Why is Estonia a Startup Paradise?

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It’s no coincidence that Estonia has one of the highest rates of startups per capita in Europe. So… how has Estonia become a startup paradise? Let’s see what’s behind these figures.


Kristi Vabamäe and Kadi-Ingrid Lilles from Startup Estonia


The Estonian people are entrepreneurial and innovative, while the government is supportive of technology and small business. We cannot think of a single reason why you shouldn’t launch a startup in Estonia, but here are at least four reasons, among many others, for why you should.

1. e-Services and ease of doing business

Estonia is often called the most digitally advanced nation in the world, and for good reason ­– you can do almost everything to run your company online without hassle – it’s as simple as it gets. Need to sign documents? Do it online! Need to register your business? Just complete a form online! You name it – it’s online! The most recent entrepreneur-friendly development is that now you can open a bank account without physically going to the bank or being in Estonia.

What further testifies to Estonia’s great business environment is the fact that we have had the most competitive tax system in the developed world for the last three years in a row, according to the International Tax Competitiveness Index. One of the key drivers for our high rank is the low corporate tax rate at 21 percent with no double taxation on dividend income.

2. People and community

Estonia might be small, but in comparison to the population, our startup community is big in every way, while also being very tight-knit. A multitude of startups might mean tough competition, but that’s definitely not the case in Estonia. If you’re a dedicated startupper, you’ll most likely be welcomed into the community very quickly, and there’s no need to be afraid of the language barrier – the vast majority of Estonians speak English very well.

Our most successful startups are known for giving back to the community by mentoring and supporting smaller startups, different events and startup hubs. The most notable example of this is the Garage48 Foundation, which is an initiative of the  “#estonianmafia” – a term of endearment that has become a recognised brand for the local startup community (and no, no actual mafia is involved).

The local startup community also has good relations with the government and their voice is being actively heard as the government does its best to be responsive to entrepreneurs and startups. “One of the best things about Estonia for an entrepreneur is the short decision-making chain. Two years ago, I wrote a blog post about why founders don’t want to establish companies in Estonia and inside twelve months there was a package of legal changes approved in the parliament that dealt with exactly these issues. You can’t see governance agility like that anywhere else in the world!” enthused one of the most well-known members of the local startup community, the founder of Teleport, Sten Tamkivi.

3. Developed and affordable living environment

The quality of life in Estonia is high but at the same time it’s very affordable: moving to Tallinn will very likely decrease your daily cost of living. Estonia ranks above average in terms of education and skills, environmental quality, social connections and work-life balance according to the OECD index. Our education system is sustainable and is rated one of the best in the world, hence the multitude of tech talent.

Our capital, Tallinn, is among the most connected cities in the world, offering almost universal free public WiFi and free public transportation for residents. We take great pride in being the most WiFi-covered country in the world – all of our e-services would be nothing without a reliable connection to the world. Furthermore, Estonia has even declared internet access a human right.

4. Skype legacy and ease of hiring talent

With the strong legacy of building and developing Skype in Estonia, a lot of people in the local startup ecosystem are highly skilled and technically talented. Estonia has also made it easy for local startups to acquire foreign talent, as in January 2017, the country launched its Startup Visa. The visa is meant for entrepreneurial non-EU nationals to come and work for Estonian startups, relocate their existing startups, or establish new ones in Estonia on preferential terms. For local startups, it has made it possible to hire the foreign talent they need with almost no bureaucracy.

As the Global Startup Ecosystem Report 2017 states: “Estonia’s mix of smart infrastructure, boundary-busting visa programmes and startup solidarity assures the world that they’ll bring us more game-changing technology like they did with Skype and are now currently doing with Transferwise.”

Consider yourself invited – come and join this rising ambitious startup community!


Current blog is created according to the action plan for promoting the E-Estonia´s reputation.

The action plan for promoting the E-Estonia´s reputation has been developed and it’s partial implementation is coordinated by the European Union Structural Assistance support scheme “Raising awareness of the Information Society”, funded by the European Regional Development Fund.


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