For the fifth year in a row, we welcomed the EstBAN, Estonian Founders Society, EstVCA, Invest Estonia, and Startup Estonia representative members to hear their conclusions for 2024 and encouraging perspectives for 2025. The anniversary event was held on January 9 at the Von Krahl Theatre and engaged over 150 Estonian innovation ecosystem members to vibe together and hear what is happening in the startup, venture capital, and angel investment landscape.
The discussion, moderated by Vaido Mikheim from Startup Estonia, featured Lauri Antalainen, from the Estonian Business Angels Network (EstBAN), Hedi Mardisoo from the Estonian Founders Society, Kaari Kink from the Estonian Private Equity and Venture Capital Association (EstVCA), and Joonas Vänto from the Estonian Investment Agency.
📸 EVENT PHOTO GALLERY
🎥 EVENT RECORDING
2024 in a nutshell
The sector has stabilized since peaking in 2021 – and despite 2024 proving to be a challenging year for founders and investors alike, there is as much interest as ever in putting money into the sector, and capital is available. The market itself, meanwhile, has become more aware.
Kaari Kink, the chairman of the Estonian Private Equity and Venture Capital Association (EstVCA), opened the now traditional Estonian Startup Ecosystem Annual Fireside Chat by saying that 2024 was a successful year for venture capital funds and that local funds are currently well capitalized.
“Investments in our local ecosystem have grown, too: the amount that Estonian venture capital funds have been putting into the local market has tripled since 2019. For example, last year around 70 million euros was invested in Estonian companies.”
Estonian Business Angels Network (EstBAN) president Lauri Antalainen added that things have changed since the clear overheating on the market in 2021. “It’s stabilized since then,” he said. “The volume of angel investments has indeed dropped off a bit in the last couple of years, but that’s Europe-wide. It’s not a major problem, because the aim isn’t just to invest money but to make money, and investors are a lot more clued-up than they used to be.”
Hedi Mardisoo, a member of the management board of the Estonian Founders Society, agreed that raising investments has become more challenging and that startup growth has tailed off. “Efficiency was the keyword in 2024, and those who survived the year are definitely in better shape and more mature for it,” she said.
Director of Estonian Investment Agency Joonas Vänto raised the point that although Estonia’s ecosystem is one of the best in the world, fierce competition makes it vital to attract entrepreneurs from other countries. “2023 was a record-breaking year for Estonia in that regard, but you can’t set new records every year,” he said. “The results for 2024 being more modest is pretty much what everyone expected. Sure, there were setbacks during the year, but there’s still a lot of interest among investors looking to come here. We have a few potential €100-million-plus investment projects in the pipeline at the moment. I’m sure we’ll be hearing good news from the investment scene in 2025.”
Highest-ever startup death rate
Last year saw the highest-ever closure rate of startups. However, the overall picture shows that lots of startups have done an amazing job in turning themselves into so much more efficient, many are in breakeven or close to breakeven. “So from that point of view, everybody who has survived is in a much better shape and form,” said Hedi Mardisoo.
But it’s not just the death rate we should be worried about. Over the last 12 months, the number of new companies hit an all-time low during the year. “How to help people launching start-ups has become a major structural issue. The risks are big in the sector and the environment isn’t at its most conducive at the moment, which is sure to impact people, mentioned Hedi Mardisoo.”
The sectors to watch
The discussion also touched on the need for the Estonian start-up sector to pivot away from financial services and software development, which have been its primary focus to date, towards innovative areas that are likely to dominate in the future: deep and health technologies; defense and energy; and ever-topical AI which got a total of €11B worth of investments in Europe last year.
At the same time, the panelists acknowledged the shortfall in experts needed to develop knowledge-intensive enterprises in Estonia, said it remains vital to attract talent to the country, and urged people to look more to universities, encouraging cooperation between the startup sector and researchers and transfer of technology.
Record dry powder
Estonia has the tools to become a global pre-seed and seed funding hub. There has never been as much available capital in funds as we have today. “Estonian funds already have around a billion euros at their disposal for new investments, and local funds have grown to become international ones, opening offices abroad and looking outward much more than they did before,” Kaari Kink explained.
But with all this money, we have seen a shift in the investors’ mindset. They have become increasingly selective. Lauri Antalainen also mentioned that the recent stories in the Estonian startup ecosystem have made investors smarter and more cautious.
Wishing exits and new founders for 2025
Predicting developments in 2025, all the panelists agreed that the Estonian startup ecosystem needs new exits as this will rejuvenate the whole ecosystem by bringing money back into the market, benefitting funds and startup founders alike. However, they also agreed that owners should not be pressured into selling, especially if market conditions are not conducive. Both Hedi and Kaari also pointed out that the goal for 2025 would be to convince at least one person to take the risk and become a founder: “The capital is out there. I hope the founders feel like it is there for them too, and they find the motivation and inspiration to build the next moonshot.”
The Estonian Startup Ecosystem Annual Fireside Chat is an exclusive gathering of the Estonian tech ecosystem, organized by EstBAN, Estonian Founders Society, EstVCA, Invest Estonia, and Startup Estonia.
