Ivo Kuldmäe: unicorns demand investments in people


We are accustomed to Estonia shining in high positions in different rankings, be it the results of the PISA education test, the digital economy index or the number of start-ups, writes Ivo Kuldmäe, CEO of KredEx.

Ivo Kuldmäe
Ivo Kuldmäe
  • Continuing the miracle of unicorns requires investments in people
  • Estonia’s start-up sector managed strong growth during the crisis
  • Investing in knowledge
  • Start-ups are leaving Estonia due to a lack of labour and talent


Estonia is also at the forefront in terms of the number of unicorns, or billion-euro companies per capita. Impressive, as fewer than a thousand companies of equivalent value exist in the world.

Standing on the threshold of the green transformation, it is time to ask about what the variables in the equation are, so as not to let go of what has been done so far and to help build on it. I see three levels that will determine our success and are a challenge for the state.

First, the ability to tackle global variables, such as climate targets, health crises, energy scarcity, but above all the rapid development of technology. Secondly, the ability to invest wisely in education and retraining, as well as attracting talent. Thirdly, we can push forward the development of potential companies and be a strategically astute anchor investor as a country.

The Estonian Founders Society, comprised of technology companies associated with Estonia, has set a vision that at least 30 per cent of Estonia’s GDP should come from technology exports by 2030. Today, it is only a few per cent. But the base, from which to move, is strong. Estonia’s start-up sector, and tech companies more broadly, have weathered the crisis quite well and adapted quickly.

According to data from Startup Estonia, Estonian startups attracted a record investment of over EUR 500 million last year, which is almost EUR 200 million more than the year before. Progress this year has also been rapid. Wise was listed on the London Stock Exchange, and according to the latest data, investments by Estonian start-ups have reached EUR 900 million, surpassing EUR 1 billion euros by the end of the year.

While Estonian start-ups employed 2600 people five years ago, today they employ nearly 7000. Labour taxes paid to the state grew from less than EUR 30 million to nearly EUR 100 million a year. As an entrepreneurial model, the start-up has changed, and will continue to change, our economy and the foundations on which it operates.

Alongside the efforts of entrepreneurs and the hunger for the growth of investors, public investments are certainly important. As a result, SmartCap’s venture capital fund investments, with a total turnover of nearly EUR 400 million, had reached nearly a hundred companies by the end of last year through fund and direct investments. The creation of a well-functioning capital market is the basis for successful start-ups. Without functioning financing models, there would be no reason to be proud or to count unicorns.

In addition to venture capital, the state has several other instruments to push development. Above all, we need to invest in people, to support the development of our start-up sector, not just with money, but also with knowledge and by creating a favourable environment. Startup Estonia has been a strong driver in this direction, supporting the creation of a sustainable ecosystem and community empowerment for years. This must continue across the legislative, educational and business landscape.

A clear signal to rethink our education system came from the founders of the Jõhvi School of Technology, which opened its doors this autumn. Estonia needs to make serious investments in science and technology education. A closer look needs to be taken at the basic education curriculum, to include robotics, computer education and entrepreneurship. Current energetic initiatives must be supported by a national curriculum. There is still a long way to go in the case of institutions of higher education.

We must avoid a situation in which start-ups simply leave Estonia due to a lack of labour and talent. The blistering rate of technological development and the need for specialists and experts in the field continues to grow and has already become critical. More than 15 times as many people applied to the Jõhvi School of Technology than were accepted. At the same time, we are planning a green transformation, which is unthinkable without research-intensive businesses and knowledge. Tech sector exports accounting for 30% of Estonian GDP by 2030 will only be realised if our companies stay here, find workers with the requisite knowledge and skills, and attract foreign talent who can and want to work in Estonia.

The challenges facing the state are serious, but worth the effort. The goal set by the Estonian Founders Society – of obtaining one-third of GDP from technology exports in the coming decade – is realistic in terms of investing in knowledge and education. This requires a technology transfer and digitalisation based on this knowledge, but also the intertwining of the start-up sector with other sectors and activities.

Smart workplaces and successful start-ups shape Estonia’s reputation, bringing in money from investors while also shaping Estonia’s good image. At the same time, start-up growth also supports other sectors of the economy and helps to bring the green transformation to life. Start-up entrepreneurship is not an end in itself; instead, it is about the creation of new operating models in different industries that can be easily scaled up and transferred to different markets.