The first half of the year has been extremely successful for the Estonian start-up sector, attracting numerous large investments. Based on the data reported by Invest in Estonia, Estonian start-ups are increasingly attractive to investors as the total amount of investments reached the 1B EUR benchmark in the first half of 2022, more than quadrupling the sum of investments made in the same period last year. To date, Estonia is home to 1,442 start-ups. Real European leadership. So far, 50 new start-ups created in 2022 have found their way into the database. 32% of the start-ups in the database have been active for 5 or more years. The largest sector in terms of active start-ups is Business software & HR with 258 active companies (18% of all start-ups in the Estonian Start-up Database), followed by FinTech with 193 active start-ups (13%) and Consumer products & services with 156 active companies (11%).

Investment figures are heavily affected by Bolt‘s massive investment round (628 M EUR). In total, there were 44 new investment deals averaging almost €23M each, 28 of those worth at least 1M euros. One of Estonia’s most remarkable characteristics is the size and quality of its pool of IT talent in relation to the general population size. In fact, Estonia continues showing its world-class mastery in building unicorns. The year 2022 has brought two new unicorns to Estonia: Veriff and Glia. Overall, the Estonian Unicorn Factory has produced 10 unicorns, that’s 7.7 unicorns per million per capita. It makes Estonia the leader in unicorns per capita in Europe. According to the quarterly data, Estonian start-ups generated a record-breaking 958M euros in turnover in the first half of 2022, a 68% increase compared to the same period in 2021 (571M euros). The TOP20 start-ups by generated turnover take up 74% of the whole sector’s turnover.

The existing expertise, through a culture of knowledge and experience sharing within the tech community, attracts more talent from further afield and creates the perfect breeding ground for more innovation and technical excellence. The first half of 2022 is showing a significant rise in people working in the Estonian start-up sector. According to the Estonian Tax and Customs Board, the employee count of Estonian start-ups has risen 36% in a year, from 7113 to 9692 people employed at the end of the second quarter of 2022. Compared to last year’s growth of 14%, the employment count increase has more than doubled, meaning that the sector is recovering from the turbulent times. And a successful first half of the year is reflected in the rise of employment taxes paid by start-ups and in the good upswing in salaries. Estonian start-ups have paid 83,4M euros worth of employment taxes so far this year, which is 46% more than the employment tax contribution of 57M euros at the end of the second quarter of 2021.

The average monthly gross salary in Estonian start-ups over the first half of 2022 was 2,840 euros, which is approximately two times higher than the Estonian average. The average salary rate in start-ups has risen 6% compared to the same time last year (the average monthly gross salary in the first half of 2021 in Estonian start-ups was 2,685 euros) as the start-up sector continues to provide one of the most competitive wages in Estonia. Average monthly gross salary distribution by age suggests that employees aged 41-50 earn the most with 3,505 EUR, but employees aged 31-40 are not far off with 3,224 euros. The largest average gross salaries by month were paid in Communication (€3,318), Business software, services & HR (€3,304), Transportation & Logistics (€3,273), CyberTech (€3,180), and FinTech (€2,972 ).

Estonia has been a trailblazer in the digital space for years, most notably with its e-Residency program. In the six years the program has been running, people from around the globe have found roughly 15,000 companies through it in Estonia. The Estonian Start-up Visa program continues to successfully attract talent from abroad and help start-ups seamlessly relocate to Estonia. Since the start of 2022, 733 global founders and start-up employees have been granted temporary residency permits and visas to become part of the start-up ecosystem. To date, 19% of the start-ups have been founded thanks to the Start-up Visa program. They contribute significantly to the development of the ecosystem. In particular, during the first 6 months of 2022, these start-ups paid 3,4M euros in employment taxes, employed around 391 people in Estonia, and generated 38M euros in turnover.

At the same time, the Estonian legal environment is famous for its entrepreneur-friendly conditions, with foreign investors given equal rights to local entrepreneurs. It takes no more than three hours to start a business online, and almost all banking transactions and tax declarations happen digitally. The online-first, tech-forward approach that sets the country apart is an extension of Estonia’s forward-thinking business environment at large. And it’s a reflection of the pragmatism of the people who shape it.

Start-up Heatmap Europe Report 2022, which analyses the potential of European cities for establishing and developing successful start-up companies, named Tallinn among the largest start-up centers in Europe. Compared to last year, Tallinn climbed up three positions into 6th place. Tallinn excelled in Ease of Doing Business metrics as founders rated Tallinn as one of the top places with the most favorable business regulations. In the StartupBlink 2022 report, Estonia retained its 13th place compared to the previous year and, despite of a small population, was confirmed with an impressive start-up ecosystem.