The Estonian startup scene is flourishing and allows the country to punch well above its weight-class in the world, while continued efforts and focused investments in high-level tech education are needed to develop and nourish the sector, Carlos Paniagua writes.
I am a Guatemalan who has settled firmly in Estonia. I love saunas, dream of a remote summer cottage and am rarely seen without my bottle of Värska Vesi. Estonia's smart policies have enabled me to study and build a rapidly growing global business here. I don't take this environment for granted and strive to contribute to improving it.
Estonia's policy decisions and investments over the past decade have focused on attracting foreign talent, students and new business. In fact, nearly a quarter of IT employees in Estonia are foreigners. And for the past five years, the number of people moving to Estonia has surpassed the number of those leaving.
I became one of those new arrivals when, in 2010, I set off for Estonia to complete my master's at Tartu University. When the call came to be the technical co-founder of a startup, I moved to New York. By then, I'd seen enough to know I'd be coming back to Estonia eventually.
When it was time to build our team, my mind went straight to my university times and the world-class tech community in Estonia. My co-founders and I believed we could build something great within this ecosystem. We started building our team and product in Tartu, and that turned out to be one of the early decisions that not only defined our identity but, in retrospect, has also been a big contributor to the success we are fortunate to be experiencing.
Today, powered by the quality of the education and tech talent in Estonia, we've built a successful software company. Our Estonian offices (we kept HQ in New York) are growing fast in Tartu and Tallinn, and we've been able to hire many exceptional people—more than half of them Estonian.
And we're in great company. The concentration of successful startups being built here is nothing short of astonishing.
In fact, the expanding startup and technology sector is a big reason why Estonia has been able to maintain its population. It's allowing the country to punch above its weight as a global force to be reckoned with. According to the Estonian Founders Society, the startup sector has grown 30 percent year-over-year over the last five years. In 2020, our startups saw a combined €1 billion in sales. What makes the startup sector unique is how much additional value a relatively small number of jobs can create. Currently employing around 1 percent of Estonia's working population, the startup sector already creates 2-3 percent of the Estonian GDP. So far in 2021, Estonian startups have paid €90 million in employment taxes, which is 24 percent more than at the same point in 2020.
There is a sense in the startup community that we've barely scratched the surface. The current landscape has much potential yet to be explored, with support systems in place that enable more people to try to hit it big with their startup ideas that will grow into the Bolts and the Wises and the Glias of the world.
To that end, Estonia is estimated to need around 7,000 IT workers over the coming few years. By 2030, the growth of the startup sector is estimated to create 50,000 jobs.
The catch, of course, is that in five years' time, there will be approximately 32,000 fewer people of working age in Estonia. So how are we supposed to fill those jobs?
It is a certainty that a lot of this talent will continue to come from abroad. But we can't slow down or even keep going at our current pace in training more IT specialists locally.
The Estonian education system has been making headlines recently, lauded as one of the best in the world thanks to high PISA rankings. Students are performing well at a global level, higher education is already accessible – that's all very nice. But it's not enough.
More Estonians need access to high-level IT education. And not just in Tallinn and Tartu, the usual suspects, where startups are sprouting like chanterelles in your favorite mushrooming spot.
Taking high-level tech education to all corners of the country will open up well-paying jobs to more Estonians of all ages. That takes investment.
The good news is that there are some programs tackling the issue. In Ida-Viru County, kood/Jõhvi recently kicked off its mission to train 200 new IT specialists every year. HK Unicorn Squad encourages more girls to choose a path in IT, which has traditionally not been a welcoming environment for them.
These initiatives are a great start and that's why I'm a proud supporter, as is my company. For these programs to succeed and scale, however, deeper mindset shifts in society are also needed. Anita Algus recently wrote at length about how our education system doesn't set the stage for children in Estonia to choose IT and STEM career paths in the first place. It's critical, she suggests, to take into account how early in life children develop their interests.
Estonia has a well-deserved reputation as a digital nation and all the adults I know are certainly excited about the technology and innovation springing up here. Now it's time to get the kids excited too.
Our country's startup success story is not a random stroke of luck. Being smart about supporting students, entrepreneurs and skilled talent has paid off brilliantly, but it would be a mistake to rest on those laurels. Funneling more resources into high-level tech education and training is key to Estonia's future success.
As someone who has seen and benefited from Estonia's development over a decade, I'm excited to see what more we can do.
Editor: Marcus Turovski