Estonian Startup Ecosystem Annual Fireside Chat 2025: Estonia’s Startup Ecosystem Is Entering a New Era
Relive the Fireside Chat Through the Recording and Photos.
The Estonian startup ecosystem gathered once again for the annual Startup Ecosystem Fireside Chat, bringing together founders, investors, and ecosystem leaders to reflect on the year behind us and look ahead. While 2024 has not been an easy one, the discussion made one thing clear: Estonia’s startup sector remains resilient, efficient, and globally competitive. Despite global uncertainty and tighter capital markets, the ecosystem continues to deliver strong results and is evolving in ways that may shape its future for years to come.
A Challenging Year and the Best One Yet?
Opening the discussion, Allan Martinson, President of the Estonian Founders Society, framed the year with cautious optimism. “It certainly wasn’t an easy year, but our founders have done excellent work.” The numbers back this up. According to Martinson, Estonia’s startup sector generated €1.8 billion in added value this year, accounting for 4.3% of Estonia’s GDP, three times more than five years ago.
What makes this growth particularly remarkable is its efficiency. “What’s remarkable, however, is that the number of employees in the sector has not grown over the past four years. We have built an extremely efficient sector that generates 2.5 times more added value per employee. The sector’s turnover is forecast to exceed €5.1 billion, around 20% higher than last year, at a time when the broader Estonian economy has grown by just 1%. “Unlike the rest of the economy, the startup sector has not contracted even once,” Martinson noted.
International Investors Are Still Watching Estonia Closely
From an investment perspective, Estonia continues to attract attention beyond its borders. Kärt Klein from Invest Estonia highlighted strong and growing interest from international investors, especially in strategic areas. “We work with international investors every day and see very strong interest in the defense industry and deep tech. Currently, 40–50 foreign funds are actively looking for investment opportunities in Estonia, with interest coming from an increasingly diverse range of countries. So we are in a good place and moving in the right direction,” Klein said.
Angel Investors: More Active and More Selective
The angel investment landscape also offered reasons for optimism. Karin Künnapas, CEO of the Estonian Business Angels Network (EstBAN), described a year of active investing and encouraging exits. “Private investors are investing actively, both directly and through syndicates and funds, and this year we have seen a record number of three angel syndicate exits, which adds optimism and brings money back into the market.”
At the same time, expectations for founders have clearly risen. “Angel investors have become more mature, and it is harder to secure early-stage investment. In the past, a good idea and a strong team were enough, but today, to raise your first investment, you need to have something real to show.”
Where Are the New Founders?
One of the more serious themes of the discussion was the declining number of new startups being founded in Estonia. Several structural factors are contributing to this trend, including demographics. “Today we have far fewer people in their thirties than five years ago, yet historically they have been the most active startup founders,” Martinson noted.
Hendrik Reimand, Chairman of the Board of EstVCA, agreed that the shortage of founders is an issue that needs focused attention. “We need to think about how to make Estonia even more attractive to foreign founders, encourage more experienced and somewhat older professionals to enter the startup sector, and engage universities to commercialize scientific discoveries better.”
The Global Context: Entrepreneurship Is Not Slowing Down
While local challenges exist, Vaido Mikheim, Head of Startup Estonia, reminded the audience that globally, entrepreneurship is thriving. “Every day, 137,000 new startups are founded worldwide, so entrepreneurship has not disappeared. This is the global context in which we find ourselves today.” This contrast highlights the importance of positioning Estonia competitively in a world where talent and capital are increasingly mobile.
Venture Capital Headwinds Across Europe
The panel also addressed the broader decline in private equity and venture capital investment across Europe. “European venture capital funds have raised a total of €9 billion this year, which is the lowest number in the last ten years,” said Kärt Klein. She emphasized that the slowdown is not unique to Estonia and pointed to a key challenge ahead: “Today’s biggest challenge is attracting investors from foreign fund of funds into Estonian venture capital.”
Profitable Growth and a Shift in Mindset
Despite reduced funding volumes, Estonia’s startups are proving that growth does not depend solely on large investment rounds. “Estonia’s startup sector is profitable today, and rising profits are replacing investor funding,” Martinson said. He concluded with a clear message about what lies ahead: “This is a dramatic change that will strongly shape the sector’s development in the coming years. Estonia’s startup sector is entering a new era.”
The Estonian Startup Ecosystem Annual Fireside Chat 2025 is powered by Swedbank Estonia and organized by EstBAN, Estonian Founders Society, EstVCA, Invest in Estonia & Startup Estonia.
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