Investments raised by Estonian startups up 18-fold on year in Q1

Kaarel Kotkas (front, center) and some of the Veriff team.
Kaarel Kotkas (front, center) and some of the Veriff team. Source: Veriff

The aggregate turnover of Estonian startups was €255 million in the first quarter of 2021, having increased by 26 percent year-on-year; startups also attracted a total of €194 million in investments, which is about 18 times more than in the same period last year.

According to the Estonian Startup Database, there were 1,144 startups in Estonia at the end of the first quarter of this year, and 21 new startups were established in the same period of time, Startup Estonia said.

The manager of Startup Estonia, Eve Peeterson, said that the coronavirus crisis dealt a painful blow both to traditional companies and the startup sector, but the Estonian startup sector has returned to growth by now.

"The turnover of startups has increased by a quarter compared to a year ago, which shows that the setbacks of the coronavirus crisis have been overcome and we can once again talk about the strong growth of Estonian startups. This is also evidenced by the significant increase in the volume of raised investments, which is proof of investors' trust and confidence," Peeterson said.

While in the first quarter of 2020, 14 startups raised investments and the total volume of transactions was €10.7 million, this year 19 startups raised money from investors and the average transaction size was €10.2 million. The largest investments were raised by Glia with €64 million, Veriff with €58 million and Bolt with €20 million.

Bolt also had the largest turnover with €126 million, followed by Adcash with €9.9 million and Paxful with €7.2 million.

As of the end of the first quarter of this year, Estonian startups paid €26.6 million in labor taxes to the state, which is 3 percent more than a year earlier. The largest payers of labor taxes were Bolt with €3.8 million, Wise with €3.6 million, Paxful with €1.5 million and Veriff with €1.1 million.

A total of 6,453 people worked in Estonian startups as of the end of the first quarter. The largest employers in the startup sector are currently Wise with 982 employees, Bolt with 757 employees, Veriff with 248 employees and Paxful with 149 employees.

Compared to the pre-COVID-19 period, the number of employees in the startup sector decreased by 1 percent, but according to Startup Estonia, the rapid recovery of the sector is indicated by the fact that compared to the end of last year, startups increased the number of employees by 6 percent in the first quarter. As of the end of the last quarter of 2020, 6,072 people worked in startups.

According to the Tax and Customs Board, the vast majority of startups operate in Harju County, where 672 startups are registered, while 79 startups operate in Tartu County and Parnu County is in third place with 16 startups.

"The regional diversity of the startup sector is an important goal of the new period of the Startup Estonia program. In cooperation with market participants, we have set up a working group that will work to revitalize and support entrepreneurship and the establishment of startups also outside Harju County and Tartu County," Peeterson said.

According to Startup Estonia, most Estonian startups currently operate in the field of business software and services, a total of 206. There are 151 startups in the field of financial technologies and 115 startups in the field of consumer services and product development.

Startup Estonia is a governmental initiative aimed to develop the local startup ecosystem. The program of Startup Estonia is carried out by KredEx. The activities of the research accelerator of the Startup Estonia program are carried out by Smartcap.


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Editor: Helen Wright

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