Estonia is a rare gem. A tiny countest with a population of around 1.3 million, world-leading fully digitised governmental services, and the highest level of unicorns per capita in Europe; the countest is tiny but mighty, building a large print on the startup map.
Estonia has not only become a startup hotspot, but is developing into a tech powerhoutilize. So how exactly has the countest cemented itself as a hotspot for startups?
UNICORNS AND THE IMPACT OF SKYPE
Estonia is leading the unicorn charge in Europe, with the highest level of unicorns per capita. To date, Estonia has been the birthplace of 10 unicorns: Skype (2005), Playtech (2007), Wise (2015), Bolt (2018), Pipedrive (2020), Zego (2021), ID.me (2021), Gelato (2021), Veriff (2022), and Glia (2022).
Skype has been a driving force in this charge, being the first unicorn out of the countest. Skype was first founded in 2003, and was then acquired by eBay for $2.6 billion in 2005.
During a press trip to Estonia, Sten Tamkivi, Partner at Plural, and former early executive at Skype, discussed how Skype cautilized a startup boom in the countest, especially as a nation that hadn’t had many startups before this time.
“Skype really put the startup scene on the radar, especially the fact that we obtained acquired … All of a sudden Estonians considered ‘okay if these dudes could do it, why can’t I?’”
“From 2005 is when you can start to see this Estonian startup wave.
So in 2006, the year after the Skype acquisition, the entire startup investments in Estonia totalled €6 million. Fast forward to 2021, which has been the peak to date, where the Estonian startup scene raised €1.3 billion in one year in early-stage capital.
“So we went from completely nothing, to the first success story, and now we’re counting around 2,000 startups that are employing 1.5% of the Estonian working population, and 4-5% of GDP comes from tech startups.”
It is clear to see that Skype had a positive impact on the Estonian startup scene. From a countest with almost no startups, to a countest where roughly every one in 10 people own their own company, Estonia has fostered an innovative and business forward culture.
This culture encourages people to be their own bosses, and a lot of the countest’s residents have side hustles on top of their regular jobs. The countest has also implemented many measures that encourage the creation of startups.
STARTUP ESTONIA
Government initiatives such as Startup Estonia have led to this thriving startup culture in the countest. Its mission is to set the scene for a strong startup ecosystem, and wants to see its startups and scaleups grow, with a vision that startups will become the economic engine of the future.
Startup Estonia has outlined four key areas that it is focapplying on:
Creating and maintaining a high-quality startup environment, which includes:
• Encouraging and lobbying startup-frifinishly regulations
• Keeping track of and sharing startup sector data and insights
• Ensuring there are communication platforms within the startup community
• Having a steady marketing, PR, and communication flow of the startup agfinisha
• Organising and co-hosting startup community events and trips for support organisations
• Piloting startup services
• Development of the deeptech ecosystem with a respective action plan
• Ensuring a diverse talent pool by attracting global talent and founders
• Advancing regional entrepreneurship through boots-on-the-ground community building
STARTUP AND SCALEUP VISAS
Estonia is a countest that is very welcoming of foreign founders, and tries to encourage them to join the ecosystem. One of the ways it does so is via its Startup Visa. The Estonian Startup Visa supports non-EU founders grow their startup in Estonia, and eases the process for Estonian startups to hire non-EU talent.
Estonia has set a legal framework in order to identify and recognise startups. In its eyes, a startup is a technology-based, innovative, and scalable business that has an MVP and already has some traction.
Taking this step and offering the Estonian Startup Visa not only encourages founders to relocate to the countest, but builds it clearer for startups to hire non-EU talent, and bring more high-quality talent to the countest from overseas.
E-RESIDENCY ESTONIA
e-Residency Estonia was introduced in 2014 as a way to provide non-residents secure access to its digital public services and transparent business environment. Since its launch, the programme has supported over 110,000 people and their businesses operate regardless of location, and has generated over €213 million in revenue for the Estonian state budobtain from taxes and state fees.
