Sector insights — Startup Estonia

Despite the hectic times, we are still seeing growth in the Estonian startup sector in terms of number of employees, employment taxes paid, investments raised and turnovers. When comparing startups and other companies in Estonia with the age of up to 5 years, we see that startups create 2,3 times more jobs than other companies. If we look at all the people in the country that worked at least one day in the first half of 2020, we see that every 95th person in Estonia was somehow involved with startups!
Statistics Estonia’s statistics imply that the average monthly gross salary in Estonian startups was 2508 EUR during the first 6 months of 2020, which is 1,8 times more than Estonian average.
Based on the crowdsourced database and the Estonian Startup Database, a total of 142,7M EUR was invested into Estonian startups during the first half of 2020. In total, there have been 35 new investment deals this year. In the first half of 2019, there were 27 new investment deals, totalling 119M EUR. There have also been acquisitions in the ecosystem in 2020. Firstly, Pocosys, a banking software provider was acquired by Opera. Secondly, the global billing platform Fortumo was acquired by Boku.

More information about the latest developments in the Estonian startup sector can be found in the latest blog post HERE. Additionally, insights of sectoral developments are described below.

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AdTech & Creative Tech

Sector covers technologies used in advertising, marketing, media, entertainment, and creative industry. It captures different types of analytics, monitoring and digital tools and systems used in the context of advertising and marketing. Here, we also count startups, containing technologies that use manufactured or created components to enhance or make possible any sort of entertainment experiences (including events and its management tools) and which disseminate, store or produce media (including TV & film) content. Creative technology encompasses art, fashion, digital product design, digital media or advertising and media made with a software-based, electronic and/or data-driven engine.

Sector developments

In the first half of 2020 AdTech & Creative Tech sector turnover accounted for 9% of the total turnover generated by the startup sector.
Most AdTech & Creative Tech startup founders have Estonian citizenship, with 37 % of startup founders being foreigners. The average age of an AdTech & Creative Tech startup founder is currently 32 years. The proportion of female startup founders in this sector is around 11%.
Approximately 31% of the employees in the AdTech & Creative Tech sector have foreign citizenship. 59% of employees have higher education and 34% of employees have general education or vocational education based on secondary education.

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Advanced Manufacturing & Industry

It is a broad set of enabling technologies, processes and practices that businesses from a wide range of sectors can adopt to improve their productivity and competitiveness. Advanced manufacturing involves smart technology to improve traditional manufacturing of products and/or processes. It also includes fields like industrial robotics, additive manufacturing, 3D printing, advanced materials, industry 4.0, nano-materials and industrial IoT.

Sector developments

In the first half of 2020, Advanced Manufacturing & Industry generated an incredible 161% increase in turnover, compared to the same period in 2019! The biggest investment in the first half of 2020 was raised by Katana (2,4M EUR) and Timbeter 0,9M EUR.
Most Advanced Manufacturing & Industry startup founders have Estonian citizenship, with 10% of startup founders being foreigners. The average age of an Advanced Manufacturing & Industry startup founder is currently 33 years. The proportion of female startup founders in this sector is around 17%.
56% of employees have higher education and 35% of employees have general education or vocational education based on secondary education.

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AgTech & FoodTech

Sector covers technologies used in agriculture, forestry, fishing, hunting, animal husbandry, food and beverage fields, horticulture, and aquaculture with the aim of improving yield, efficiency, and profitability through information monitoring and analysis of relevant indicators such as weather, pests, and soil and air temperature. Also, scientifically-driven farm practices, equipment or processing including bio-engineered, transgenic crops, proprietary breeding, GPS, water management and improved equipment, conservation-based best management practices, food manufacturing and related advancements. Food technologies consists any technology applied to the production, selling (including supply chain and distribution), or serving food and beverage.

Sector developments

In the first half of 2020, AgTech & FoodTech startups generated 36% increase in turnover, compared to the same period in 2019.
Most AgTech & FoodTech startup founders have Estonian citizenship, with 23% of startup founders being foreigners. The average age of an AgTech & FoodTech startup founder is currently 33 years. The proportion of female startup founders in this sector is around 14%.
65% of employees have higher education and 26% of employees have general education or vocational education based on secondary education.

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Business software & HR

A broad set of softwares and services that are designed to integrate multiple facets of a company’s business through the interchange of information from various business process areas and related databases. The sector also includes technology and software to provide legal services. Business software aims to improve the enterprise's productivity and efficiency by providing business logic support functionality. Services provided by enterprise software are typically business-oriented tools, such as business and project process management and resource planning, documentation management, human resource management, collaboration, payment and billing systems.

