Startup Estonia: state has gained € 11.7 million in tax revenue from startups within six months

17 December 2015

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Startup Estonia wants to make their country the most startup and business-friendly ecosystem in Europe. Similarly, the Dutch initiative, StartupDelta, is their closest competitor in gaining this status, as the Netherlands wants to become the largest startup ecosystem in Europe. Can Poland aspire to become one, too?

“Between Quarter 2 (Apr to June) and 3 (July to Sept) 2015 the state collected € 11.7 million in tax revenue from local startups currently employing 2154 specialists,” said Startup Estonia CEO Mari Vavulski. She also stressed that building startups, globally-oriented firms, creates an unexpected added value for the economy and the society. Firstly, it contributes to a positive image of Estonia in the world and, secondly, presents Estonians as innovative and entrepreneurial-minded. Vavulski emphasizes that 80% of startup employees live and work in Estonia.

The Estonian counterpart of Startup Poland established in 2014 has been managed by the Estonian Development Fund with a main goal to identify the weak spots of local startup ecosystem and provide solutions to create a supporting environment for startups. “During the first year Startup Estonia launched a number of successful acceleration programs and two seed funding programs. We also helped to expand local investor network and to introduce Estonian startup ecosystem in foreign countries,” Vavulski added.

In total, 98 startups participated in eight programs initiated by Startup Estonia and 71 graduated successfully. In total, 1.9 million euros of growth capital was raised. From the local programs provided by Startup Estonia, 4 startups moved on to participate in international accelerators: Sorry as a Service, Deltabid, Results on Air and Deekit.

Vavulski emphasized that local startup scene is in a good place, however, they foresee that lack of smart capital and globally competitive projects might become the main obstacles in the near future. “The cause for both obstacles is our young startup ecosystem. We don’t have a generation of entrepreneurs with long-term comprehensive experience in startup business who wish to re-invest their knowledge and capital into new startups. The next major goal for Startup Estonia is to invest in early-stage knowledge-intensive and high-tech Estonian enterprises, and provide them with management consulting services needed to step up the game,“ Vavulski concluded.

The number of Estonian startups as compared to the size of the entire population is remarkable. There are around 1.3 mln Estonians and 404 startups. According to our report, there are 2 432 startups in Poland. We are particularly impressed by the skilful data collection carried out in Estonia. According to a press release, their local organizations know exactly how many young entrepreneurs there are in Estonia, how many people they employ, and how much income they bring to the national budget. Does the Polish Central Statistical Office (GUS) hold such data? No. Does the Polish Agency for Enterprise Development (PARP)? No.

Startup Poland’s role is precisely to provide hands-on tools for startups, as well as knowledge about, and for the ecosystem. In a couple of days, we are going to start measuring our ecosystem capacity – we are launching Startup Poland’s new website.

In conclusion, looking at the Estonian example, we can assume that favourable conditions for growing startups translate into their own effort applied into building a solid national brand supporting not only entrepreneurs’ interests, but also their country’s economy. Thanks to these measures and the scale of mobilization and engagement of startups in their own environment, now we have no doubt that we also take part in the competition.

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