The Economist writes about Estonian techology and start-up scene, pointing out that not only Skype was born here. According to one estimate, Estonia holds the world’s highest number in start-ups per person—a sizeable feat considering that the country has only 1.3m people.


It takes just five minutes to register a company in Estonia. Entrepreneurs wishing to start a firm log in with their national electronic identity-card and a few clicks later the confirmation arrives by e-mail. That service and many other equally convenient electronic offerings are a big reason why Tallinn, Estonia’s capital, is now mentioned in the same breath as Berlin, London and even Silicon Valley.

International venture capitalists have taken notice and they are also investing. In May Transferwise, which offers a cheap way to send money across borders, announced that it raked in $6m in funding, with Peter Thiel, the co-founder of PayPal, being the lead investor. In April, a virtual fitting room, raised $7.6m. Nearly a tenth of the firms in the portfolio of Seedcamp, a noted group of European angel investors, hails from Estonia, including Erply, a fast-growing maker of web-based retail software, which raised $2.15m in May.

Some Estonian firms have already graduated from the class of start-ups. The best known is Skype. The technology behind the popular internet phone service, which Microsoft acquired in 2011, was developed in Tallinn. Playtech, one of the big names in online gambling software, is listed on the London Stock Exchange for nearly £2 billion.

Indeed, some argue that the boom is largely fuelled by government subsidies. But Estonia has managed to punch above its weight entrepreneurially because it has also been creative institutionally. Other countries have also set up state-funded venture capital firms, but Estonia’s SmartCap has been much more than a source of money; it educates investors and has given legal advice to start-ups.

And the government isn’t sitting on its hands. Programming is now part of the curriculum even in some primary schools. The country is relaxing its immigration rules, making it easier for start-ups to attract foreign talent. There is also an idea in the air of letting foreigners use Estonia’s digital identity system. They could then found a new company in the country from afar.

Another example to illustrate the points made by the Economist is the IT Academy, which is also funded by the Estonian state. The goal is not to just develop the IT related curriculums, but to also get as many (international) students interested by offering scholarships and tuition free courses, as well as creating placement and startup opportunities.

Estonia may be too small to become anything like Europe’s Silicon Valley, but it certainly has a shot at being the EU’s Delaware, the state where most of America’s technology firms are incorporated.

Read the full article from The Economist.


Read another article about The Economist explaining how Estonia became a leader in technology here.

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