Sector developments

In the first half of 2020 Business software, Services & HR sector has been one of the biggest contributors in employment taxes and employee count. Business software, services & HR sector employees accounted for 19% of the total startup sector and 22% of employment taxes paid by all startups. The average gross wage was also one of the biggest in the Business software, services & HR sector, as it is 15% higher than the average gross wages in the startup sector. The biggest investment in the first half of 2020 was raised by Pactum (2,7M EUR), Jobbatical (2,6M EUR) and Dashbird (1,9 M EUR).
Most Business software, services & HR startup founders have Estonian citizenship, with 29% of startup founders being foreigners. The average age of a Business software, services & HR startup founder is currently 32 years. The proportion of female startup founders in this sector is around 14%.
Approximately 25% of the employees in the Business software, services & HR sector have a foreign citizenship. 62% of employees have higher education and 33% of employees have general education or vocational education based on secondary education.

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CleanTech

Clean technology is an umbrella term which is used to define technologies which optimize the use of natural resources, produce energy from renewable sources, increase efficiency and productivity, generate less waste and cause less environmental pollution. CleanTech is comprised of sustainable solutions in the fields of energy, water, transportation, agriculture and manufacturing, including green technologies, smart city solutions, advanced material, smart grids, water treatment, efficient energy storage and distributed energy systems.

Sector developments

In the first half of 2020, CleanTech startups showed a remarkable 45% increase in employee count compared to the same period in 2019. Meanwhile, the turnover has decreased ca 41% compared to the previous year.
Most CleanTech startup founders have Estonian citizenship, with 15% of startup founders being foreigners. The average age of a CleanTech startup founder is currently 30 years. The proportion of female startup founders in this sector is around 19%.
Approximately 8% of CleanTech sector employees have foreign citizenship. 57% of employees have higher education and 38% of employees have general education or vocational education based on secondary education.

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Communication

Sector covers technologies used to create, store, transmit, or share information. It includes telecommunication, communications equipment and services, networking solutions and services (also social media and social networking) and internet technologies. Telecommunication is the transmission of signs, signals, messages, words, writings, images and sounds or information of any nature by wire, radio, optical or other electromagnetic systems.

Sector developments

In the first half of 2020, Communication startups generated an incredible 309% increase in turnover compared to the same period in 2019. The sector also showed a remarkable increase in employee count (87% compared to last year). The average gross wage was one of the biggest in the startup sector,11% higher than average.
Most of the Communication startup founders have Estonian citizenship, with 30 % of startup founders being foreigners. The average age of a Communication startup founder is currently 35 years. The proportion of female startup founders in this sector is around 25%.
Approximately 23% of the employees in the Communication sector have foreign citizenship. 64% of employees have higher education and 28% of employees have general education or vocational education based on secondary education.

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Consumer products and services

Consumer products and services are electronic or digital equipment, software and services intended for everyday use, including smart devices and software used for entertainment, communications and home-office activities. It includes consumer electronics and home electronics. Apart from traditional consumer electronic products like TVs, smartphones, it includes consumer IoT, AR/VR devices, fitness and wearables, consumer drones, consumer robots, consumer hardware, among others.

Sector developments

In the first half of 2020, Consumer Products & Services startups generated a 30% increase in turnover, compared to the same period in 2019.
MostConsumer products & services startup founders have Estonian citizenship, with 21% of startup founders being foreigners. The average age of a Consumer products & services startup founder is currently 33 years. The proportion of female startup founders in this sector is around 17%.
Approximately 10% of the employees in the Consumer products & services sector have a foreign citizenship. 51% of employees have higher education and 40% of employees have general education or vocational education based on secondary education.

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CyberTech

Cybersecurity is the body of technologies, processes, and practices designed to protect networks, computers, programs, and data from attack, damage, or unauthorized access. It includes application security, information security, network security, disaster recovery, business continuity planning, operational security, and end-user education.

Sector developments

Compared to the same period in 2019, CyberTech startups generated a 54% increase in turnover in the first half of 2020. The biggest investment in the first half of 2020 was raised by Veriff (14M EUR).
The proportion of foreign founders in CyberTech is one of the biggest: 54% of the founders are foreigners. The average age of a CyberTech startup founder is currently 33 years. The proportion of female startup founders in this sector is around 4%.
Approximately 33% of CybeTech sector employees have foreign citizenship. 60% of employees have higher education and 35% of employees have general education or vocational education based on secondary education.

