The Q3 Results of The Cyber Technology Startups

The Q3 turnover of the cyber technology startups was 102.5 million euros, which is 91% more compared to last year's performance. The largest turnover was made by Veriff (50.5 million euros), followed by Messente Communications (13.3 million euros).

Kati Pärn, cyber technology project lead at Startup Estonia, said that the security situation in the world backs the growth and expansion of local startups to international markets. "Today we can see the development of cyber innovation and the sector growth everywhere in the world. The field of cyber security is moving ever more into the physical world and requires better cyber resilience; international conflicts and wider digitalisation in all areas of life are the reasons behind this trend. Estonia's digital history is globally known, and Estonia plays a leading role in the field of cybersecurity development. The NATO Cyber ​​Defense Cooperation Center operating in Estonia indicates the international competence of our country and contributes to the Estonian reputation as one of the flagship countries for cybersecurity " said Pärn.

Tehnopol Startup Incubator manager Kadri Tammai pointed out that the NATO Defence Innovation Accelerator for the North Atlantic (DIANA) opening in Estonia also creates further opportunities for cyber technology startups. "The new accelerator program helps to bring dual-use high-tech products and services to the market, gives access to international mentors and test centres across NATO and grants funding for up to 200,000 euros while opening potential investments from a billion-euro NATO investment fund. Equally important is the fact that the accelerator program opens direct communication with the largest companies in the field of defence.

68 Estonian start-ups have indicated cyber technology as their field of activity in the Startup Estonia database. 686 people work in cyber technology companies, which is 37% more than last year when 498 employees were working in the field. Demand for the workforce is insufficient likewise in other deep-tech areas. Salaries exceed the average of high-paid start-up companies - a wage of 3180 euros as a meridian. By Q3, the largest employer is Veriff, with 427 employees working for the identity-verifying startup. For the same period, cyber technology companies paid a total of 10.7 million euros in labour taxes. The highest paying were Veriff (6 million euros), RangeForce (1 million euros) and CybExer Technologies (0.9 million euros).

During the first three quarters of this year, companies in the field of cyber technology raised a total of 103 million euros in investments, which is 9% of the money involved in the Estonian startup sector. The biggest investment was made to Veriff, (89 million euros) and the second largest investment was raised by Binalyze (8.8 million euros). Jaana Metsamaa, VP of Product of Binalyze commented: “We see the cyber security industry growing faster than ever - on one side unfortunately the number of threats is ever increasing and on the other hand there's increasing pressure from regulations in the EU and U.S for companies to increase their cyber resilience and capabilities to respond. These tailwinds have led to a huge lack of skilled and experienced specialists becoming one of the biggest challenges in the industry. We see this as challenging for our customers and feel the pain when hiring ourselves.”

She added that to improve the situation we need to focus on three aspects that Binalyze considers while developing Digital Forensics and Incident Response product Binalyze AIR as well while growing their team.

“First, we need to reduce the number of manual tasks conducted by cyber security specialists and increase automation. Second, we need to focus more on cybersecurity skills across all levels of education. Cyber security education and mindset shouldn't be treated as an afterthought as it often is today. Third, day-to-day cyber security functions are often still very location-specific, companies and their tooling need to adapt to the new global way of working, and the new global talent market and make sure their cyber security departments are equipped to work globally and at scale.”

Pärn further elaborated: “Our biggest challenge today is to expand our national reserve of IT-savvy and knowledgeable people who can secure our cyber resilience and can solve crisis successfully. Cyber security-related know-how must be introduced from very early on and it has to be integrated into our education systems from the beginning. Good examples are competitions like Küberpähkel, Küberpuuring and Küberolümpia, where the young can develop their skills. The public and private sectors are carrying an important role here when cooperating to popularize and spark interest in cyber technologies, an excellent example is the ethical hacking competition Cyber Battle of Estonia, which again took place in October this year enjoying the presence of the Estonian President Alar Karis.” Pärn also added that developing the cyber technology sector with such examples is a national priority.

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: Signe Reinumägi (Startup Estonia)
The blog post was written by: Kati Pärn and Ettie Mikita (both from Startup Estonia)