After the dissolution of the Soviet Union, Estonia sought to lay new digital foundations. Now, with more unicorns per capita than anywhere else in the world, it presents a highly attractive prospect for foreign investors.
Kaspar Kork, director of Estonian Investment Agency, a government agency promoting foreign investments in the Baltic country, discusses post-pandemic, the push for research and development (R&D) into the country and Estonia’s high-tech and green credentials.
How has the pandemic altered your investment focus?
Last year, we changed our focus really quickly to move the whole client journey online. But the reality of this was that many sectors didn’t adapt to these online visits. There is the kind of old tradition that “I want to see with my own eyes, I want to touch with my own hands, what property or country I’m investing in”. We saw a bottleneck in organising visits and therefore didn’t reach our goals. But in sectors which can manage the transition online, like IT, online visits proved successful.
One global movement that we have noticed is nearshoring. We saw that companies which had looked at Asian countries before would rather spend more, but bring their production lines or units closer to home. We can see this kind of trend in Scandinavian companies, specifically electronics companies, which are looking to relocate their production units back into Scandinavia and the Baltics, and we want to be the one offering this kind of advantage in Estonia.
Tell us about the startup scene in Estonia
It is a strong sector that we are promoting at the moment. We have the most unicorns per capita and so it is easy to build trust between investors and Estonian start-ups.
As you may know, we started out pretty much 30 years ago from scratch. We had a forward-thinking government; a switched on, tech-savvy population; and a very proactive IT sector. Now, as a digital country, it’s very convenient to do business in Estonia. You can register a company online, you can open a bank account online and we actually have more than 99% of our state services online.
The country’s size is also a big advantage. Estonia is a small country and we don’t have huge markets, so from day one, companies need to think big and think global.
What sectors are you targeting for the year ahead?
Foreign companies see that Estonia is a very good environment to establish an R&D centre and want to use Estonia as a testbed, unlike years ago when they came here in search of cheap labour. Normally, if you want to test self-driving buses or vehicles you would need a small test centre, but because the country is so digital you can pretty much test this on a national level. So R&D is our big focus.
Our second focus is dealing with our pre-existing foreign companies. If you look at the statistics, companies that are active in Estonia are profitable year after year, but they don’t invest much money into the country. So this is definitely the work we need to do, to work with these companies and to bring in other companies from abroad.
Our third focus is venture capital (VC). We know this sector has big potential, with lots of foreign VCs already invested here. And the last focus is we need to be one step ahead of other investment promotion agencies (IPAs). With more competition between IPAs than ever before, we want to use artificial intelligence and automation to work with foreign investors.
How important is sustainable development?
This is really important for us. We are focusing on making better value propositions so that foreign investors and companies can see what kind of benefits we have here in Estonia. I think it’s a great place for sustainable development because of the cooperation between universities, the private sector and the public sector, and half of Estonia is covered in forests. We would like to keep this kind of synergy of being a high-tech, green country.
Kaspar Kork is the director of Estonia Investment Agency, a government agency that is part of Enterprise Estonia and promotes foreign investments into the Baltic country.
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