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Estonia may not rank at the very top of global ease of doing business indexes—we’re currently 18th – but with firsthand experience in the investment scene here, I can confidently say this small country punches well above its weight when fostering entrepreneurship and innovation. My recent experiences, both personal and as an observer of more significant trends, underscore why Estonia is such an exciting place for entrepreneurs and investors.
One of the most poignant recent developments has been the closure of Grünfin, a licensed investment firm in Estonia that aimed to make sustainable investing more accessible. Over four years, Grünfin built a platform for values-driven investments, focusing on Environmental, Social, and Governance (ESG) principles. Despite raising over €2 million and providing tangible returns to their investors, Grünfin struggled to scale and acquire enough clients to achieve profitability. This reflects a broader challenge: while Estonia is perceived as a sustainable nation, many local investors prioritise returns over sustainability.
What sets Grünfin’s story apart, however, is their exit. In ceasing operations, Grünfin returned every euro to their investors, including all accrued profits. No one lost money. As someone who personally invested through Grünfin, I experienced this firsthand. While seeing such a noble effort fall short is disheartening, it’s proof of the integrity and responsibility characterising Estonia’s fintech sector.
Looking ahead, promising developments could support future ventures like Grünfin. Starting in 2025, Estonia’s Income Tax Act will allow investments made through licensed investment companies to qualify for the same tax deferral benefits previously available only through credit institutions. This change broadens the investment scene for Estonians, fostering competition and innovation in the financial sector.
One notable beneficiary of this amendment is Lightyear, a fintech startup based in Estonia. Lightyear is the only licensed investment company taking advantage of the recent Income Tax Act amendment. Still, it’s hoped that others will follow suit as the new framework takes effect. Lightyear’s platform holds significant appeal for someone like me seeking new ESG-focused investment opportunities post-Grünfin. This reform increases investors’ options and strengthens the competitiveness of Estonia’s fintech companies on a global stage.
These changes are emblematic of Estonia’s forward-thinking approach to governance and business. Encouraging saving and investing through innovative policy adjustments demonstrates how the country aligns its regulatory framework with the needs of a modern economy. By opening the market to licensed investment companies, Estonia is levelling the playing field and creating new opportunities for entrepreneurs and investors.
Beyond investment reforms, Estonia’s push toward a real-time economy exemplifies another area where a mindset shift is necessary. By encouraging businesses to adopt e-invoices, the government aims to reduce administrative burdens and improve reporting efficiency. However, many entrepreneurs remain wary, fearing increased government oversight. These concerns, while unfounded, highlight the need for a cultural shift like the one that enabled Estonia’s digital transformation decades ago.
Estonia’s journey from a bureaucratic state to a global digital leader has been driven by its people’s ability to grasp change and trust their government. This trust, built on transparency and accountability, has allowed Estonians to enjoy citizen-centric services that are unparalleled in efficiency and accessibility. However, the next frontier of progress—whether in sustainable investing or adopting real-time economic practices—requires further evolution in mindset.
So, while Estonia might not be number one on global rankings, it remains one of the best places to be an entrepreneur or investor. The commitment to innovation, ethical business practices, and fostering competition keeps me optimistic about the future. From amicable exits like Grünfin’s to game-changing policies that empower companies like Lightyear, Estonia continues to prove that it’s a small country with big ambitions.
