Estonian e-residents establish record number of new businesses in 2021
Last year, Estonian e-residents established a record-setting 4,700 new businesses, exceeding 2020 numbers by one third. Altogether, more than 20,000 companies have been established by Estonian e-residents since the launch of the e-Residency program in December 2014.
Companies set up by e-residents enrich the local business environment and enhance Estonia's image as an attractive destination for foreign investment, Minister of Entrepreneurship and Information Technology Andres Sutt (Reform) said according to an e-Residency press release.
"Our e-Residency program empowers entrepreneurs from around the world by providing an opportunity to set up and run a business 100 percent digitally," Sutt said. "At the same time, international businesses and talents introduce new skills and knowledge to the Estonian business space, thereby contributing to the development of local companies and improving their global competitiveness."
The minister stressed, however, that in the current security context, e-Residency cannot be used for circumventing sanctions or engaging in illegal business activities, noting that when it comes to the e-Residency program, ensuring security remains a top priority.
"The program offers all law-abiding businesses access to Estonia's public e-services ecosystem and to the European market," he added.
Rapid growth in number of active businesses expected
Lauri Haav, managing director of Estonia's e-Residency program, said that in recent years, e-residents have been establishing new companies at a record pace — while it took five years to reach the 10,000 company mark, it took just another two to double that figure.
"The e-Residency program has created a completely novel niche for local companies, helping them expand abroad, recruit talent and increase turnover," Haav said, adding that the program has revived the local business services sector as well
Seven years ago, Estonia was the first country in the world to offer e-residency to foreign nationals, generating an impressive amount of global attention and trust, he said.
"Today we are seeing a clear shift from quantity to quality, as more and more people are joining the program with the specific goal of starting a business," the managing director explained. "As a result, the economic impact of the program is likewise set to increase."
In 2021, almost 20 percent of all private limited liability companies in Estonia were set up by Estonian e-residents. 40 percent of these were established in the ICT sector and another 24 percent in the vocational, research and technical sectors. These companies paid remuneration to nearly 4,000 people, and one in five companies was economically active.
"Looking at these numbers, we must bear in mind that although the establishment of new companies has grown rapidly, particularly in the last few years, many of them are still taking their first steps, i.e. developing business plans, testing their products or services in different markets and target groups," Haav said. "At that stage, economic activity remains low, but going forward, we expect to see rapid growth in the number of active businesses."
Ukrainian e-resident: This is Estonia's true success story
"Estonian e-Residency offers the kind of flexibility sought by modern businesses, which is a huge competitive advantage," said Natalya Storozhuk, an e-resident from Ukraine and manager of the startup company PRNEWS.IO. "In addition, the local business community is highly collaborative, encouraging people to follow their dreams."
According to Storozhuk, Estonia's e-Residency program is best described by keywords such as inclusiveness, openness and innovation.
"I was on an online call with a potential customer from Canada and mentioned that my company was established through the Estonian e-Residency program," she recalled. "Next moment, my conversation partner showed me his e-Residency card, establishing a special bond that has been driving our cooperation ever since. This goes to show the extent of the e-Residency network around the world, all contributing to the Estonian economy."
Storozhuk noted that the e-Residency team has provided a great deal of support beyond business-related issues as well.
"The war in Ukraine is terrible, but there is no doubt that Ukraine will rebuild itself after the war, implementing innovative technologies for better governance," she said. "I believe that all countries have a lot to learn from Estonia on digital issues. More than 5,000 Estonian e-residents from Ukraine are already well aware of what it means to be part of a highly developed digital society and how setting up and running a business 100 percent digitally brings the whole world to your doorstep. This is Estonia's true success story."
More than €90 million direct revenue to state
Estonia's e-Residency program was launched in December 2014 with the aim of providing foreign nationals secure access to digital services offered within the Estonian e-governance ecosystem. To date, Estonia has registered more than 90,000 e-residents, who have in turn established some 20,000 new companies.
In addition to the indirect economic impact, including growth among and investments into Estonian companies offering services to e-residents, the e-Residency program has also generated more than €90 million in direct revenue for the Estonian state budget, including €75 million in tax revenues.
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Editor: Aili Vahtla