ESTONIA’S STARTUP BOOM!

With seven unicorns founded by Estonians and/or by a founding team based in Estonia, Tallinn rightfully claims to be a flourishing haven for budding startups. Yet most outside of the Baltics may have never heard of this Startup hub or its habit of churning out tech Unicorns. To uncover the secret behind the rapid growth of the startup scene in Estonia, and more broadly in the Baltics, my teammate, Gijs Wilbers, and I, Manasvi Srivastava, decided to form “The Baltic Sea Crew” – a two-man crew with a mission to discover the startup haven that is fast becoming an envy of countries across Europe. In this article, I will try to cover the highlights of our trip, the conversations that helped shape our understanding of startups, and our key takeaways and insights from the tour.

The Baltic Sea Crew: Manasvi (right) and Gijs (left)

The idea behind our tour was to meet as many people as possible who are involved with startups to develop a well-rounded understanding of the challenges and experiences of all the different players in the startup world – from Founders and venture capitalists to policy makers and startup-organizations. It felt like a pipe dream to travel through an exotic geography and uncover the magic that goes behind building unicorns. Yet with the INSEAD network and support of Sebastien Barthelemy and Sandra El Dakkak, our Summer Startup tour organizers, we began to patch together this incredible voyage through the Baltics.

Every good startup has wise mentors. So with INSEAD’s help, we were able to connect with Cristobal Alonso and Jone Vaituleviciute, CEO and Partner respectively at the Startup Wise Guys, who became our mentors for the tour. With the support of the Startup Wise Guys (and a truckload of cold emails), we finally began to find traction, and before long we had more meetings than we could fit into the two weeks we had planned to stay in Estonia.

To get a full sense of the experience of founding a venture, we reached out to startups in all possible stages – right from pre-seed to Series B. Of all the startup Founders we met, there were some that truly captured our imagination with their vision and inspired us with their ability to “power through” the hard times.

Kaidi Ruusalepp (center-left), Founder and CEO at Funderbeam and Ardo Mardisoo (left), Head of Funderbeam’s Baltic and Finish divisions, with the Baltic Sea Crew

Kaidi Ruusalepp – Founder and CEO at Funderbeam (and former CEO of Nasdaq Tallinn)

Kaidi, one of the first founders we met, spoke to us about the evolving private investment landscape over the past two decades and how her startup, Funderbeam, is offering a viable liquid secondary market for early-stage investors to help unlock the full growth potential of promising startups. The journey that Kaidi and her team have been on, from Funderbeam’s launch in 2013, exemplified to us the kind of determination that separated Tallinn’s big successes from the rest.

Kimmo Rytkönen (center), Founder at Income, with the Baltic Sea Crew

Kimmo Rytkönen – Founder at Income

Kimmo showed us how the Income marketplace is offering retail investors an easy and secure way to invest in cashflow assets such as consumer loans. Speaking to Kimmo we realized how important positioning and messaging are for a consumer-facing startup that is looking to disrupt an industry like the P2P lending business involving sophisticated financial instruments and regulatory requirements

Taavi Tamkivi (center), Founder & CEO at Salv, with the Baltic Sea Crew

Taavi Tamkivi – Founder & CEO at Salv

Having led the AML, fraud and KYC divisions at Wise and Skype, Taavi decided to put his years of experience to launch his own venture to fight money laundering. Salv is built on the principle of “Collaboration – across institutions, across national borders and legal jurisdictions”, to assemble the necessary intelligence to fight money laundering. Our chat with Taavi left us impressed how a founder’s bold thinking and deep technical expertise in a field can forge a visionary path that could both generate profits and build a better future for everyone.

Vilve Vene (center-right) & Rivo Uibo (right), Co-Founders at Modularbank, with the Baltic Sea Crew

Vilve Vene (CEO) & Rivo Uibo (CBO) – Co-Founders at Modularbank

Over a fine outdoors lunch, Vilve and Rivo told us about their modular banking platform and how it is allowing traditional banks to offer next-generation banking experiences without having to re-write millions of lines of “legacy code”. We had a lot to learn from our chat with Vilve and Rivo – not just about banking, but also about lean growth and the importance of selecting the right VCs and Angels to propel a startup to an exponential growth trajectory.

Andrus Alber (center), Co-Founder and CEO at Bankish, with the Baltic Sea Crew

Andrus Alber – Co-Founder and CEO at Bankish

Andrus talked to us about the tailored core-banking software solution offered by Bankish for professional credit providers. Our meeting with Andrus helped us see how important it is for a young startup to have an overriding business focus on its key competitive advantage in order to stand out in an over-crowded market-space and demonstrate its unique value proposition.

