The first quarter of 2021 for the Estonian startup sector

To conclude the successful first quarter of 2021 – there are 1144 startups operating in Estonia, which generated 255 million euros in turnover, raised 194 million euros in investments and paid 26,6 million euros in employment taxes.

According to Eve Peeterson, the Head of Startup Estonia, the corona crisis hit traditional enterprises as well as startups, but by today the startup sector is growing again. ‘’The turnover of startups has increased by 26%, showing not only the recovery of the sector but also improvements. Additionally, the investments to startups have shown a significant increase, showing trust from the investors towards the next Estonian unicorns,’’ she added.

Turnover & taxes

According to the Estonian Startup Database, we have 1144 startups operating in Estonia, with 21 new startups created in the first three months of 2021. The number of startups that have been active for at least five years is 344 (30% of the startups in the Estonian Startup Database).

The turnover of Estonian startups totaled 255M EUR in Q1 of 2021, growing by 26% year-on-year. In the first quarter, the startups with the largest turnover were Bolt (126M EUR), Adcash (9,9M EUR) and Paxful (7,2M EUR), while the top 20 startups were generating 76% of the total turnover.

In Q1 2021, Estonian startups paid 28,8 million euros in taxes (an increase of 8% year-on-year), including 26.6 million euros in employment taxes (+3% compared to Q1 2020). The largest employment taxpayers were Bolt (3,8M EUR), Wise (3,6M EUR), Paxful (1,5M EUR) and Veriff (1,1M EUR).

Funding & biggest startup sectors

Estonian startups signed 19 funding deals for 194 million euros in Q1 of 2021. The average deal size was 10,2 million euros per deal and the biggest investments went to: Glia (64M EUR), Veriff (58M EUR) and Bolt (20M EUR). 11 startups raised investments of more than 1 million euros in Q1 of 2021. Compared to last year, we see the investment scene being way more active – in Q1 of 2020, startups raised 10,7M EUR in total.

The largest sector in terms of active startups was  Business software & HR with 206 active companies, equivalent to 18% of all startups in the Estonian Startup Database. The 3 month turnover of Business software & HR tallied 21 million euros. Startups in this sector paid a total of 3,1 million euros in employment taxes – the largest contributors were  Scoro (0,4M EUR) and Testlio (0,4M eur).

The FinTech sector covers 13% (151 startups) of all companies in the Estonian Startup Database with a turnover total of 31,9 million euros. At the end of the I quarter, FinTech startups had paid 8,4 million in employment taxes. The third-largest sector was Consumer products & services with 115 companies (10% of the startups in the Estonian Startup Database). 

Employment numbers & Estonian Startup Visa

According to Estonian Tax and Customs Board, Estonian startups employed 6453 people as of March 31, 1% less than in the year before. However, we see the startup sector recovering from COVID-19, as since the end of 2020, startups have hired 381 people, showing a quarterly increase of 6%. The biggest employers among startups are Wise (982 employees), Bolt (757), Veriff (248) and Paxful (149). Moreover, 52% of the total number of people employed in the whole startup sector at the end of Q1 of 2021, were employed by top 20 startups.

In the first quarter, 185 employees and 53 founders relocated or got permission to do so with the help of Estonian Startup Visa. In the first quarter, companies founded with Estonian Startup Visa paid 0,75M EUR in employment taxes and generated 5,7M EUR in turnover.

For more insights into all of the Estonian startups, check out the Estonian Startup Database.

Sources: Startup Estonia, Statistics Estonia, Estonian Tax and Customs Board, Estonian Startup Database,  Funding of Estonian Tech Startups #estonianmafia

Data crunched by Signe Reinumägi (Startup Estonia)


Cover by: Kristjan Prik (MadeBY)