Estonia aims to develop deep-tech startup entrepreneurship
Startup Estonia and the Ministry of Economic Affairs and Communications have prepared an action plan to develop research- and technology-intensive startup entrepreneurship.
The action plan aims to accelerate the development of research- and technology-intensive entrepreneurship in Estonia and create a supportive economic environment for that. According to the Minister of Entrepreneurship and Information Technology, Kristjan Järvan, Estonia has a powerful startup business image internationally, so the goal is to use it to become an international centre of attraction also in the field of deep technologies.
Estonia’s entrepreneurial ecosystem already has many strengths for creating technology-intensive startups, but we also have many challenges to address. One is the workforce issue – how to ensure enough people with top-level knowledge and skills in Estonia, and deepen cooperation with universities to develop the necessary competencies?
It is also necessary to improve the availability of investments for high-tech enterprises and keep the legislation flexible for creating and using new technologies. “If we can successfully address these challenges, deep-tech companies will be able to play a key role in the Estonian economy and society in the future,” the minister added.
The objective of the action plan is to double the number of startups operating in deep technology by 2025 and increase it five times by the year 2030. Last year, Estonian deep-tech companies attracted investments in the amount of 175 million euros and made 15 transactions. Also, 13 percent of all venture capital investments were allocated to deep technologies. By 2030, the plan is to increase the number of transactions to one hundred and the percentage of investments to 30 percent.
According to the database managed by Startup Estonia, there are 1,444 startups currently in Estonia, and 119 of them have registered deep technology as their field of activity. These include well-known startups such as, for example, Starship Technologies, Milrem Robotics, Comodule, and new enterprises established by Estonian female researchers, LightCode Photonics and Nanordica Medical. The total turnover of deep-tech startups last year was 130 million euros, and they paid the state a total of 25.6 million euros in labour taxes. Deep-tech companies employed 1,505 people last year.
Eve Peeterson, Head of Startup Estonia, said that the development of deep technologies is critical for the state. “According to various reports, deep technologies will be the main engine of future economic growth. However, startup entrepreneurship in Estonia has traditionally concentrated on software; we have significant experience and international success stories in this area,” Peeterson said. She added that our ecosystem, incl. founders and investors, are ready for the next development stage to develop world-level technologies together with scientists in Estonia.
A good example, according to Peeterson, is LightCode Photonics, a deep-tech enterprise that has stemmed from a research project at the University of Tartu. Established by Estonian researchers, this startup develops innovative 3D cameras, the platform technology of which is becoming the new standard in 3D imaging. The startup’s ambition is to change how robots see the world.
Head of the University of Tartu Centre for Entrepreneurship and Innovation Mart Maasik emphasised that effective implementation of research results increases the contribution of businesses to national economic growth.
Research-intensive ventures tend to be complex, and their development paths are longer and riskier. Therefore, a collaborative environment fostering the birth and likely success of new enterprises plays an important role. Tomorrow’s success stories result from long preparations, implementers’ efforts and investments – thus, it is particularly crucial for researchers, entrepreneurs, investors, universities and research institutions to work together towards a common goal.
In order to develop a functioning ecosystem, the action plan concentrates on people or, primarily, the founders and employees of businesses. It also focuses on the further development of intellectual capital, including providing services and competencies in technology development, product development, intellectual property, business development and team building. Also, it is essential to develop the capital market to improve the availability of investments for high-tech startups. The action plan also involves building international and sectoral collaborative networks between research institutions, major Estonian and global companies, and investors.
The topics in the action plan will serve as a tool for startup entrepreneurs and researchers looking for business models, as well as support organisations, universities, research institutions, investors, private and venture capital funds and the public sector. The action plan to support deep-tech startups was prepared by the Startup Estonia programme of the joint agency of Enterprise Estonia and Kredex, in cooperation with the Ministry of Economic Affairs and Communications.