Venture Capital - Estonia

Estonia

Highlights

Estonia is projected to see the Total Capital Raised in the Venture Capital market market reach US$93.96m in 2024.
In the country, Later Stage dominates the market with a projected market volume of US$40.23m in 2024.
When compared globally, most Capital Raised will be generated the United States (US$136.6bn in 2024).
Estonia's Venture Capital market is rapidly expanding, with a surge in tech startups attracting significant investor interest and funding.

Key regions:

Market definitionIn-Scope/Out-of-scopeMarket structureReportsMethodology

The Venture Capital market in Estonia has been experiencing significant growth and development in recent years.

Customer preferences: Investors in the Venture Capital market in Estonia have shown a strong preference for startups and early-stage companies in the technology sector. This preference is driven by the country's reputation as a hub for innovation and technology, as well as its supportive business environment and strong entrepreneurial ecosystem. Investors are attracted to the potential for high returns on investment and the opportunity to be part of the next big success story in the tech industry.

Trends in the market: One of the key trends in the Venture Capital market in Estonia is the increasing number of international investors showing interest in the country's startups. This trend can be attributed to several factors. Firstly, Estonia has gained recognition as a global leader in digital innovation, with successful startups such as TransferWise and Bolt (formerly Taxify) gaining international acclaim. This has attracted the attention of investors from around the world who are looking for the next big tech success story. Additionally, Estonia's favorable business environment, which includes a simple and efficient tax system, ease of doing business, and strong government support for startups, has made it an attractive destination for foreign investors. Another trend in the Venture Capital market in Estonia is the growing focus on deep tech startups. Deep tech refers to companies that are based on scientific or technological breakthroughs and have the potential to create significant impact in their respective industries. Estonia has a strong pool of talent in fields such as artificial intelligence, cybersecurity, and blockchain, which has led to the emergence of several deep tech startups in the country. Investors are recognizing the potential of these companies and are actively seeking opportunities to invest in them.

Local special circumstances: Estonia's small size and close-knit entrepreneurial community have created a unique environment for the Venture Capital market. The country's startup ecosystem is characterized by strong collaboration and support among entrepreneurs, investors, and government entities. There are numerous incubators, accelerators, and co-working spaces that provide support and resources to startups, helping them to grow and attract investment. This tight-knit community fosters a culture of innovation and entrepreneurship, which has contributed to the success of the Venture Capital market in Estonia.

Underlying macroeconomic factors: Several macroeconomic factors have contributed to the development of the Venture Capital market in Estonia. The country has a stable and growing economy, with a high level of digitalization and a strong focus on technology and innovation. Estonia's membership in the European Union provides access to a large market and funding opportunities from EU programs. Additionally, the country's favorable business environment, including a low corporate tax rate and minimal bureaucracy, has attracted both local and foreign investors. In conclusion, the Venture Capital market in Estonia is experiencing significant growth and development, driven by customer preferences for technology startups, the emergence of deep tech companies, the country's unique entrepreneurial ecosystem, and favorable macroeconomic factors. These factors have positioned Estonia as an attractive destination for investors looking for high-potential opportunities in the tech sector.

Data coverage:

Data encompasses B2B and B2C enterprises. Figures are based on the amount of capital raised, the average of deal size and the number of deals.

Modeling approach / Market size:

Market sizes are determined through a combined top-down and bottom-up approach, building on a specific rationale for each market segment. As a basis for evaluating markets, we use data from OECD, annual financial reports of key players, industry reports, third-party reports, publicly available databases, and survey results from primary research (e.g., the Statista Global Consumer Survey). In addition, we use relevant key market indicators and data from country-specific associations, such as GDP, CPI, number of small and medium-sized enterprises (SME), new businesses registered (number) . This data helps us estimate the market size for each country individually.

Forecasts:

In our forecasts, we apply diverse forecasting techniques. The selection of forecasting techniques is based on the behavior of the relevant market. For example, the S-curve function and exponential trend smoothing are well suited for forecasting digital products and services due to the non-linear growth of technology adoption.

Additional notes:

The market is updated twice a year in case market dynamics change. The impact of the COVID-19 pandemic and the Russia-Ukraine war is considered at a country-specific level.