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Estonian startups raise record-breaking €102.5 million in 2016

Transferwise founders Taavet Hinrikus (left) and Kristo Käärman, two of the figures behind the Good Deed Foundation education fund.
Transferwise founders Taavet Hinrikus (left) and Kristo Käärman, two of the figures behind the Good Deed Foundation education fund. Source: (Startup Estonia)

Estonian startups set a new record in raising €102.5 million in investments during 2016, it appears from figures published by Startup Estonia.

There are currently a little over 400 startups in Estonia, roughly 90 percent of which are in the very early or early stages of development. At the end of 2015, the startupcount was approximately the same, as a result of both natural selection and the fact that upon the launch of the new startup database together with Funderbeam, Startup Estonia narrowed down the criteria for what qualifies as a startup.

Startup Estonia said that while Estonian startups cannot be defined by any one ruling industry, the most common keywords to describe them would be IT services and B2B, or business-to-business.

By the end of the third quarter of 2016, Estonian startups had already paid the same amount in employment taxes to the government as they did for the whole of 2015. All in all, taxes paid by startups increased from €21 million in 2015 to €28 million in 2016.

The number of people employed by Estonian startups kept increasing rapidly and had reached 3,500 by year-end. Compared to the end of 2015, startups had attracted 1,000 more employees. The general rule of thumb is that three in four of the people employed by Estonian startups are employed in Estonia, which means that approximately 800 of the new jobs were created in Estonia and 200 elsewehere.

The companies with the greatest numbers of people on their payroll were Transferwise, which employed 600 people, including 400 in Estonia, Pipedrive with 240, Adcash with 200, Zeroturnaround with 170, and Creative Mobile with 100 people.

December deals lead to record-breaking year

Estonian startups have raised altogether €370 million euros during the last 10 years, more than 80 percent of which was raised from foreign investors. 2016 turned out to be a record-breaking year, with Estonian startups attracting €102.5 million in investments. By Christmas, it appeared as though 2016 would turn out to be a step back from 2015 in terms of the amount of capital raised, deal count as well as deal sizes. Pipedrive, Monese and Starship Technologies, however, annoucned huge rounds in January with deals dating back to 2016, allowing for last year to emerge as the most succesful funding year for Estonian startups yet.

The average deal size of the 40 deals recorded in 2016 was €2.5 million. A closer look at these deals reveals that the biggest contributor, Transferwise, raised €48 million in 2015 and €23.5 million in 2016. The year ended with sizable investment activity by Starship Technologies, which raised a historically large seed round of €16.5 million, Pipedrive, which attracted €16 million, and Monese, which attracted €9.4 million.

The most notable initial rounds of 2016 were done by Leapin, which raised €200,000, Shipitwise, which raised two rounds on the Funderbeam platform amounting to €176,000 and €181,000, respectively, Globalreader, which raised €165,000, and Transferfast, which raised €150,000.

Editor: Aili Vahtla

Source: BNS

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