How has the Estonian Startup Visa built 3000 bridges in 4 years
Upon joining team Startup Estonia this January, I was excited to lead one of the best Startup Visa schemes in the world. I could not have imagined the journey that would lie ahead! I was astonished by last year’s statistics - despite closed borders and the pandemic, founders who used Startup Visa to relocate to Estonia paid 72% more employment taxes and also had a 46% increase in turnover than the previous year!
Startup committee* has continuously impressed me in the last two months, being extremely strict in terms of approving or rejecting applicants who wish to receive the Startup Status* for their startups. Those, who are not granted the startup status, receive great advice from the committee to improve their startups, as we hope to see them re-apply once they feel ready.
I am happy to see that the Estonian startup ecosystem is getting more diverse by the day - in 2020 alone, we received applications from 88 different countries!
Let's dig a little deeper into the numbers.
Everything Begins with Startup Status
If a startup wishes to relocate their founders and/or employees to Estonia, the first step is to apply for the Startup Status. Startup companies with innovative, repeatable business models and global growth potential are more than welcome to apply. Check out the FAQ of Estonian Startup Visa for more details. Estonian startups can also apply for the Startup Status to hire talent from outside of Europe. In fact, about 38% of the founders of startups that received the Startup Status in 2020, had Estonian citizenship.
There were a total of 685 applications for the Startup Status in 2020, 175 of which were successful. The overall success rate has dropped from 43% in 2017 to 25,5% in 2020, implying that the Startup committee is only issuing the status to companies who would benefit from the Estonian startup ecosystem and vice versa. We have received a total of 2778 applications since the start of the program, 761 have been successful.
Once a startup receives the Startup Status, the founders can apply for a 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 up to 5 years.
Startups that are already registered in Estonia and hold the Startup Status, can hire global talent with ease. They do not have to repeat the process until they mature and grow out of the startup stage.
Estonia treasures its global founders
Since the beginning of the Startup Visa programme in 2017, 697 founders have received the temporary residence permit (TRP) or a visa. That has resulted in 226 startups in the Estonian Startup Database, that have been registered by a founder holding a Startup Visa. Main activities of these startups are in the fields of Business software and HR (40), AdTech and CreativeTech (28), Consumer products and Services ( 23).
Looking at recent numbers, we do see the effects of the pandemic. In 2020, a total of 125 global founders received a TRP or a visa. That led to the creation of 25 Estonian-based startups. Both of these figures dipped from the previous year, as 54 startups were founded by 291 TRP or visa recipients in 2019. Out of founders who have received the Startup Visa, the highest number of people have relocated to Estonia from Russia, Iran and India.
It is wonderful to see how much value global founders are creating to the Estonian ecosystem. The amount of employment taxes paid, turnover generated and employees hired keeps on increasing. In 2020, 263 people were working in startups created with the Startup Visa, constituting a 32% increase from 2019. Moreover, those startups paid 2,6 million euros in employment taxes and their turnover was as high as 25,5 million euros. These figures increased by 72% and 46% respectively from the previous year.
Bridging the gap between talent and companies
The number of companies that have benefited from the Estonian Startup Visa keeps growing. A total of 2237 employees have obtained either a temporary residence permit or a visa since 2017. In 2020, 659 people moved to Estonia to work in local startups. 297 people received a temporary residence permit and 362 people obtained a short- or long-term visa. In 2020, the 3 countries with the most successful applications were Russia, Ukraine, and Brazil.
58% of the people who have relocated to work in Estonian startups have higher education and a majority of those people work as top professionals.
Our aim is to keep on nurturing the increasing demand for talent in the technology and IT field. Fortunately, according to an amendment from 19th of February 2021, an employee from outside the European Union can now be accompanied by their family members when they relocate to Estonia to work in IT or the startup sector. This will also apply when a person comes to work on the basis of a visa, returning things to the pre-Covid period. We hope this encourages more specialists to relocate to Estonia despite the turbulent times the world is currently facing. Estonian forests may not be as empty as they used to be, but they sure pack a quiet corner for everybody!
We are also looking for ways to further ease the process of settling in Estonia by collaborating with global founders to address problems they may face.
Avery Schader, the VP of Foreign founders at Estonian Founders Society and Founder & CEO of Modash comments: ‘’The value of the global founder community is that they bring a diverse set of perspectives on the problems faced around the world. Their unique backgrounds, homelands, working cultures and perceptions on the problems they solve is what makes them so powerful.
That said, founders from abroad face all the problems as locals, plus the immigration / integration related stuff. That has drawn our focus into building a community of founders sharing solutions to those problems. From how to acquire customers to what's needed to set up a bank account, how to deal with immigration paperwork and fundraising. The core goal is to bring those global founders "under one roof", make sure they have access to local connections and information they need to quickly get beyond the immigration process and focused on growing Estonia's next generation of unicorn companies. We are building the place for all founders in Estonia, from anywhere in the world, to get the help they need.
Global startups setting up shop here is the chance to build an ecosystem that can compete in a global market. Estonia will soon reach a stage where there are thousands of people who have been a part of the local startup success stories from the early days. Global founders and access to global talent will play a key role in keeping that talent here rather than helping Finland, Sweden, Germany etc. build the next hundred billion-dollar company.
More founders, more ideas, more success for us all to share in.‘’
Are you excited? I am. Turbulent times have given us the chance to look at things with a new perspective and I am confident that the best part of the journey is still yet to come!
Startup committee* - consists of 7 organisations : Startup Estonia, Garage48 Foundation, Superangel VC, Tehnopol, Estonian Startup Leaders Club, 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
Startup Estonia's program is financed by the European Regional Development Fund.
Sources: Startup Estonia, Statistics Estonia, Estonian Tax and Customs Board, Estonian Startup Database
Data crunched by: Moonika Mällo (Startup Estonia)
Blogpost written by: Annika Järs (Startup Estonia)
Graphs by: Kristjan Prik (MadeBY)