Estonia; Europe’s Silicon Valley, attracting Entrepreneurs from around the world Episode 2 (All 2 episodes)
Latest startup trends in Estonia
ー I could clearly see that it is a good environment for startups to be born. What are the current trends in Estonian startups?
(Mr. Oliver Ait) I think that Estonian start-up companies have their characteristics by their practical solutions to problems in society through technology or innovation. For example, if someone finds an issue or problem, they consider that there may be a similar case, so they establish their own company and try to find solutions from a global perspective.
The Estonian market is also small. For this reason, I believe that Estonian start-up companies are looking at the world from the beginning and providing solutions to common issues on a global scale.
The themes they work on tend to be solutions and services using technology such as the IoT, AI, big data, and cyber security. All of them have the characteristic of aiming to solve practical issues.
─ One of the most common problems in the world is environmental issues. How about solutions for environmental issues such as carbon neutrality and circular economy?
(Mr. Oliver Ait) First of all, the digitization of government, which I mentioned earlier, is another example of resource-saving efforts, since there are almost no paper-based documents.
Start-up companies are also tackling environmental issues. For example, let me introduce Skeleton Technologies, a company that develops and manufactures ultracapacitors.
Ultracapacitors are energy storage devices with excellent features such as high power, fast charging and discharging, long life, safety, and recyclability. Skeleton Technologies is the largest ultracapacitor manufacturer in Europe, providing technology and products to major
automotive and electronics manufacturers, mainly in Europe and the U.S. In March 2021, Marubeni Corporation invested in Skeleton Technologies, and the company is developing the Asian market.
Elcogen, a company that develops solid oxide fuel cell based products, is also approaching environmental issues through its technology on a global scale. BugBox is also providing solutions to the problem of poverty caused by food shortages, by using insect diets and insect protein substitution technology.
─ What do you see as the path for Estonian startups to scale up?
(Mr. Oliver Ait) For example, Bugbox raised funds in Estonia and developed its technology. When it comes to going outside of the Estonian market and partnering with major global companies, the possible first target will be Europe or Silicon Valley, where language and communication can do
smoothly. However, Asia is also an important partner for Estonia, and I feel that each start-up company often looks at the Asian market after their business has stabilized.
Examples of initiatives with global companies.
─ What are the key points for a successful collaboration between a large company and a startup, and what should we keep in mind?
(Mr. Oliver Ait) Communication is one major point to be kept in mind. Estonia has its environment where the action can be taken in a non-hierarchical and flexible manner with a sense of speed, but there are times when such an environment and way of proceeding do not match. Estonian start-ups may also lack an understanding of the other company’s situation and culture. Both parties must understand these differences.
For example, Marubeni is not only investing in Estonian companies but has also established a local base. This is not only for collecting information, but also to facilitate actual contact with the Nordic innovation environment. In 2020, ITOCHU Corporation also invested in Tera Ventures, an Estonian venture capital company.
NICHIGAS (NIPPON GAS) has developed a one-stop service for call centers in 2019 by combining blockchain technology with an infrastructure technology called X-Road, which is being adopted as Estonia’s electronic national infrastructure, and this enables more efficient operator tasks. In this way, collaboration while utilizing the knowledge and experience of Estonian companies will lead to problem-solving. We feel that it is important to build a relationship of trust through repeated communication.
Future direction and outlook that Estonia considers
─ The EU has set a goal for 2050 called the “New Circular Economy Action Plan,” and Estonia has also set a strategy called “Estonia 2035. I would like to ask you about Estonia’s environmental issues and how the country is working with innovation.
(Mr. Oliver Ait) In the 2011 WHO (World Health Organization) air pollution survey, Estonia ranked as having one of the cleanest air on the earth. It might be related to the fact that half of Estonia’s land area is forested. It comes from a strong commitment to actively using renewable energy sources such as wind power and biomass. However, the current energy market and production are dependent on oil shale, and I feel that this is a problem that needs to be solved in the future.
One of Estonia’s unique approaches is the use of DX as a means to solve environmental problems, and I feel that we will be able to further reduce the burden on the environment if the use of digital technology becomes more widespread in the two areas where DX is lagging
behind: the construction industry and the transportation and logistics industry. This is why the Estonian government is also working on this. For this reason, the Estonian government is actively supporting the use of DX in these two areas.
Of course, the government issues a variety of policies and plans. However, I think most of the actions are bottom-up-oriented rather than top-down instructions: private companies and startup companies coming up with agile solutions to problems and the need, and then taking action.
─ Oliver-san, please give a message for our readers.
Welcome to Estonia !
If you are interested in taking on challenges, especially in start-up and innovation fields, I would like you to visit Estonia. You will have the guts to contact not only Estonian companies, but also Nordic companies and start-up companies, and seize many opportunities.
I also hope you will consider establishing a base/office in Estonia as one of the ways to research and access the Nordic innovation ecosystem.
By the way, In Estonia, two major startup events are held every year in May and August: “Latitude59” and “sTARTUp Day.” The speakers and companies are all related to startups and the startup ecosystems, and the participants come from all over the world. Of course, you can learn a lot about the Estonian startup environment, trends, and funding. If you have a chance, please join us.
I hope this conversation will help you to think about collaborating with Estonian start-up companies.