Estonia has embraced digital technology much faster than most other European countries, and is therefore fertile ground for startups. However, once set up, they need to look abroad in order to thrive.
Interview on the sidelines of a L’Atelier numérique (L’Atelier Digital) broadcast on the BFM Business channel, with Nadim Taoubi, a Frenchman living in the Estonian capital Tallinn who founded e-commerce website Ooolala.
L’Atelier: So just how advanced is Estonia when it comes to digital technology ?
Nadim Taoubi: Estonia is one of the smallest countries in the European Union, with 1.3 million inhabitants – the equivalent of (major French city) Toulouse and its surrounding area. But this city-sized country still has a government, ministries, an army, embassies, and all the rest, which are quite expensive to run. So in order to be able to cope with this fairly heavy financial burden and balance the books they could only afford to create a relatively thin layer of administration and they needed to find simple solutions fast! Estonians describe their society as a digitised society, or an e-society. They even talk about e-Estonia !
How does that work in practice ?
Well, first and foremost digital technology is harnessed for public services. In fact mobile parking has been up and running for 15 years now in Tallinn. No more parking meters, you pay for your parking directly on your mobile phone. There aren’t any printed bus tickets, either. You buy your tickets with your phone and when there’s an inspection, you just show your identity card. And there are no paper medical prescriptions any more. Your doctor sends an electronic prescription to the pharmacy, and you go there and show your ID card.
Is Estonia equally as advanced when it comes to innovation and startups? Is there an entrepreneurial culture over there ?
Absolutely. Estonia is the country with the most startups per inhabitant in the whole of Europe. There are three main reasons for this phenomenon. The first, as we just mentioned, is that the environment is quite favourable and things are straightforward. It takes 15 minutes to set up a company on the Internet in Estonia, compared with several hours or even days in France. The second reason is that there’s a ‘can do’ culture. We should remember that the country started its new capitalist life only 20 years ago. Everything had to be set up from scratch. The first entrepreneurs who established the private banks were just 26 years old. The current Prime Minister of Estonia is only 34. So young people have a number of successful role models close at hand. The third factor is the example set by Skype, a true local success story, though in fact the company was set up by a Swede. But anyway he was living in Estonia and Skype was developed by Estonians. In fact Skype’s main development office is still based in Tallinn. This has really had a huge impact on the whole of Estonian society. It’s proof that a tiny country can succeed in hosting a highly successful international startup.
Does the country provide help, support or structures – incubators, accelerators, and so on – to stimulate this creativity further ?
Well, Estonia is a very liberal country in the European sense of the word, i.e. it has a rather non-interventionist attitude. All these things like incubators, accelerators etc. can only happen through private initiative, the State’s role here being more of a facilitator. The government builds bridges between Estonian startups and Silicon Valley investment funds and venture capital providers for instance. However, five or six years ago the government did establish a seed fund for startups as it realised that investors from abroad were rather wary of investing in very new companies. This seed fund invests between €200,000 and a million in Estonian startups.
Do Estonian accelerators specialise in any particular sector ?
Estonia’s strong point is process automation. Of course we have everything to do with Internet services and also video games. So there are accelerators for video games and also a lot of B2B focus, but everything is oriented to the international markets. Given that Estonia is a small country, everyone knows that if you want to succeed you have to look to international markets in order to attract foreign investment. The government actually encourages Estonian start-ups to go elsewhere !