Estonian business

environment

Kaupo SempelsonEnterprise DivisionMinistry of Economic Affairs and CommunicationsMay 17Valmiera, 2013

About Estonia

General Information

Population: 1.29 million

Area: 45 000 km²

Language: Estonian

Currency: EUR

GDP: EUR 13 172 per capita (2012)

GDP growth: 3.2% (2012)

Exports: 92.5% of GDP (2012)

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Entrepreneurship

• 52 acting enterprises for 1000 inhabitant• Survival rate of enterprises 73,7% (3 years

old enterprises)• Share in world trade 0,099%• 11 281 exporting enterprises• Productivity of EU 27 – 68%• Approximately 19 000 new enterprises in

2012• 43% want to be entrepreneurs (8,3% are)

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Taxes in Estonia

GDP by Economic Activity, 2012

Source: Statistical Office of Estonia

FDI inflow by countries and activity, stock as of 31.09.2012Sweden 27,3%

Finland 22,9%

Netherlands 10,6%

Norway 5,1%

Russia 4,2%

Lithuania 3,2%

Cyprus 3,0%

Denmark 2,5%

USA 2,4%

Germany 2,3%

Other 16,5%

Financial and insurance activities 25,7%

Manufacturing 16,9%

Real estate activities 14,1%

Wholesale and retail trade 13,1%

Professional, scientific, technical activities 9,1%

Transportation and storage 5,5%

Information and communication 3,1%

Other 12,5%

Source: Bank of Estonia

Exports of Manufacturing Industry by technological intensity

2012

Source: Statistical Office of Estonia

Average gross wages by economic activity

Source: Statistical Office of Estonia

State roll

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Existing pieces @2009-2010

Business competition: Ajujaht

Incubation programs, accelerators

Start-up grants, guarantees

R&D grants VC funding: Estonian Development Fund

Export grants

Knowledge transfer

Bits and pieces are there but few of them with really global growth company ambition

VC funding: Baltic Innovation Fund

Subordinated loans

Estonian Start-up Scene

• Largest number of start-ups per capita• Accelerators

• Start-up Wise Guys• Gamefounders

• The 2008 financial crisis was an extra boost

• Key focus in the near future – make them grow fast

• Brain Hunt• ENTRUM• Garage 48

Start-up Estonia – „umbrella“ program for high-growth start-ups

Pre-seed phase

Generation of biz ideas, developing biz cases, providing entrepreneurial challenges for students

Work with university’s intellectual property

For example:• Biz competitions for wider audience• Entrepreneurial, inspirational lectures• bootcamps, etc

Generation of biz ideas, developing biz cases, providing entrepreneurial challenges for students

Work with university’s intellectual property

For example:• Biz competitions for wider audience• Entrepreneurial, inspirational lectures• bootcamps, etc

Seed phase

Validating the biz concept

Building the prototypes

For example:• “Start-up academy”, intensive mentorship-acceleration program

• Incubation programs• Lectures and training on specific topics

Validating the biz concept

Building the prototypes

For example:• “Start-up academy”, intensive mentorship-acceleration program

• Incubation programs• Lectures and training on specific topics

Start-up phase

Accelerating the most promising companies

Internationalization

For example:• business accelerators (like Vigo)

• International networking projects

• Biz missions to target markets

Accelerating the most promising companies

Internationalization

For example:• business accelerators (like Vigo)

• International networking projects

• Biz missions to target markets

Business incubatorsTechnology incubators in science parks:•Tallinn - Tehnopol•Tartu - Tartu Biotechnology Park, Tartu Science ParkCreative Industries Incubators:•Tallinn - ESA Creative Incubator•Tartu - Tartu Centre for Creative Industries•Viljandi - Viljandi Creative Incubators Foundation Other incubators:•Tallinn - ESA incubator in Ülemiste, ESA incubator in Kopli•Narva – Business Incubator Eagle Nest

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Example: Innovation vouchers• Target group: SMEs (only once per SME)• Activities: buying services from HEIs and R&D

institutions, patent offices and certified labs; 3200EUR per SME

• Option for cooperative projects between up to 5 SMEs; 15% of all projects, increasing trend

• Technology transfer offices have had a major role in promoting vouchers and university services to SMEs

Information

Enterprise Estonia

•http://www.eas.ee/en

KredEx

•http://www.kredex.ee/en/

County Development Centres

•http://www.eas.ee/et/eas/kontakt/maakondlikud-arenduskeskused

Starting a business

Company Registration Portal

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Company Registration• Step 1: The entrepreneur logs onto the portal using an ID card• Step 2: He or she fills in the necessary information• Step 3: The founder or founders electronically sign the

documents• Step 4: Fees and share capital are transferred through the

Internet• Step 5: The entrepreneur sends the application with just one

click

All of the information is automatically sent to the courts and the Central Commercial Register, and a confirmation is received a few minutes later.

• Cross-borders• Thanks to the introduction of cross-border digital signatures,

Portuguese, Finnish, Belgian and Lithuanian citizens can also register their companies in Estonia and vice-versa. Potential users are up to 20 million.

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All you have to have:

Computer

Internet access

ID-card

ID-card reader

Valid PIN passwords

E-business register data exchange

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Centre of Registers and Information Systemse-Business Register

It works!We can use this knowledge in any Internet portal

Know-how

First in EU

Innovative

Improves Estonian business environment

Co-operation

World record

18 min 3,5 sec Supporting single market

Single points of contact

Proof of concept

Free license

Cost saving

Efficient Saves time

Secure Co-operation

Use of ICT•E-government

•E-Tax Board

•E-elections,

•Digital signature

•E-billing

•Mobile parking,

•Mobile payments

•Online company creation

•Digital prescription

•90% electronic transactions, 88% of the population using Internet banking

• Submittance of annual reports electronically in Commercial register

• Census 2011, more than 60% of population counted electronically

Information

ICT demo centre

•http://e-estonia.com/

Centre of Registers and Information Systems

•http://www.rik.ee/en

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Opportunities for 2014-2020

Smart specialisation …

• ICT supporting other sectors

• Health technologies and services

• Resource efficiency

… and target groups

Locomotives: export turn-over > 30 MEUR

Key clients: export turn-over > 1,25 MEUR, value-added > 25k EUR/per

Growth enterprises: sales turn-over > 200 000 EUR + yearly growth 20%

Main fields

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What do we offer our target groups?

• Support against comprehensive business-plan

• Long-term client management

• Exports in focus

• Increase of financial instruments

Estonia-Latvia cooperation• Tourism between countries has been risen last years.• INTERREG programs• Cooperation between local governments• Estonian export to Latvia – food and drinks, machinery-

equipments, minerals• Latvian export to Estonia - mineral fuels, food and drinks,

machinery-equipments, chemistry products• Latvia is 4th trade partner to Estonia• BIF

Thank you!

kaupo.sempelson@mkm.ee

www.investinestonia.com

www.tradewithestonia.com