In 2023, Estonia is something of a tech powerhouse — and potentially even a blueprint for all countries, large or small, on how to foster the right internal conditions for tech startups to arise and excel.

Despite being a country of only 1.3 million citizens, it’s managed to produce ten tech unicorns — companies that have reached $1 billion in valuation without being listed on the stock market, which in Estonia’s case includes the likes of Skype and Wise.

Further, it boasts a tech sector worth roughly double the country’s national budget, and is home to around 1,300 tech startups.

To gain insight into what’s contributed to the success of Estonia’s tech sector, an exclusive roundtable was held on 8 June at the Edinburgh headquarters of Scots tech firm Forrit, with the Estonian Ambassador to the UK, Viljar Lubi, as the special guest.

In attendance to hear Lubi speak — and ask questions — were key figures in the Scottish tech ecosystem, including members from the Scottish Government, Scottish Enterprise, ScotlandIS, Par Equity, and DIGIT.

During the course of the roundtable, Lubi dove deep into how Estonia got to the advantageous position it’s in today, citing its agile government, a simple taxation system, reduced bureaucracy, increased collaboration, and its tech companies’ international outlook, among various other aspects.

A small country with global ambitions

As a small country, the global-mindedness of Estonia’s tech scene is something of a necessity: to grow and scale like their international counterparts, companies need to tap into markets outside of Estonia due to the size of the country’s own market.

On this, Lubi mentioned that “all our startups need to go global from day one.”

It is this collective, internationally-focused mindset — rather than an inward-looking posture — that directly lends itself to a thriving tech sector and culture, and is one facet that Peter Ferry, the Estonian Honorary Consul in Edinburgh, believes Scotland would do well to emulate.

“A Scottish company can […] find a customer, even a few customers, get funded, and not leave the postcode area,” he said. “In Estonia, it just doesn’t happen — the market is tiny, so the companies have a global outlook from day one. And their funding profile has an immediate global outlook because that’s just the way that the environment works.”

Relatedly, Lubi touched on how having such an outlook means that Estonia’s tech scene moves quickly: “If they exceed, they exceed fast. If the idea is bad, they die fast,” he said.

The global-mindedness of the Estonian tech scene, then, is also a way to filter ideas and companies that won’t succeed in the long run, thereby helping tech founders and talent to move onto more promising companies faster.

A deeply invested, agile government

Perhaps unsurprisingly, the subject of how government interacts with and responds to business was a topic that arose multiple times during the roundtable.

For Lubi, the Estonian Government’s ability to act quickly and respond to the collective needs of its founders was something that invoked pride. “Agility of government is one of our trump cards — we can change the environment if needed,” he noted.

As just one example of how Estonia facilitates an agile, collaborative government-business relationship and environment, Lubi mentioned that “for years, we’ve had this practice — usually twice a year — where founders, VCs, and angels have a roundtable with the Prime Minister.”

As part of these discussions, a wishlist from participants is supplied to the government, and potential solutions to the raised issues are conceived.

Nick Price, the CEO of tech recruitment company Bright Purple, commented on how impressive it is that Kaja Kallas — the Estonian Prime Minister — is deeply in tune with her country’s tech sector. On this, he said, “when you listen to her talking about her interaction with tech, she’s joined to the hip.”

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In light of the Estonian Government’s agility, receptiveness, and symbiosis with its tech sector, it raises the questions: could the Scottish Government perhaps be more in tune with Scotland’s tech sector, if not the overall business landscape, and also be more responsive to it?

For Peter Proud, the CEO and founder of Forrit, the answer is yes. “There’s a real disconnect between government and business here in Scotland at the moment.” He added, “people like myself are drifting away […] because I don’t feel we’re being listened to.”

On that disconnect, Proud relayed a recent experience. “I was asked to sit on an economic development day — a workshop on startups. I was the only person that started a company there. Everyone else was from a government agency,” he recalled.

However, during the roundtable, Duncan Hart — the co-founder and CEO of DeepMiner, a tech company that specialises in AI and machine learning for data analysis and decision-making, and whose solutions are used by industries including government — said that he’s witnessed a positive governmental change over time regarding agility and responsiveness.

Collaboration — across the board

During the roundtable, another area of clear consensus was greater collaboration: be it the founders of companies talking to each other to share knowledge and learnings, to cross-talk between the public and private sectors.

In Estonia’s tech sector, there’s a deep-rooted culture of collaboration between locally-based founders and businesses — of helping each other learn, grow, and succeed — and this is something that has helped propel its success. “They really want to help each other,” mentioned Lubi.

Price agreed that Estonia’s culture of collaboration is something that’s particularly apparent, and is similarly present across the Baltics as a whole.

“What they do is collaborate — they collaborate the hell out of each other,” he said. “It’s interesting going back to Skype, Wise, and Bolt — I’ve been over there and met them all — because they chat away about how they’ve built their companies.”

Sharing experience-based knowledge about what’s worked — and, perhaps more crucially, what hasn’t — not only helps founders to steer their companies in the right direction, but it also builds a supportive ecosystem and in turn deepens a collaborative culture.

Proud agreed that collaboration is something wholly essential to a successful business, not least during the early stages. “It’s really difficult to start a company; you’ve really got to roll your sleeves up. Sitting in your bedroom, working at home all the time isn’t going to make it happen. You’ve actually got to collaborate.”

Adopting Estonia’s learnings in Scotland

Estonia’s tech success story is — and continues to be — an inspiring one.

To help ensure that Scotland’s own tech sector remains accessible, innovative, and expansive going forward, perhaps the industry can look to what’s been cited as some of Estonia’s major proponents of success.

As mentioned during Friday’s engrossing hour-long roundtable, this includes an unwavering global outlook from tech companies; a deep-rooted culture of collaboration and knowledge sharing; and a proactive, agile government-business relationship and environment.

By taking multiple leaves out of Estonia’s playbook, who knows how many more Scottish tech unicorns we’ll be able to usher in?