This is how we got the most out of Tallinn’s startup scene in 3 days
We at Aalto Entrepreneurship Society, Aaltoes, visited Tallinn on 29.6.-1.7.2022 to learn more about Tallinn’s startup ecosystem, build connections for the future and to scout collaboration opportunities with current Aaltoes-projects. The three-day visit included many meetings with varying startup ecosystem players. Here we’ll cover the main contents of our trip and provide an overview of what we learned from the scene as a whole.
Our schedule for the trip:
The trip consisted of multiple 1–2 hour long meetings daily with local ecosystem players. Here’s an overview of our schedule:
Wednesday 29.6.
- (Ferry to Tallinn & settling at the accommodation)
- Meeting Andrus Alber, co-founder & CEO of Bankish, a startup combining IT with financing and deep knowledge of the industry that Andrus has gathered from a long career in finance before founding
- Meeting Mari-Ann Meigo Fonseca, co-founder & COO at Gelatex, a materials startup revolutionizing the production of nanofibers
Thursday 30.6.
- Meeting Sandra Saarnit, startup community development manager at Startup Estonia, a governmental organization supercharging Estonia’s startup ecosystem
- Meeting Ivar Siimar, partner at TrindVC, a VC focusing on helping in scaling startups with a consumer or community component
- Meeting Kairi Loomet, community manager at Palo Alto Club, a membership-based coworking space located in an old train garage, where we also had the following meetings:
- Meeting Kadi Aguraijuja, project manager at Garage 48, Estonia’s largest hackathon organizer
- Meeting Kaari Kink, VC at Superangel, a pre-seed + seed investor looking to invest in ventures that have the potential to be impactful globally
- (Dinner with some local students)
Friday 1.7.
- Meeting Helery Pops, co-founder of Honey Badger Capital, a cleantech and emerging markets focused seed and pre-seed investor
- Meeting Kairi Tammal, the head of Technopol Startup Incubator, an incubator located in a business park supporting technological entrepreneurship
- (Ferry back to Finland)
Our delegation for the trip
Our delegation for the trip represented different roles within Aaltoes quite well. The trip was organized and led by two board members who were accompanied by volunteers from Dash and Deep Dive, a participant from Ignite, and a few volunteers working on developing the Aaltoes community.
Overview: The Estonian Startup Scene
Having all started from very small circles, the goodwill is still very strong in the Estonian startup ecosystem; even the busiest individuals are happy to help up-and-coming founders with their problems.
The Estonian government has taken a lot of action to improve conditions for startups in the country, and it shows in statistics. Estonia has the most VC funding per capita in the world and is well on its way to surpass the United States with the most unicorns per capita. As of our visit, Estonian startups had raised a collective of over 1 billion euros at the halfway point of 2022. This figure puts them miles ahead of any other European startup ecosystem when it comes to funding raised per capita. According to EU-startups, Estonian startups received nearly two times more funding per capita on a European level in 2022 than the second-ranked country on that list, Sweden. For reference, Finland is sixth on this list.
Estonia’s startup scene is growing rapidly. Startup Estonia provided us with an estimated 30% annual growth rate for the startup scene, which consisted of 1383 startups on the day of our visit (30.6.2022). These are supported by approximately 150 support organizations, such as Garage 48 or Palo Alto Club.
Another strength of the ecosystem lies in effective legislation. Estonian law has defined startups as technology companies that have scalable business models. This definition has allowed the country to make specific legislation to help these companies grow big and provide the base for the country’s future. This growth is also in large part enabling itself; founders of unicorns have gone to found new startups or VC companies to address founders’ needs through their own past perspective.
Lastly, many of the people we visited brought up the importance of Skype, Estonia’s first unicorn, in being the cornerstone of the startup ecosystem in the country. The term ”Skype-mafia,” coined after the world-famous Paypal-mafia, is quite commonly referred to while talking about Estonian unicorns as many of the founders of the next generation success stories got their start working for Skype in its glory days. The ecosystem also has a very strong pay-it-forward -culture.
Our visits
During our visits with local startups on the first day, we got to take a peek at two very contrasting companies. Bankish was located, in good fintech fashion, right in the city center above rooftops in a highrise. As our host, CEO, and co-founder Andrus founded Bankish later on in his career, our discussion revolved around the differences and success rates of founding startups at different ages. We concluded with Andrus that the later you wait, the greater your idea needs to be, as you will be taking a far bigger risk. As young students, most people don’t have to earn large salaries to pay the bills and support their families. Especially in Finland, the environment for founding as a student is really favorable, as a failure can be brushed off by returning to your studies and getting financial support from the government.
