December 2018
Index Venture, the international venture capital company, evaluated the business policies of different countries in the world and found that Estonia’s economic environment ranks the first place in terms of startup friendliness. Startups are less prone to fail here, and Estonia is perceived as an extremely attractive place for business thanks to its reasonable business policy.
“Estonia has often been highlighted as a country with an open economy, where innovation is considered normal. We do not have huge riches or a vast amount of mineral resources, so we have to be smart to survive, and this also manifests itself in large-scale business activities and the search for new niches in the global market. For Estonia, this predominantly means engagement in new technologies,” Minister of EntrepreneurshipRene Tammist explained.
“Estonia is a country where foreign talents are welcomed. We also have a unique and successful e-Residency programme, which became four years old this Friday. An important advantage of Estonia is the positive involvement of the private sector in the state’s policy-making and legislation. Startups have functioning cooperation forms with the state, and the companies themselves interact with each other closely. It raises awareness and also provides a decent base for supporting business activities both in the initiation phase and in the future. The business environment needs to be transparent and provide the necessary space for innovation, strengthen investment security, and increase the added value,” said Tammist.
High-tech small and medium-sized startups have a potentially high economic impact. According to the OECD analyses, high-tech startups will create 25–50% of the new high-paying jobs once they reach the growth phase. In the example of Estonian startups, it is known that startups create five times more and twice the higher paid new jobs (labour taxes per employee) than traditional companies of the same age.
At the same time, however, Estonian start-ups are facing similar problems all over the world. In the start phase, very few of them are able to succeed and reach the growth phase due to limited capital. “Although high-tech startups may be characterised by a higher percentage of failures, but this is offset by higher added value of breakthrough companies,” Minister Tammist added.
Though we have the same problems as for example in other European countries, we have been able to move forward with new ideas as a state and provide innovation with such an economic environment, where new solutions – such as sharing economy – can be successful with traditional solutions. “We already have good cooperation in the technology sector, so it is wise to use this to initiate new and ambitious projects. Now is the time to make the next move and find new big ideas, where Estonia can be a pioneer similarly to the e-Residency programme,” the Minister noted.
“Europe is only beginning to develop its artificial intelligence, quantum computing and electric transport technologies, while China has established itself the goal of becoming the world leading power in these extremely influential technology sectors already in 2025. The ambition of Estonian and European business policy needs to be directed towards shaping the future – this has also been emphasised by the 30 most successful European startups,” Minister Tammist said.
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