Kalle Palling (center), Co-Founder and COO of Cachet, with the Baltic Sea Crew

Kalle Palling: Co-Founder and COO of Cachet

Kalle spoke to us how as a young parliamentarian from the age of 22, he played a crucial role in building the policy framework that made the new “gig” economy even possible. He explained how his role in enabling this economy gave him a sense of responsibility to fill in the crucial gaps left unserved by the market like insurance for gig economy workers. Speaking with Kalle helped us realize how analyzing an industry from a regulatory perspective can also give insights to new business opportunities.

Karel Nappus (center), Co-founder and COO at Montonio Finance, with the Baltic Sea Crew

Karel Nappus – Co-founder and COO at Montonio Finance

Karel told us how Montonio uses payment initiation to process payments, which is ten times more affordable than traditional bank links. A key insight for us from our meeting with Karel was how a bold vision and a strong sense of ownership in the founding team can help propel a startup to rapid growth even through a legacy-ridden and regulated marketspace like online payments.

Speaking to these herculean “Venture Builders” gave us insights and learnings, and immense motivation to start a venture of our own. But most ventures cannot scale without capital. To see the other side of the coin, we spoke to a few Venture Capitalists and Accelerators in Tallinn that are helping make true Estonia’s dream of being known as a cradle for unicorns.

Kaari Kink (center), Venture Development Associate at Superangel, with the Baltic Sea Crew

Kaari Kink – Associate at Superangel, Member of Estonian Startup Visa Committee, Mentor at Garage48

Kaari talked about Superangel’s impressive track record with investments like Bolt and Veriff, and the assessment criteria that help them identify the winners from the rest. As a member of the Estonian Startup Visa Committee, Kaari also elaborated on how Estonia is looking to attract both tech talent and tech startups through its Startup Visa program.

Vattan PS (center), Founder at Founderly, with the Baltic Sea Crew

Vattan PS – Founder at Founderly

Vattan, a serial entrepreneur, shared with us his vision behind Founderly: building a thriving ecosystem where first-time Founders can discover new opportunities, find, and meet amazing people, and get support to dream big. As Vattan put it, “There is an enormous psychological price to pay for running a business and having people who can support you through that journey can be an invaluable strength”.

Speaking to Founders and Venture Capitalists gave us an understanding of the vision and drive propelling the private sector in Estonia. But to get a 360° view of the country’s startup ecosystem, it was crucial that we spoke to the country’s startup-organization and the policy-makers managing matters relating to entrepreneurship and new ventures.

Sander Sillavee (right), head of Marketing & Partnerships at Startup Estonia, with the Baltic Sea Crew

With the motivation to develop a 360° understanding of Tallinn’s startups, we reached out to Sander Sillavee, head of Marketing & Partnerships at Startup Estonia. Sander invited us for coffee at his office in Tallinn and talked about the exciting place that the Estonian startup world is in after the recent Wise IPO. Sander told us how he and his colleagues are on a mission to push the contribution of local startups to Estonia’s GDP from roughly 3% now, to 20% by the year 2030. A lot of this is going to rely on the success of the Estonian Startup Visa program, which has already managed to attract 226 startups to move to this vibrant Baltic nation.

Andres Sutt (center), Estonian Minister of Entrepreneurship and IT, with the Baltic Sea Crew

To round-off our extraordinary education in Estonian startups, we met with Andres Sutt, the Estonian Minister of Entrepreneurship and Information Technology, and his advisor Helmuth Martin Reisner. Mr. Sutt shared with us how Estonia has developed into a haven for tech startups coming from all over the world, while also having one of Europe’s highest GDP growth rates since its independence in 1991. Mr. Sutt told us how keeping alive this entrepreneurial spirit of risk-taking and having a global mindset will be crucial to the success of Estonian startups in the decade to come.

As our journey to the Baltics came to an end, we still weren’t sure if we were ready to build a tech unicorn, but some lessons began to crystallize quite clearly. A close-knit system of Founders and VCs, and bold and forward-thinking policymakers were both required ingredients for a booming startup ecosystem like the one we had witnessed in Tallinn. But beyond this, we also saw a deep sense of pride in building prosperity for all sections of the Estonian society and spreading the fruits of success to every corner of the country – a deep-rooted understanding that there must be a clear purpose for every startup beyond the lines of code on a screen, and a sincere willingness to serve its customers. And that was perhaps our biggest learning from the tour – that a startup draws value from serving its customers and the real driving force behind any startup, anywhere in the world, is the people it serves.

Thank you for the education, Estonia! Until next time!

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