The young generation of Estonian start-up entrepreneurs shows exceptionally rapid growth

O-Mag
Tallinn

According to data from Startup Estonia and the Estonian Tax and Customs Board, the turnover of Estonian start-up sector companies in the first quarter of this year was 1.2 billion euros, growing by approximately 40% compared to a year ago. At the same time, the turnover of Estonian start-ups up to 5 years old grew by over 60%, and they have also attracted 70% of all investments in the start-up sector.

Vaido Mikheim, Head of Startup Estonia, pointed out that the focus of the Estonian start-up sector has shifted from investor money to customer money, and the trend observed last year continues, where both younger and more mature start-ups focus on finding customers and increasing sales turnover. "Today's market conditions require start-ups to have users and, preferably, paying customers. It is pleasing to see that younger start-ups are able to keep pace, and the confidence of investors in the new generation of start-up entrepreneurs also shows that they are serious," said Mikheim.

Top-earning start-ups in Q1

The undisputed leader of the Estonian start-up sector, Bolt, generated the largest turnover in the first quarter of this year (405.4 million euros), followed by Pipedrive (121 million euros), Wise (34.8 million euros), BetPawa (32.8 million euros), and Sunly (29 million euros).

Mikheim added that the first quarter of the year showed several interesting tendencies in the Estonian start-up sector. "The exemplary turnover growth of the start-up sector will hopefully inject optimism and ambition into the mainstream economy. While the turnover of all taxpayers grew by less than 5% year-on-year, the results of the start-up sector show that the situation is not at all so hopeless. Secondly, both in Estonia and Europe, start-up sales or exits are a very welcome trend. While 11 sales transactions were concluded last year, in just three months of this year, five start-ups have found a new owner," Mikheim highlighted, but emphasized that the coming months will show whether these are permanent trends.

Five start-up exits in Q1

In the first quarter of this year, five start-up sales, or exits, took place:

  • In January, marketing start-up Promoty gained a new owner in major competitor Modash.
  • In February, Parcelsea, a developer of parcel lockers and smart mailboxes, sold its business to the Ukrainian company Jetbeep, and the Swedish international loan brokerage firm Clar acquired the Estonian loan start-up Fiizy.
  • In March, the Estonian start-up Adact, which offers game-based marketing campaigns, was sold to a US company with Israeli roots, which will now establish its development center in Tallinn.
  • In the same month, the international private equity fund Bregal Milestone acquired a major stake in the Estonian transport technology company Ridango.

Q1 investments

In the first quarter, start-up sector companies attracted 92.8 million euros in investments, which is unfortunately 40% less than in the same period last year. During the first quarter, 14 transactions took place, which is 11 fewer transactions than in the first quarter of 2024.

The largest investments among Estonian start-up companies were attracted by:

  • Blackwall (45 million euros)
  • Stargate Hydrogen (11 million euros)
  • Hoovi (8 million euros)
  • Elcogen (5 million euros)
  • Gridraven (4 million euros)
  • Frankenburg Technology (4 million euros)
  • Cino (3.5 million euros)

The average transaction size in the first quarter was 6.6 million euros, which was somewhat larger than in the same period a year ago, when the average investment volume was 6.1 million euros. This year, 13 transactions over one million euros were concluded, which remained at a similar level to last year.

Young start-ups attract major investments

Start-ups up to 5 years old (inclusive) attracted 73 million euros in the first quarter of the year, which is about 70% of all investments in the start-up sector. The largest investment was attracted by Blackwall, and the five-year-old start-up's 45 million euro investment was the largest in the start-up sector. Major investments have also been attracted by young start-ups such as Stargate Hydrogen, Frankenburg Technology, and Cino.

Startup Estonia points out that the above-mentioned turnover data for Estonian start-up sector companies are based on quarterly data published by the Tax and Customs Board based on VAT declarations submitted by VAT liable persons and are not comparable with the data from annual reports. Estonian start-up sector statistics include both start-ups in their classical definition and growth companies older than ten years, as well as technology companies operating in Estonia that have reached a sales transaction.

SOURCE: Startup Estonia

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