Estonia is a small country with 1.3 Million inhabitants, with small domestic market so companies with high ambition to grow need to look beyond estonian borders. While Estonia is known to generate a huge number of innovative startups per capita, the majority of entrepreneurial businesses in Estonia are quite traditional and are stuck in subcontracting activities, what it means that there’s no enough number of them to produce a big impact on the economy.
According to GEDI report for Estonia, there are four key bottlenecks that hold back Estonian entrepreneurial performance:
- Attitudes towards Entrepreneurship
- Skills for Entrepreneurship
Clearly, the cultural factors (attitudes and skills) are closely related, and both are key drivers of the innovation and finance bottlenecks.
Call to Action for Estonia
The GEDI approach is designed to identify and analyse bottlenecks that hold back entrepreneurial performance in countries, and to design policies that help alleviate those bottlenecks. Therefore, the call for actions in that report listed below are aimed to remove those bottlenecks:
- Increase the participation of startups in research funding and public procurement.
- Create a soft landing package for foreign talent.
- Create an action plan to attract postgraduate students (including doctoral level students) to Estonia.
- Introduce scholarships and internships for university students and student teams in Estonian startups and nearby startup hotspots (e.g., the Aalto University ecosystem in Espoo, Finland).
- Introduce industrial companies to lean startup methodologies.
Skills and Attitudes
- Launch an ’Entrepreneur at School’ initiative.
- Create a dedicated Executive MBA programme for entrepreneurs.
- Launch a programme offering support to startup teams to grow innovative global startup companies from conception phase into startup phase.
- Create a bank of teaching case studies of Estonian entrepreneurial businesses.
- Launch spin-out programme for people with industry backgrounds and for university spin-outs.
- Create an employment tax honeymoon for new businesses.
- Create a legal framework for crowdfunding and related syndication activity.
- Create tax incentives to encourage business angels and crowdfunding investors.
- Allow tax exceptions for in-moving global talent.
Challenge: Ecosystem-wide approach is required
There’s no magic potion for such scenario but long term commitment to stimulate entrepreneurial skills and mindset and effective allocation of resources to support organizations, services and activities that are helping entrepreneurs and startups to move forward to next level.
Startups ecosystems are complex systems that need to be understood, maintained and improved. Perhaps one of the most difficult things to assume is that, above all, nobody and no organization has its control as the startup journey is unpredictable, interacting with different organizations, services, activities or processes, whether at local level or beyond your borders.
You just contribute to the system in the most sustainable way, creating as much interactions as possible with other stakeholders and comparing this concept to a telecommunication network, according to Metcalfe's law, the value of the ecosystem is proportional to the square of the number of connected organizations of the system.
That’s why it is so important, amongst other things, to map any startup ecosystem as once you know who is who in your ecosystem, the likelihood to create interactions increases and therefore, the value does as well.
Arengufond, the public institution subject to the Parliament whose aim is to contribute to the economic development of Estonia, got in contact with Grow Advisors, a consulting unit of Grow VC Group that also Startup Commons is part of, as they are looking for a partner who would have the expertise in developing an startup ecosystem as a whole and help to guide through the process to implement the Startup Estonia program in order to develop the startup ecosystem in Estonia.
For that purpose, a join team by Grow Advisors and Startup Commons visited Arengufond headquarters in Tallinn last week to run a two full days workshop. The results of that workshop will be announced next month on our blog site. Meanwhile, stay tuned and don’t stop building startups ecosystems!