Apr 26, 2023
Estonian Startup Visa in 2022 - success amid true challenges
Mar 21, 2023
Estonia has long been a popular destination for startups and entrepreneurs from around the world, thanks in part to its supportive ecosystem and startup-friendly policies. In 2022, the Estonian startup scene continued to evolve, with the launch of the new Scale-up Visa and an increasing number of employees relocating to Estonia. However, there were also some notable changes in the startup visa statistics, with fewer founders coming to Estonia and some of the top countries falling out due to the ongoing war in Ukraine. Let’s look at the latest Startup Visa statistics and explore what they mean for Estonia's startup ecosystem!
Startup StatusThe Startup Visa program helps non-EU startups relocate to Estonia, and local startups can use the program to hire talent from outside the European Union. Thus, companies with innovative, repeatable business models and fast global growth potential can apply for Startup Status and kick off their Startup Visa process.
In 2022, 667 startups applied for Startup Status, 27% of which were successful. The drop in successful candidates shows continuous interest in the Startup Visa program. The increased popularity of the startup sector and variations in startup definitions worldwide have caused an increase in the rejection rate. The Startup committee has been working hard to ensure that Startup Status acts as a validation for startups entering the ecosystem.
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.Startup committee* - consists of 7 organisations: Startup Estonia, Garage48 Foundation, Superangel VC, Tehnopol, Estonian Founders Society, Startup Wise Guys, and Estonian Business Angels Network.
Startup Visa for FoundersSince the Startup Visa program launched in 2017, it has facilitated the issuance of 5454 temporary residency permits and visas. Of these, 977 were granted to startup founders, with 109 issued in 2022. There has been a significant decline of 36% in international founders relocating to Estonia compared to the previous year. This decrease is largely due to the ongoing war in Ukraine and the resulting sanctions that prevent the issuance of new visas and residency permits to citizens of Russia and Belarus.
Of the 977 founders, who have been granted the right to relocate their businesses to Estonia with the help of a Startup Visa, 267 have established registered companies in Estonia, contributing significantly to the Estonian economy.
Foreign-founded startups have had an increasingly positive impact on the economy, paying an impressive 119% more governmental taxes than in 2021, totalling 9.5M EUR in 2022. Additionally, the turnover of these startups in 2022 was a remarkable 84M EUR, representing a substantial 125% increase compared to 2021! The biggest revenue was generated by Glia, Vertigo Games and Atomic Wallet.
*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.
Startup founders that have relocated to Estonia with the help of Startup Visa keep high standards for their employees as well - 53% of the employees work as IT professionals, and the average gross salary in those startups was 2.1 times the Estonian average salary, totalling 3240 EUR.
The top countries for founders since the beginning of the programme in 2017 to today are Russia, Iran, Turkey and India. The main sectors those founders operate in are Business Software & HR, AdTech & Creative Tech, Fintech, and Consumer Products & Services.
Startup Visa for EmployeesThe Estonian startup scene had a stellar year in 2022, with record investments raised and unprecedented taxes contributing to the Estonian economy. Yet, behind every successful startup, the people make the difference. One of the key drivers behind the success of Estonian startups is their early focus on scaling, with diversity being at the core of their teams' global understanding. The Estonian Startup Visa program has played a crucial role in enabling many startups to achieve this diversity, and its impact is evident in the program's 2022 results.
Last year, the Startup Visa program facilitated granting 1315 visas or residency permits to foreign employees, comprising 606 temporary residency permits and 709 visas. These figures represent a 42% increase from the previous year and bring the total number of foreign employees authorised to relocate to Estonia through the program to 4477. These impressive results highlight the Startup Visa program's critical role in enabling Estonian startups to tap into the global talent and build diverse teams that can drive growth and success.
The top Countries for Employees relocating from 2017-2022 were Russia, Brazil and Ukraine. Here we expect a change in the upcoming years since Estonia has stopped issuing new visas and temporary residency permits to Russians as an ongoing sanction is still imposed. Employees from Brazil seem to be substituting that gap.
Startups' Success Using Estonian Startup VisaStartups that utilised the Startup Visa program in 2022 achieved remarkable success. They generated a turnover of 1.6 billion EUR and contributed 136.4 million EUR in governmental taxes to the Estonian economy. The biggest employers in 2022 that used Startup Visa for hiring talent were Wise, Bolt, Swappie and Veriff.
Scale-up visa launched
We are excited to welcome to our family the brand new Scale-Up Visa! Launched in January 2023, this visa program is designed to help startups that have been in operation for over 10 years but are still rapidly growing. With the Scale-Up Visa program, these companies can continue to grow and hire talent from outside the EU on preferential terms.Technology-based and innovative companies with fast global growth potential that meet the following criteria are eligible to apply for the Scale-Up Visa program:
- Have at least 50 employees in an Estonian business entity
- Have paid at least 1 million EUR in employment taxes in the last year in the Estonian business entity
- Have shown a growth of at least 20% in employment taxes paid in the last 3 years
Like the Startup Visa program, we have compiled a list of eligible companies.
However, if your company is not listed, contact Startup Estonia for more information on how to apply! The evaluation is valid for 5 years, and as long as the growth is happening, the process can be repeated over and over!
Helise Johanson, ReloEst comments
From the immigration perspective, the startup visa program has been one of the most effective enhancements implemented to the Aliens Act in the last 8 years. It has helped many startups grow and scale over the past years. The program is most beneficial when it comes to hiring non-EU nationals for non-IT roles like marketing, support, finance, KYC, etc which are inherently essential to ICT/startup companies.
As the startup status is issued for a limited period, the new scale-up visa program allows companies that meet the criteria, to grow at the same pace without worrying about the Estonian immigration quota for non-IT positions. What it means in practice is that startups that have shown growth and bring value to the Estonian economy and reputation, can hire non-EU nationals for any role without an immigration quota and with lower minimum salary criteria that have been set for other industries. This allows companies to continue hiring talent without major adjustments after the startup visa benefits end.
In order for the scale-up visa program to reach its full potential from the process perspective, we are hopeful for some further changes in the Aliens Act that would allow a faster short-term employment registration process and an exception for required financial means in the visa process.
In SummaryIn 2022, the Estonian startup sector encountered difficulties stemming from the ongoing war in Ukraine, which caused a decline in founders relocating with the aid of the Startup Visa program. Despite this setback, the program still managed to attract a record number of international talents to Estonia. Furthermore, the recently launched Scale-Up Visa is anticipated to provide additional support to the sector. In another positive development, Startup Estonia's team expanded with the addition of a new member to the Startup Visa team, Kille-Ingeri!
Startup Visa Team is expandingHi!
I’m Ingeri, and I’m thrilled to be the newest member of the Startup Visa team. You may know me from my previous work at the International House of Estonia. I’ve always been passionate about showcasing how amazing Estonia is. I’m excited to continue doing so while also assisting founders who are considering or have already moved to Estonia.
I'm looking forward to getting to know the global founders better, and I hope to meet many of you in person at the next Global Founders Meetup.
*Global Founders Meetup is a series of events organised by Startup Estonia dedicated to the Estonian startup ecosystem, enabling international founders to enter into the Estonian startup ecosystem.
Startup Estonia connects and supports Estonian startups and develops the sectoral ecosystem. The Estonian Business and Innovation Agency implement the Startup Estonia program. SmartCap implements the activities of the Startup Estonia research accelerator. The Startup Estonia program (project number EU50651) is financed from the resources of the European Regional Development Fund.The 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