But it seems that the days of garage-started tech giants may have ended, as entrepreneurs tend to work in different conditions nowadays. They are invited to join creative hubs all over the world, and as Silicon Valley is an obvious example of that, who would have thought that Estonian capital – Tallinn will also have a huge role to play?
Estonia is a relatively small Baltic country, which will be entering the fourth decade of independence from the Soviet Union in November 2021. It has a growing reputation as a non-stop working factory of fintech successes. That is all due to meticulous care from the government.
It is not a piece of common knowledge, but Estonians have bred such startups as TransferWise, Monese (both still having development headquarters in the homeland), Skype, and Bolt.
During the last decade, more than 1000 tech-based companies have been started here, 125 of those describing themselves as fintechs. And the numbers (and revenues as well) are constantly growing (of course the companies were heavily affected by the Covid-19 global crisis just like everyone else).
The foundations of the success
To explain the reason for the Estonian successes in the technology field, we must learn some Estonian language first. ‘Tiigrihüpe’ stands for the ‘Tiger leap’ and is the name of huge state investment in the education sector. Its purpose was to teach children to code and grant them access to the internet. The state services have also shifted, almost entirely, to the online sphere. Estonians are now getting their prescriptions, can vote, and pay taxes on the internet.
The state provides an e-Residency scheme, allowing non-Estonians to use different services – for example, to form a company, conduct banking, taxation, and a lot more. And all of that really seems to be paying off, as not only Estonians are really literate with technology, but they also have the drive to create something new on their own.
The international and local successes
The current bright and new Estonian crop is Veriff, employing about 230 people in New York and Tallinn. It was founded only in 2015, and the company’s specialty is AI-based protection services for businesses and customers. It is effective against online ID fraud and is getting more and more recognition worldwide.
Janer Gorohhov, the COO and one of the company’s founders, spoke about how the Estonian market is a great place to test some new services, products and solutions, before reaching international clients. In his opinion, that is the result of the common Estonian tech-savvy and the readiness to test new products.
Estonians are indeed really proud of their tech achievements, and that is no surprise, that they are mentioning Skype’s success a lot. Even Gorohhov does it and refers to it when asked about his homeland tech scene. He points out, that those successful start-ups begin with an idea and local (Estonian) money to support them, and only later use foreign capital to expand. Skype followed this pattern in the early 2000s. Actually, the company’s success was a kickstarter to other companies’ launch, as a lot of them were founded by Skype’s ex-employees.
Gorohhov also cites London-based TransferWise as an inspiration, as he claims it to be focused on the international market (although founded in Estonia). What impresses him, is the constant expansion of the offered services and following the international standards.
For more information about Estonian fintech companies’ successes on a global scale, please visit Ian Hall’s piece published by Disruption Banking. The author focuses more on the Estonian Investment Agency’s actions there and compares other Baltic countries to Estonia. He also analyses, how successful firms plan their next steps when expanding to foreign markets. To read his full article, enter the following link: https://disruptionbanking.com/2020/06/24/tallinn-stories-dispatches-from-estonia/