How the 132nd Smallest Country in the World Became the Startup Nation?

Europe’s most entrepreneurial country? It’s not the one you might expect

Have you ever been stuck in a public administration wondering why you could not have submitted this document online? Have you ever waited hours over the phone to get an answer from your social benefits provider? All of that during work hours because you had no other choice.

Well… I understand, it is exhausting. Even more when you are a young entrepreneur and you must deal with red-tape for your company.

Would you believe me if I tell you that there is a country where bureaucracy does not exist? A place where you can manage everything online whenever and wherever you want thanks to blockchain technology. An entire online nation that fosters tech innovation and startup creation through simplified tax rates, investment, and high-quality education.

This is exactly what makes Estonia the first real “Startup Nation”.

That small European country of no more than 1.3 million people has developed an inspiring digital strategy. They are now considered by the World Economic Forum (WEF) as the most entrepreneurial country in Europe. Make no mistake, that success is no accident. Estonia is an example of good politics driving towards an innovative and dynamic economy.

Let’s see how Estonia has achieved it.

1/ Service Digitalization

Since 1991, when Estonia gained independence from the Soviet Union, the Baltic country has decided to encourage an online culture. The Internet has been declared as a fundamental right and their internet connection is known to be one of the best in the world and for free!

That sounds normal when you know that 99% of Estonian state's services are online. Every Estonian citizen gets an ID card with a chip-and-pin that gives you a digital identity. That allows the Estonian administration to authenticate people without any physical contact. You can sign state documents, manage your company or even vote directly from your laptop everywhere in the world.

That is a real advantage for remote workers or digital nomads.

2/ E-Residency

To attract more investment and to drain the best brains in the world, Estonia launched an e-residency initiative in 2014. No need to be physically in the country to create an Estonian company. You just need to request your ID card online with the required documents.

Since its launch, the program has registered more than 70.000 applicants.

To attract even more talents and a qualified workforce, Estonia just launched a digital nomad visa for remote workers. That visa deals with the ambiguity that faces remote workers while travelling in foreign countries with a tourist visa.

3/ Transparency

Investors and entrepreneurs love when things are clear and simple. That is why Estonia has implemented business-friendly taxes to encourage small business creation. In Estonia, there is no corporate income tax. Only the distributed profits are taxed with a single 20% flat rate. That system fosters entrepreneurs to reinvest their money in their businesses.

Today, Estonia holds the world record for startups per person while being the 132nd -smallest country in the world in surface area. The country gave birth to Skype and Transferwise among others.

Why does it matter?

Covid-19 has accelerated the trend for digitalization. In the future, we will see even more digital nomads and remote workers in the coming years. To answer their new needs and to foster even more tech innovation, governments would need to provide better digital services. Estonia should be an example of success in that field.

About this article

This article has been written by a student on the Grenoble Ecole de Management’s Advanced Masters in Digital Strategy Management. As part of a content creation assignment, students are given the task of writing articles based on their digital interests and disseminate the articles online. Articles are marked but we make minimal changes to the content. Thanks for reading! James Barisic, Programme Director, MS DSM.