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DeepTech & SpaceTech

Technologies that are based on tangible engineering innovation or scientific advances and discoveries. It includes space technologies and robotics. DeepTech companies often possess fundamental and defensible engineering innovations that distinguish them from those companies that are focused on the incremental refinement or delivery of standardized technologies or only use business model innovation to create opportunities. DeepTech can span across many technological areas and can impact diverse applications. Space technology includes spacecraft, satellites, space stations, and support infrastructure, equipment, and procedures.

Sector developments

In the first half of 2020, DeepTech & SpaceTech startups generated a 7% increase in turnover compared to the same period in 2019. At the same time, employee count has decreased 11% compared to the same period in 2019.
Most of the DeepTech & SpaceTech startup founders have Estonian citizenship, with 13 % of startup founders being foreigners. The average age of a DeepTech & SpaceTech startup founder is currently 32 years. The proportion of female startup founders in this sector is around 8%.
Approximately 20% of the employees in the DeepTech & SpaceTech sector have foreign citizenship. 77% of employees have higher education and 20% of employees have general education or vocational education based on secondary education.

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EdTech

Education technology generally describes the digitization of education services and business models. Education technology refers to an area of technology devoted to the development and application of tools (including software, hardware, and processes) intended to redesign traditional products and services in education. It includes software providers or vendors delivering technology solutions to schools at all levels and new and emerging models of delivering better and smarter learning.

Sector developments

The first half of 2020 was challenging for the EdTech sector due to the global spread of the coronavirus and the resulting operational constraints. At the same time, Estonian EdTech companies responded well to the emergency situation announced in mid-March, where all studies were ushered to online channels. As a result of the increased supply, the number of users of digital educational solutions increased by approximately 180%. Even though many EdTechs made their services free for schools, they still managed to generate an 18% increase in turnover compared to the same period in 2019.
The first half of 2020 was also good for Estonian edtechs in terms of attracting investments. A total of 2.5 million euros was raised in the period December 2019 - March 2020. The largest investors were Mistletoe and Superhero Capital.
MostEdTech startup founders have Estonian citizenship, with 20% of startup founders being foreigners. The average age of an EdTech startup founder is currently 32 years. The proportion of female startup founders in this sector is around 25%, which is significantly higher than the startup sector’s average.
Approximately 26% of the employees in the EdTech sector have foreign citizenship. 65% of employees have higher education and 22% of employees have general education or vocational education based on secondary education.

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FinTech

Financial technology describes the evolving intersection of financial services and technology. It aims to improve existing processes, products, and services in the financial services industry (including insurance) via software and modern technology. Anywhere technology is applied in financial services or used to help companies manage the financial aspects of their business, including new software and applications, processes and business models. FinTech products and services can be found within retail, corporate and investment banking, asset management, transaction banking, insurance, crypto finance and several others.

Sector developments

The FinTech sector is the biggest contributor in employee count and employment taxes paid. Of the startup sector’s total, Fintechs accounted for 27% of the employee count and 28% of employment taxes paid in the first half of 2020. The biggest investments in the first half of 2020 were raised by askRobin (1,6 M EUR) and Funderbeam (1,5 M EUR).
Most Fintech startup founders have Estonian citizenship, with 34% of startup founders being foreigners. The average age of a Fintech startup founder is currently 33 years. The proportion of female startup founders in this sector is around 11%.
Approximately 31% of the employees in the Fintech sector have foreign citizenship. 66% of employees have higher education and 25% of employees have general education or vocational education based on secondary education.

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Gaming

Gaming involves the development, marketing, and monetization of video games and gambling machines, as well as associated services. Gaming is the running of specialized applications known as electronic games or video games on game consoles like Xbox and PlayStation or on personal computers or mobile phones. Mobile gaming overtakes console and PC gaming to become the largest segment. eSports is one of the fastest growing segments.

Sector developments

In the first half 2020, Gaming sector employee count(-30%) and turnover(-36%) has decreased considerably compared to the same period in 2019. That is, because Creative Mobile, one of the sector’s largest companies, reached a ‘matured’ status and was thus counted out of the Estonian Startup Database.
Most Gaming startup founders have Estonian citizenship, with 33% of startup founders being foreigners. The average age of a Gaming startup founder is currently 32 years. The proportion of female startup founders in this sector is around 11%.
Approximately 29% ofGaming sector employees have a foreign citizenship. 50% of employees have higher education and 36% of employees have general education or vocational education based on secondary education.

