Estonia, a start-up nation

Innovative, forward-looking, Estonia is nicknamed the Silicon Valley of Europe, and it continues to surprise.

Who knows today that Skype, a software revolutionary in 2003, allowing users to make free phone or video calls via the Internet, was developed by three Estonian programmers alongside a Danish and a Swedish founder of the company.

The Skype effect has opened unexpected doors for this small country under Soviet rule for more than 50 years, and independent since 1991. This spirit of research and innovation has led to the emergence of a dynamic culture of entrepreneurship and investment, and has permitted the emergence of unicorns in this small country that became European in 2004.

Today the average time to create a start-up in Estonia is 15 minutes, and this process can be done from a computer thanks to the Estonian digital governance model. There are more than 400 start-ups (31 per 100,000 inhabitants) in Estonia, most of them specialized in FinTech (companies that use technology to rethink banking and financial services, such as Transferwise).

This growth of young digital companies is due to the choices of successive governments over the past thirty years, which have played on all aspects of society with:

• A very digital-oriented school education whose excellent level makes it possible to produce specialists in the country. In 2015 Estonia was ranked 3rd in the world in the PISA ranking and 1st in Europe.

Estonian Business School where education is mainly focused on business creation

• Very strong public-private relationships, with a public sector that constantly fosters the private sector to modernize and work with the well-being of the customer in mind. As the procedures are simplified, companies do not have to think about administrative or legal feasibility, but just about technical feasibility. The legislative power is even very adaptable to the reality of the market and its needs (possibility of adapting laws according to the needs of the private sector).

• An favorable and simple tax system for entrepreneurs with a tax rate of 20%, and a tax exemption for income reinvested in the company.

• But also the incentive policy of the E-residency since 2014 to attract foreign talent and investors. With the status of E-citizen obtained in a few weeks, foreigners have the possibility to create a company from their country, online, obtain a bank account or sign contracts. In 2019, there are more than 58,000 E-residents, but this status does not give them the right to vote online or to live on the territory.

Pictures of the Telliskivi district where many start-ups are located

All these policies have been the breeding ground for many start-ups now working with the largest groups to shape the digital world. These measures are not intended to enable Estonia to earn money but rather to extend its soft power* internationally to make room for itself.

*Licorne: refers to a start-up of new technologies with a value-added of at least one billion dollars and with very significant growth potential. (definition of the International Trade Dictionary)

**Soft power: refers to the power of influence, persuasion, of an entity (such as a State) over another actor. Influence is achieved by non-coercive means, and without any constraints. (definition of the International Trade Dictionary)