Emerging Trends | SMEs/Entrepreneurship
April 24, 2017

How Estonia became a leader in tech startups and entrepreneurship

By Theadora Mills

Estonia, the birthplace of Skype, has in recent years enjoyed a well-earned reputation as a startup hotspot — a mini Silicon Valley in the Baltics.

But now it’s being recognized as the most entrepreneurial country in Europe — at least according to a recent World Economic Forum (WEF) report that includes analysis of “intrapreneurs” who formulate and implement new ideas within organizations.

Indeed, Estonia has become a place for developing, testing and bringing to market innovative digital solutions with the information and communication technology (ICT) sector now constituting some 20% of total exports.

So how did Estonia realize success? What did the government do to foster ICT entrepreneurship?

“Leading politicians in Estonia have continuously held supportive views of innovation and technology that have led Estonia to develop state of the art e-governance systems for already over 20 years leading to a state-of-the art e-society,” said Veikko Montonen the Second Secretary of the Permanent Mission of Estonia in Geneva.

“For example, [Estonia was] the first country to provide ‘state as a service’ to people around the world with e-residency. Estonia’s leaders at the highest levels recognise the potential of ICTs and the start-up scene and are supportive to the community’s aspirations as well as back its activities.”

Lessons from e-Estonia

Given that micro, small and medium enterprises (MSMEs) make up more than 95% of all businesses worldwide and two thirds of all formal jobs, understanding how Estonia demonstrated success in building a thriving startup ecosystem is worth understanding better.

Digital Estonia, or e-Estonia, can provide some insights.

The underlying infrastructure of Internet connectivity is a basic necessity for a culture of ICT entrepreneurship, and Estonia boasts a robust ICT infrastructure as the Internet is accessible nearly everywhere in the country. Fixed broadband coverage in Estonia is estimated at 93%.

As Mr Montonen told ITU News, the country also embraces the political will and e-services necessary for a thriving start-up culture.

In November 2013, the Estonian government developed the Digital Agenda 2020 for Estonia, which aims to create an environment that facilitates the use of ICT in the development of Estonia. Four goals were set to support the development of Estonia’s information society, which included: ICT infrastructure that supports economic growth; larger number of jobs with higher added value and improved international competitiveness; smarter governance; and enhanced awareness of Estonia as an e-state over the world.

Additionally, Estonia launched the Estonian Entrepreneurship Growth Strategy 2014–2020 focusing on three areas: increasing productivity, stimulating entrepreneurship and encouraging innovation.

The government has also developed a dedicated website, Startupestonia.ee, to support start-ups and simplify the registration process for new businesses.

Given that it takes “just five minutes” to register a firm in Estonia, the ease of incorporation really helps to facilitate the start-up scene.

Cultivating ‘intraprenurship’

Estonia is also taking part in Stimulating Intrapreneurship, an EU partnership which is exploring how organizations can stimulate employees to be more ‘intrapreneurial,’ a term that refers to individuals who innovate within established companies and organizations.

Intrapreneurship is a relatively recent concept that describes employees of a company that have many of the attributes of entrepreneurs, including those that take risks in an effort to solve a given problem. “What Europe lacks in early-stage entrepreneurship, it makes up for in intrapreneurship,” says the recent WEF report.

Entrepreneurial activity that happens within firms, also known as entrepreneurial employee activity (EEA) or, more commonly, intrapreneurship is a quickly becoming a trend in Europe.

Countries are heavily investing in entrepreneurship for continued economic growth and to boost competitiveness in the global market, MSMEs along with a new focus on intrapreneurship will be key factors for growth in the European region.

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ITU is the United Nations' specialized agency for information and communication technology. Any opinions expressed and statistics presented by third parties do not necessarily reflect the views of ITU.

How Estonia became a leader in tech startups and entrepreneurship

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