Estonian Startup Visa in 2021 - enabling success for our startup ecosystem
We stand with Ukraine
Last year and early this year has not been easy on many of us. We stand firm for Ukraine's independence, territorial integrity and sovereignty within its internationally recognized borders. Estonia is continuing to provide Ukraine with military support and humanitarian aid.
The Estonian Government, together with Ministries and Government Organizations, has put in effect different measures to help and assist Ukrainians currently in the territory of Estonia and those Ukrainians who might come towards Estonia. Ukrainian citizens can currently enter Estonia visa-free. Furthermore, the Police and Border Guard Board in Estonia confirmed that Ukrainian nationals in Estonia whose residence permits are about to expire may continue to stay in Estonia on a temporary basis. Read more about the possibilities for Ukrainian Citizens to enter and stay in Estonia. This information is also available in Ukrainian. The applications for the Startup Status from Ukrainian citizens are prioritized and results should come within 1-2 days. The Startup Status is a prerequisite for a startup visa or a temporary residence permit.
Regardless of another turbulent year, Startup Visa has been consistent in creating bridges: in total 4030 people have used the Estonian Startup Visa program in the past 5 years and a lot of hard work was done collectively. Let’s dig into it.
Starting it off with Startup Status
Startup Visa program helps non-EU startups relocate to Estonia as well as local startups can use the program to hire talent from outside the European Union. Thus, a company that has an innovative, repeatable business model with fast global growth potential can apply for the Startup Status* and kick off their Startup Visa process.
In 2021 total of 765 startups applied for the Startup Status, 16% of them successfully. The drop of successful candidates shows continuous interest in the Startup Visa program. The increased popularity of the startup sector and variations in startup definitions around the world have caused an increase in the rejection rate. Startup Committee* has kept up hard work and made sure that Startup Status acts as a validation to startups entering the ecosystem.
Once a startup receives the Startup Status, the founders can apply for a short or long-term visa or a temporary residence permit, depending on whether or not the company has already registered in Estonia. If the founders have already established a startup in Estonia, they are eligible to apply for a residency permit, which is valid for up to 5 years.
Startup committee* - consists of 7 organisations : Startup Estonia, Garage48 Foundation, Superangel VC, Tehnopol, Estonian Founders Society, Startup Wise Guys, Estonian Business Angels Network.
Startup Status* - a special status, which gives the eligibility for a company’s founders and employees to apply for the D-visa or temporary residence permit.
Global Founders are becoming superstars
Startup Visa program was initiated back in 2017 and since then 868 founders have received a temporary residence permit (TRP) or a visa. That has resulted in 250 startups in the Estonian Startup Database that have been registered by a founder holding a Startup Visa. The main activities of these startups are in the fields of Business software and HR (52), AdTech and CreativeTech (31), Consumer Products and Services (29).The effects of a pandemic are easing off and compared to 2020, more people were ready to relocate to Estonia. In 2021, a total of 171 international founders received a TRP or a visa. That led to the registration to the Estonian Startup Database 36 new startups. We are not yet on the pre-pandemic level but both of these figures overdid the previous year, as 25 startups were founded by 125 TRP or visa recipients in 2020. Out of founders who have received the Startup Visa, the highest number of people have relocated to Estonia from Russia, Iran, and India.
I am impressed by how much value global founders have added to the Estonian startup ecosystem. The amount of employment taxes paid, turnover generated and employees hired kept increasing. In 2021, 310 people were working in startups created with the help of Startup Visa, constituting an 18% increase compared to 2020. Moreover, those startups paid 4,2 million euros in employment taxes and their turnover was as high as 37,4 million euros. These figures increased by 55% and 47% respectively from the previous year.
Please note that turnover data is published based on the quarterly data from the Estonian Tax and Customs Board and therefore is not comparable with companies’ financial year annual reports data.
One of the biggest success stories of the Estonian Startup Visa program is the digital customer service provider, Glia. In 2021, Glia raised the second biggest investment of the year in Estonia - 64.1 M EUR. Just yesterday, Glia announced a new funding round - a Series D of 41 M EUR, that catapults the company’s valuation to over $1 billion. Glia is now the 10th unicorn in the Estonian startup ecosystem!
Carlos Paniagua, co-founder, and CTO of Glia comments: “I am extremely grateful of Estonia being so welcoming and supportive to expats like myself who feel at home here, and find a community, ecosystem, and systems like Startup Visa that provide with opportunities to contribute back to the country and the community by either starting new businesses or helping to build successful startups and scale-ups.”
International talent is helping Estonian startups to grow
One of the most important problems startups face not only in Estonia but also around the globe is the lack of people in the IT workforce. Startup Visa comes in handy to help ease that problem. In fact, 148 startups have applied for the Startup Status for the purpose of hiring talent and additionally, 124 Estonian startups have the Startup Status by default. Since the beginning of the Startup Visa program in 2017 a total of 3162 temporary residence permits or visas were granted. In 2021, 925 people moved to Estonia to work in local startups and top countries where the majority of the people relocated from were Russia, India, Brazil, and Ukraine.
Startup Visa has been an important tool that has enabled many startups to grow rapidly and this translates into numbers in a pretty epic manner!
Startups that used Startup Visa for employment paid in total 89.9 M EUR worth of employment taxes and generated 1.09 B EUR in turnover in 2021! According to the Estonian Tax and Customs Board statistics, companies that had the Startup Status employed in total 5677 people at the end of 2021. According to Statistics Estonia, ca 30% of the Estonian startup sector workforce are foreigners. Since over 82% of all the foreign talent in the Estonian startup workforce are non-EU citizens, we can estimate approximately 1400 people employed in 2021 were citizens of non-EU countries.
Future - scale-up visa in the making
We do have some great news for mature startups that no longer qualify for the Startup Visa program (companies older than 10 years) and are struggling with hiring international talent. In 2023 we hope to launch a new visa program for scale-ups, which similarly to the Startup Visa program helps Estonian fast-growing scale-ups to hire talent from outside the European Union.
Martin Villig, co-founder of Bolt and Estonian Founders Society comments: ‘’We see our startup ecosystem maturing and a lot of Estonian startups are now entering into a new phase of becoming scale-up tech companies. Those companies, including Bolt, are innovative, scaling globally and contributing significantly to the Estonian economy. In order to keep growing, scale-ups similarly to startups need talent. It is estimated that the tech sector will be 25-30% of Estonian GDP in 2030, bringing more direct and indirect wealth, joy, and pride to all Estonians. The scale-up visa is a useful tool to reach that goal.’’
I am so proud to represent the best Startup Visa program in the world and looking back to last year it has been heartwarming to work with such amazing people from the ecosystem! No matter how far from home I have gone, the Estonian startup ecosystem is something that seemingly everyone already knew about and wanted to be part of. Let’s treasure our community and not take the amazing people we have for granted and keep our arms open to new ones, wanting to join our startup family!Blog post was written by Annika Järs (Startup Estonia)
Data crunched by Signe Reinumägi (Startup Estonia) and Annika Järs (Startup Estonia)
Sources: Startup Estonia, Statistics Estonia, Estonian Tax and Customs Board, Estonian Startup Database, Funding of Estonian Tech Startups #estonianmafia