Startups Play a More and More Significant Role in the Economy of Estonia

Last week Estonian startup Veriff received 58 million EUR from investors. In the Coronavirus era, the need for non-contact facial recognition is very high both in banks and other institutions worldwide. Therefore the growth of Veriff was active.

“Today, we can identify more than 9,200 national documents in more than 190 countries, our largest and fastest-growing market is the United States,” said Veriff founder Kaarel Kotkas.

The company was able to fundraise a further 58 million euros from investors. The Estonian unit of Veriff employs more than 250 people, and it is planned to hire 150 more next year. Veriff grew from a startup.

“In the area of technology and startup, it is crucial to identify the problem and solve it ten times better than before and then enter the world market”, Kotkas explained.

Banks often do not finance startups. That’s why business angels come to the rescue, who are ready to support potential startups both financially and by the council.

Superangel venture partner Velojo Otsason was also involved in the creation of Veriff during the first round of investments. “I think we have something to celebrate. Our investors have something to celebrate,” he said.

Superangel portfolio companies made 37 investments in three years.

“In fact, Estonia has an excellent reputation in the world. Estonia is now considered the European Silicon Valley. This helps the company grow and raise funds. Many foreign funds are interested in Estonian companies,” Otsason emphasised.

Fundraising is the key

“There are five unicorns or startups in Estonia whose value exceeds the magic limit of a billion dollars. In relation to population, Estonia ranks first in the world,” said Otsason.

Most new Estonian startups are born in the Tehnopol startup incubator, from which 350 companies have grown over the years.

The opportunity to enter the world market made startups the fastest growing industry in Estonia. Last year the sector’s total turnover increased by 43 per cent and investment by a record 440 million euros. The startup companies employ 8,000 people.

“This, of course, is not the limit of the sector’s ambitions. If today the sector’s contribution to GDP is around 3%, then in the coming decades, the volume should increase approximately tenfold,” noted the incubator Tehnopol Kadri Tammai. In comparison, manufacturing accounts for 14 per cent of GDP.

The specialists of LKS Consult OÜ will be happy to assist with company registration in Estonia.