€328 million invested in Estonian startups in 2018 ({{contentCtrl.commentsTotal}})

Estonian startup Monese added 57 new jobs in 2018.
Estonian startup Monese added 57 new jobs in 2018. Source: Erik Prozes/Postimees/Scanpix

While the overall number of investments made into Estonian startups declined last year, the total volume of investments grew to €328 million, Kredex and Startup Estonia said on Tuesday.

Last year saw the Estonian startup sector set new records in connection with the increase in the number of employees, labour taxes paid to the state as well as in investments raised. In total, some €328 million was invested in Estonian startups in 2018, with 30 new investments, indicating an average investment of €10.9 million.

"Since 2010, the proportion of investments raised by Estonian startups from abroad has been growing year after year, reaching a new high of 96.3% in 2018," said Maarika Truu, head of Starup Estonia. "The increased interest of foreign investors confirms that Estonian startups are being noticed globally, we have a strong startup ecosystem and a credible transparent business environment."

Statistics from the Estonian Tax and Customs Board (MTA) indicate that Estonian startups employ a total of 3,763 people in their Estonian offices, up 26% from 2,981 in 2017.

The top 20 startups in Estonia accounted for 62% of the new jobs created by startups in 2018. Transferwise was the biggest recruiter, adding 239 jobs during the year, followed by Taxify with 92 new jobs, Monese with 57, Veriff with 54 and Pipedrive with 53. Veriff has shown the biggest increase percentage-wise, with 490% employee growth at its Estonian office. Veriff also announced recently that the company has hit the 100-employee mark in all of its offices, and that it is looking to hire another 100 people within the next six months.

"In 2018, I saw a big increase in the new wave of Estonian startups," said Veriff co-founder Kaarel Kotkas. "Funding was raised, bigger offices were built, and more people were hired. 2019 will be the year of newcomers. Veriff has received a lot of support from the #EstonianMafia on our road to success, so now we are trying to support the newcomers. I see that the 'giving-back mentality' is the key element, and that allows us to get even more smart people on board who will allow us to do even bigger things. We will gladly be the first clients to newcomers, test their solutions and help them get to the big markets."

More employees means more employment taxes

The benefit of increased employment is reflected in a growing amount of employment taxes paid. While startups in Estonia contributed €28 million in employment taxes in 2016, this figure increased to €36 million in 2017 and €46 million in 2018, reflecting an annual growth of some 30% on year. The largest contributors in 2018 were Transferwise with €7.8 million, Pipedrive with €5.8 million, Taxify with €2.9 million, Starship Technologies with €2.2 million and Monese with €1.1 million.

The average gross monthly salary in the startup sector was €2,024, falling just below the IT sector average of €2,181.

Estonian startups generated €299 million in annual turnover last year, 9% more than in 2017. The greatest turnovers were seen by Taxify (€51 million), Pipedrive (€30.7 million), HashCoin (€15.5 million), Starship Technologies (€16.3 million), and Creative Mobile (€13.5 million). Compared to 2017, the biggest increases in turnover on year were registered by HashCoin and Taxify.

According to Leapin CEO Allan Martinson, 2018 was without a doubt a superb year for Estonian starups in terms of both funding raised and overall growth.

"Tech startups are shifting the direction of the Estonian economy more and mroe, constituting several percentage points of the overall economy and growing more and more every year," he highlighted. "This kind of fast growth is not visible in any other sector. Although startups raised more than €320 million, there was a visible trade — the big startups got even bigger, but early-stage fundraising decreased. This is similar to what is happening in the world in general."

The technology sector is leaning toward mature enterprises which may not even be called startups anymore, Mr Martinson noted. "For me, it would be interesting to see if the trend will break in 2019, and new fresh startups will get investments and increase sales," he added.

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Editor: Aili Vahtla

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