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HealthTech, Life sciences & Wellness

Sector uses digital technology to maintain or improve health via the diagnosis, treatment, and prevention of disease, illness, and injuries. It also covers occupational health and safety, sport, welfare and elderly care technologies. Sector includes drugs, medical technologies like diagnostics, monitoring and other devices (e.g. catheters, stents, etc.), hospital and physician costs, dental costs, home health care, unreimbursed insurance, and some other expenses related to healthcare. Overall physical wellness encourages the balance of physical activity (sport and fitness), nutrition and mental well-being to keep body in top condition.

Sector developments

In the first half of 2020, HealthTech, Life Sciences & Wellness startups generated an incredible 242% increase in turnover, compared to the same period in 2019! The biggest investment in the first half of 2020 was raised by Viveo Health (2M EUR).
Most of the HealthTech, Life sciences & Wellness startup founders have Estonian citizenship, with 29% of startup founders being foreigners. The average age of a HealthTech, Life sciences & Wellness startup founder is currently 33 years. The proportion of female startup founders in this sector is around 26%.
Approximately 15% of HealthTech, Life sciences & Wellness sector employees have a foreign citizenship. 71% of employees have higher education and 20% of employees have general education or vocational education based on secondary education.

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PropTech & Construction

Property technology is the use of information technology to help individuals and companies research, buy, sell and manage real estate. These technologies include property management using digital dashboards, smart home technology, research and analytics, listing services/tech-enabled brokerages, mobile applications, residential and commercial lending, 3D-modeling for online portals, automation, crowdfunding real estate projects, shared spaces management, as well as organising, analysing, and extracting key data from lengthy rental documents. Construction technology refers to the collection of innovative tools, machinery, modifications, software, etc. used during the construction phase of a project that enables advancement in field construction methods, including semi-automated and automated construction equipment.

Sector developments

In the first half of 2020, PropTech & Construction startups showed a 15% increase in employee accounts, compared to the same period in 2019. At the same, turnover has remained at the same level as last year.
Most of the PropTech & Construction startup founders have Estonian citizenship, with 17 % of startup founders being foreigners. The average age of a PropTech & Construction startup founder is currently 34 years. The proportion of female startup founders in this sector is around 13%.

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Transportation & Logistics

Transportation and logistics technology refers to tools and machines used to solve problems or improve conditions in respect to the movement of people and goods. It includes new transportation technologies such as intelligent transport systems (ITS), connected and autonomous vehicles, alternative fuels, keyless fleet management and traffic analytics and management, as well as local zoning and planning policies that support transit-oriented development. Logistics technologies help to manage the process of planning and executing the efficient transportation (including shipping) and storage of goods from the point of origin to the point of consumption. It includes machine-to-machine connectivity, radio frequency identification (RFID), automatic identification and data capture (AIDC), and Internet of Things (IoT).

Sector developments

In the first half of 2020, Transportation & Logistics sector has been one of the biggest contributors in employment taxes and employee count. Of the startup sector’s total, Transportation & Logistics sector accounted for 15% of the employee count and 17% of employment taxes paid. Transportation & Logistics is also the biggest contributor in turnover. In the first half of 2020, it accounted for 41% of the total turnover of the startup sector. This figure was heavily influenced by Bolt, with 132,7M eur generated in turnover. The biggest investment in the first half of 2020 was also raised by Bolt (100M EUR), Milrem Robotics (2,7M EUR), High mobility (1,5 M EUR) and Speys (1 M EUR).
Most Transportation & Logistics startup founders have Estonian citizenship, with 15 % of startup founders being foreigners. The average age of a Transportation & Logistics startup founder is currently 33 years. The proportion of female startup founders in this sector is around 11%.
Approximately 25% ofTransportation & Logistics sector employees have foreign citizenship. 60% of employees have higher education and 34% of employees have general education or vocational education based on secondary education.

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TravelTech

Travel technology consists technologies used in the travel, tourism and hospitality industry. Some forms of travel technology are flight tracking, trip planning, journey planner, booking price tracking and so on. Travel technology also include virtual tourism in the form of virtual tour technologies, analysis, design, implementation and application of IT and e-commerce solutions in the travel&tourism industry, as well as the analysis of the respective economic processes and market structures and customer relationship management.

Sector developments

In the first half of 2020, TravelTech startups generated a 45% increase in turnover, and the employee account increased 67% compared to the same period in 2019.
The proportion of foreign founders is biggest in TravelTech: 55% of the founders are foreigners. The average age of a TravelTech startup founder is currently 33 years. The proportion of female startup founders in this sector is around 10%.