Estonia recently made history when its third unicorn, Wise, went public on the LSEG as the largest tech listing in London to date. The company was valued at a staggering 11 billion USD, making it the Estonia's first Decacorn.
This is a game changer for the Estonian startup ecosystem as well as the country's reputation, showing its presence in the international capital markets. This is a proof of the increasing strength of the Estonian startup ecosystem. The story of Wise shows the power of Estonia as a country for startups. It's also a great example of the country's entrepreneurial mindset.
The tech industry is booming in Estonia and it has been booming for quite some time. For example, according to a recent report by the European Digital City Index, Tallinn is Europe's fastest growing digital city and ranks third after Amsterdam and Vienna. The Estonian e-residency programme also recently passed the 250 000 mark, resulting in even more international entrepreneurs who want to start businesses in Estonia or relocate part of their company operation there. So what makes Wise so special?
Devid Palchak founded Transferwise back in 2011 with Kristo Käärmann. They were trying to solve one of the most common problems among migrants: currency transfer fees when sending money abroad. As they say on their website 'When you send money abroad, it's like sending a heavy parcel with expensive shipping costs'. Palchak and Käärmann believed that if both sides of a transfer agreed to use their platform, the transfer fees could be halved. So why did they decide to base the company in Estonia?
The answer is actually very simple: They were offered help by the Estonian government including tax breaks, grants and seven years of reduced rent for the office space. This gave them a huge head start. It may seem unbelievable but Transferwise was founded in 2011 when the entire population of Estonia was just 1 333 000 people! (Source: CIA World Factbook)
So what next?
To put things into perspective let's take a look at London where Wise also operates. The startup ecosystem in London is well established and supported by the government. There's Westminster, one of Europe's leading universities, numerous co-working spaces to name just a few. Wise still managed to find its spot and become one of the most valuable companies on London Stock Exchange. It definitely had to work hard for it but had plenty of advantages starting with the location which allowed them to focus on their core business early on and gain traction internationally much faster than startups from other countries.
While this was happening Estonia's tech scene was still growing, expanding different areas such as cybersecurity, robotics etc. This has been possible due to governmental support in promoting entrepreneurship which makes our country especially attractive for tech startups (Digital City Index).
Wise gives a proof that Estonia is the startup hub of Europe. When the company's valuation was approximately 4 billion USD last year, it was already the largest European tech startup by market cap. The latest valuation shows how far we Estonia has come and gives a new perspective on Estonia as a place to start a business. In less than 10 years, three companies from here have reached unicorn status - that's more than any other country in Europe! (Source: European Tech Monitor).
The success of Wise is not only impacting individuals but also shows what kind of impact startups can make on larger international society. On top of this Tallinn has been growing faster than London over the past 5 years according to PricewaterhouseCoopers' City Growth Index which took into account 60 different factors such as employment growth, technology investment or manufacturing output. Estonia is becoming a global centre for fintech, e-health and other tech innovations that change the way we live.
As an e-Estonia enthusiast, I am delighted to see the country rise and take such a prominent position on the world stage. It's inspiring to think that three companies from here made it into the list of Europe's most valuable startups which makes us even more confident in our work: there are plenty of opportunities for entrepreneurs in Estonia and with Wise going public today, there are also great chances for investors. It's safe to say that Wise won't be Estonia's last Decacorn. In fact, they're just picking up!