The second startup, materials technology-focused Gelatex, was housed quite far outside the center, in a much less modern concrete neighborhood. By the looks of their premises, Gelatex was putting money where it mattered most, in developing their product. They are engineering substitutes for animal-based products using nanofibers, and by the time of our visit, they had managed to create a scalable 3D scaffold as a base for cultured meat production. The idea was for these scaffolds to be the base that animal cells get planted on to grow and thus enable eg. cell-cultured meat to have a structure reminiscent of real meat, instead of being jellylike. During the visit, we also got our hands on their previous physical product, an eco-textile that the company originally produced to be an alternative to leather before pivoting their efforts toward cell-based meat.
Our second day started with a visit to Startup Estonia, which gave us a great general overview of the Estonian startup scene. We discussed various government initiatives that enable startups to thrive in the country: efficient visas for developers that help startups hire talent from abroad, startup visas for founding your company in Estonia, and the Estonian startup database, collecting data of all Estonian startups in one place to name a few.
After learning the basics of the ecosystem, we went to see an active investor in the scene, TrindVC. Our discussions revolved around the overall practicalities of VCs and how they analyze founding teams when making investment decisions. The main takeaways from this being:
- Three is better than one, solo-founding is a road riddled with obstacles
- A good founding team seems like a group of friends with diverse skillsets and backgrounds
- Investors appreciate accomplishments without funding as this showcases passion toward what you’re doing and resourcefulness in how you’re doing it
Our host Ivar also brought up the Estonian Startup Founder Society, an active Slack-group for founders to help each other in the country. Since Estonia is a very small country, the startup scene is quite a tight-knit community and it’s easy reaching out to other founders.
In the afternoon we headed to Palo Alto Club, located in an old train warehouse that had since been taken over by local VC, Superangel, as office space for their portfolio companies. As time passed by, the space was eventually converted into its own subscription-based coworking space, run by a separate team. Visiting a coworking space proved quite valuable as in addition to meeting the people running the space, we also had the chance to talk to other users of the premises. One visit turned into three and soon we were comparing our hackathon experiences with Garage48, Estonia’s largest hackathon organizer, and got to meet the original owners of the space, Superangel.
We started our last day by packing our bags and headed to eat brunch with an up-and-coming VC, Honey Badger Capital. Our discussions started with similar topics as with TrindVC, good founder teams. Helery illustrated the importance of gender-diverse founding teams with a simple one-liner: “Why wouldn’t you include someone on the team who has the viewpoint of 50% of the world?”
Talking with Helery, it started to become clear why the Estonian startup scene thrives so well in comparison to how small of a country Estonia is. In fact, the small size of Estonia may be the driving reason behind such growth and success as the locals seem to perceive this as an advantage. When your domestic market is small, you’ll have to build internationally from the get-go. The hardships of the late 20th century are also fresh in mind and force Estonians to focus on constantly getting better and getting things done. This culture is quite admirable as they’ve turned their disadvantages into an attitude of constant growth.
For our last visit, we headed to Technopol, which is located in the near vicinity of Tallinn University. Technopol is a science park that was built to form a big campus with the university, to ideally cover the whole life-cycle of entrepreneurship and boost university based startups. As Technopol deals with a lot of young founders, they put a special emphasis on mentoring and otherwise helping founders through lots of pivots in their early stages of developing companies. Though located next to a university, Technopol had faced a problem with the amount of hardware startups being born from the science park. They combatted this together with Taltech and Swedbank by developing an equity-free prototype fund so hardware startups would have an easier time building their first prototypes that are usually required to get any private funding.
Takeaway: Navigating the scene as a newcomer
From our visit, the Estonian startup scene seems approachable for a newcomer though getting into the thick of it may seem challenging. The best bet to immerse yourself in the scene, based on our trip, would be to reach out to TrindVC about the Slack-group they mentioned. It’s also good to keep in mind that though the scene is very active, there aren’t that many people involved, which makes it very easy to reach out to basically anyone through introductions.
One common recommendation in many meetings was watching the comedy movie “Chasing Unicorns,” which can either serve as a nice intro into the Estonian startup scene or a good review after visiting the scene. Watching the movie beforehand will give you something to break the ice with new people as it’s a very popular film in the Estonian startup scene.
Written by Niklas Hamberg, photos by Anna Chialà & Niklas Hamberg, edited by Lilya Lagerbohm.