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 capitalised. “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,” she explained. “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 was invested in Estonian companies.”

Kink nevertheless conceded that 2024 was a hard year for fund managers. “People are being a lot more conservative when it comes to capital, and we’re seeing a trend throughout Europe that fund investors are opting to put their money into well-known names,” she said.

Estonian Business Angels Network (EstBAN) president Lauri Antalainen added that things have changed since the clear overheating on the market in 2021. “It’s stabilised since then,” he said. “It’s true that the volume of angel investments has 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. “But the fact that so few startups were founded here over the last 12 months is a worry – the number of new companies hit an all-time low during the year, and how to help people launching startups 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 have an impact on people.”

The panellists agreed that Estonia remains a wellspring of ideas and enterprise, but noted that people are hesitant to change career paths, abandon stable jobs, and take the risk and responsibility of launching startups in uncertain times. They nevertheless see the future of the sector in Estonia as lying in the younger generation and employees in large, traditional companies.

However, Vaido Mikheim, the head of Startup Estonia who led the discussion, reminded the panelists that as recently as five years ago, people were very optimistic about the local startup sector. “Was that optimism justified?” he asked. The participants all felt that the Estonian sector remains well positioned compared to other European countries, but acknowledged that Europe as a whole is being outstripped by the United States.

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. In fact, 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.”

The discussion also touched on the need for the Estonian startup 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; defence and energy; and ever-topical AI. At the same time, the panellists 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. Mardisoo added that thought also needs to be given to enticing researchers who have left Estonia and set up companies abroad to return to the country.

Predicting developments in 2025, the panellists agreed that the Estonian startup ecosystem needs new exits, i.e. companies that have reached the point of sale, as this will bring 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 to it.

The Estonian Startup Ecosystem Fireside Chat 2025 was organised by EstVCA, the Estonian Founders Society, EstBAN, Startup Estonia, and Invest Estonia. The panel was led by Vaido Mikheim, the head of Startup Estonia.

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