups build a sustainable business model, create customer-centric products, reach their first clients through sales, marketing, and PR management plans, and establish connections with investors and business partners. The program is free of charge for selected startups, but it requires 2% equity from each team to foster strong relationships between mentors and founders. Tehnopol is particularly interested in startups with ambitious plans to disrupt the market. The program's objective is to help startups succeed, and the equity model aligns the interests of Tehnopol with those of the founders

Beamline Accelerator

Bealine is one of the only accelerators in the region with a laser focus on cleantech. Their 3-month industry-specific mentorship-driven growth program provides startups with an in-depth business foundation, a worldwide cleantech network & 25K€ cash. Their mission is to help cleantech entrepreneurs develop the most viable business model, find their go-to-market strategy and make that big vision a reality by connecting startups with further potential investors. 

European Space Agency Estonian Business Incubator 

The European Space Agency Estonian business incubator (ESA BIC Estonia) collaborates with entrepreneurs to transform space-related business ideas into commercial start-up companies. ESA BIC is part of a European-wide network of 20 space incubators across 18 countries, fostering the growth of 140 new companies each year. ESA BIC offers access to ESA expertise, knowledge, and data, along with laboratory and testing facilities provided by participating universities. The Incubation Centre teams receive hands-on business development support. Additionally, selected startups receive 50,000 euros to develop and test their product or service

Coworking spaces

Spring Hub

Spring Hub offers a flexible workspace and community for like-minded entrepreneurs, providing meeting rooms, a café, a lounge, and separate silent and teamwork areas. All office spaces are equipped with Wi-Fi, printing capabilities, and coffee and tea stations. Moreover, Spring Hub hosts various events, challenges, seminars, training sessions, and work-related consultations to enrich the entrepreneurial experience. 

Metro Plaza Centre

Made of a glass facade, Metro Plaza Centre is located at the heart of the city. The center is easily accessible by public transport, bicycle, or foot. Metro Plaza Center earned a BREEAM Green Certification, which proves it has passed the environmental impact assessment method. The seven-floor building contains offices with natural light, retail spaces, spas, sports clubs, and underground car parking. 

Mobispace 

A place for startups, freelancers, and entrepreneurs, Mobispace offers 24/7 access to its startup area full of wifi, utilities, meeting rooms, event space, kitchen, sauna, shower, phone booths, and more. It is also possible to use optional services, like accounting or Mobi VR lab. Moreover, one can use an accessible 9 to 17 hot desk, meeting rooms, a roof terrace, and bike storage.   

Lift99

Lift99 is aimed at startup founders, freelancers, nomads, and entrepreneurs. In its two locations, Telliskivi Hub and RED Hub, Lift99 offers a variety of working spaces, including team spaces with wifi, skype rooms, personal lockers, ergonomic chairs, beanbags, and standing desks. Furthermore, the space offers online membership, with access to advisors and investors' network. In addition, Lift99 lies in the hippest district in Tallinn, with a parking lot, market, railway station, and restaurants nearby. 

Palo Alto Club

Palo Alto Club offers more than just a coworking space; it caters to startups and freelancers by providing private rooms, hot desks, and meeting rooms. The club boasts in-house experts specializing in law, HR, and finances, offering invaluable advice and support. Early-stage startups particularly gravitate towards Palo Alto Club due to its distinctive atmosphere, 24/7 accessibility, fully-equipped kitchen, private call booths, and complimentary hot beverages. Additionally, the club hosts a variety of engaging events and provides exclusive deals in collaboration with its partners. Interestingly, Palo Alto Club was founded by several startups that received support from the esteemed Estonian VC firm, Superangel.

Workland 

Workland centers can be found all across the Baltics. Located in the old town or business districts in Tallinn, Riga, Vilnius, and Kaunas, each center has its own atmosphere and style. Workland offers access to private offices, dedicated and hot desks, virtual offices, and meeting and podcast rooms. There are four Workland offices in Tallinn: Hobujaama, Vabaduse, Maakri 19, Maakri 25, and one more office, Fahle, which is about to open. Moreover, it is possible to acquire the Workland membership, which opens access to its network and community events and allows one to work from any Workland center within the Baltics. 

Tehnopol

Tehnopol has already been mentioned a few times in this article, in regards to its several functions: incubation, business and innovation services, event organization, and a coworking space. Its smart research campus is located next to the Tallinn University of Technology, Microsoft, Fujitsu, Cybernetica, and other tech companies. Tehnopol coworking space offers an office, development, and lab space, production facilities, free onsite parking, and furnished space for meetings, seminars, and conference rooms for up to 240 people. Additionally, one can join a sports club, use child-care services, visit various lunch spots, and more. 

FahleOffice

FahleOffice offers office spaces, meeting rooms, a virtual office, and a lounge. The coworking space is located in a former paper and pulp mill, Fahle House, close to the airport and the city center. FahleOffice's office spaces are available 24/7 and include a reception room, tables, a kitchenette, and free parking. Also, it has three meeting rooms with data projectors, board papers, light modes, adjustable air conditioning, and a lounge for presentations and receiving guests. Furthermore, FahleOffice collaborates with Business Advisor LLC, which provides management and financial consultations.

Startups to watch

Gelatex Technologies, which develops technology for producing nanofibers used in lab meat production, wound healing, and energy storage

LightCode Photonics, produces innovative 3D cameras that could transform how robots perceive the world.

Capitual, multi-currency digital bank that makes use of cryptocurrencies, enabling customers to send and receive bank transfers, pay bills directly from crypto-currencies, and manage personal finances.

Larrosa Music Group, consulting company, enables the understanding of new technologies that created Petal - a highly specialized in the music industry AI with specific training in key areas such as copyright management, artist promotion, and investment in music assets.

Rangeforce, developing a platform that enables companies to minimize cyber risk by improving cybersecurity skills and validating cyber readiness in action with realistic threat exercises.

Centurion_Invest, is a solution that provides high liquid, secured, decentralized investments and trading platforms mixed with investment plans to increase customers' profit by educating investors on the most advanced investment tools and dynamic techniques.

Roofit.solar, a company set up to implement the technology based on a combination of sleek black roof panels and high-tech photovoltaic cells in order to obtain integrated solar roofs, combining the traditional Nordic metal roof design with progressive solar technology.

Salv, an Estonian company that developed a solution to fight financial crimes with their innovative platform dedicated to banks and fintech who are in constant need to combat financial fraud.

Bloomcoding, a company registered in Estonia but actively working on the Romanian market, digitally teaches coding to children by building Virtual and Augmented Reality experiences.

Co-one, a data platform, provides fast & accurate data annotations for AI teams.

Vool, an EV charging solution that provides business and private customers with dependable, smart, and cost-effective charging.

Sunly, an independent power producer that builds solar and wind farms, which helps the current energy crisis. The company has recently secured a funding round in the amount of €200M from Mirova to build and expand its renewable energy portfolio.

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Sources:

World Bank data
Crunchbase, Pitchbook, Startup Blink, Global Startup Genome Ranking

https://startupestonia.ee/blog/the-first-quarter-of-2023-for-the-estonian-startup-sector

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