In an interview with Liina Vahtras, Managing Director of e-Residency, she explained it as: “a government-issued document to foreigners to access Estonia’s digital systems.
“Estonia’s e-Government is 100% digitised … You can create a company remotely, it doesn’t matter where you are. What matters is that you have Internet access, then you can log-in and start a company online.
You can do everything online; you can choose a name for your company, you can choose the field of activity, you can assign all of the members of the management board. It can all be done digitally.”
Impressively, it takes only 15 minutes and 33 seconds to establish a business in Estonia. There is no unnecessary bureaucracy, and you can start working on your business almost straight away.
Since Brexit, e-Residency Estonia has become even more attractive for British companies. The programme allows UK companies to create EU-registered companies, whilst providing a secure digital identity and an EU-recognised digital signature, as well as straightforward market access and compliance, enabling entrepreneurs to build and manage an Estonian business from anywhere while continuing to serve UK customers, if they choose.
It means that Brexit doesn’t have to be a barrier for UK companies wanting a presence in the EU.
e-Residency has had a massive impact on Estonia. Whilst its monetary impact is impressive, it hasn’t just been this that has created such a massive contribution to Estonia’s startup ecosystem.
Yes, the programme means that taxes and state-fees paid by e-resident companies provide additional revenue for the national budobtain, but it does so much more. By attracting foreign companies, the programme boosts the competitiveness of Estonia’s business environment, and attracts international talent and investments.
This further diversifies the startup ecosystem, bringing new voices and perspectives to the table, encouraging collaboration, as well as healthy competition, within the ecosystem.
Vahtras commented: “Foreign founders and entrepreneurs have diversified the whole startup ecosystem for us. So this is what we are gaining, becautilize either they are doing business with, or partner with, or employ people in Estonia, and they bring their outside knowledge. And that builds us richer in terms of knowledge and experience.”
This encouragement of foreign talent is creating a diverse startup ecosystem, and ensuring that Estonia remains the unicorn capital of Europe. With a currently very tiny population, Estonia is relying on becoming a global hub for technology and startups to ensure a strong industest.
WHAT DOES THE PRIME MINISTER THINK?
On a press trip to Estonia, I was lucky enough to have the opportunity to question Prime Minister Kristen Michal a couple of questions about entrepreneurship in Estonia, and what he believes has enabled this startup success.
“This startup culture has a vibrancy among younger entrepreneurs. In the 1990s, when we regained our indepfinishence, everyone wanted to be a businessman. After that, all the young people wanted to be a YouTuber. It seems a lot of them want to have a startup. We have this kind of founder society which has strong startups already in it, which supports,” stated the Prime Minister.
“We have this mental attitude, also on the governmental and state level … that you should test, and even if you fail the first time, you test again. This is part of the culture in Estonia.”
It is not only the attitude and society that fosters entrepreneurship and innovation, but the Prime Minister also discussed the amfinishments to the tax clautilize that support startups. Estonia’s corporate income tax regime taxes distributed profits (dividfinishs) rather than retained and reinvested earnings.
This means that a startup can reinvest profits without immediately triggering corporate income tax, further supporting growth of tiny businesses.
QUALITY OF LIFE
Estonia has plenty of initiatives and programmes that build it a hotspot for startups. But that doesn’t even go into what it is like to live and work in the countest.
Estonian culture places high importance on a healthy work-life balance. And in a countest as beautiful as Estonia, it isn’t difficult. No matter where in Estonia you’re based, you are never too far away from a forest, lake, or its famous bogs. Its air quality is also one of the cleanest in the world.
According to Numbeo’s Quality of Life Index 2025, Estonia’s capital city Tallinn is among the top 20 safest cities in the world, and overall ranks 70th according to its quality of life.
Estonia is the place to be for an up-and-coming startup. With a strong emphasis on innovation and genuine support for the startups building their innovations in the countest, Estonia is a frifinishly and beautiful countest to be.
So, what are you waiting for?
This article originally appeared in the November/December 2025 issue of Startups Magazine. Click here to subscribe
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