Estonia presents a unique model in the global technology landscape, leveraging national strengths, fostering public-private partnerships, building technological literacy among its citizens, and embracing rapid digital transformation as a key driver of entrepreneurial growth. These efforts are empowering Estonia’s vision to nurture deep tech startups.

Innovation has rapidly accelerated in the past few decades strengthening the growth of “deep tech,” which experts predict will revolutionize and disrupt the technology sector, forcing a reassessment of priorities. This growing area of technological advancement relies heavily on scientific and engineering research, seeking to solve problems before they arise through revolutionary methods such as AI, robotics and energy storage solutions. It has the potential to transform society and the economy.

Like any such leap, deep tech faces many challenges and requires specific requirements to fulfil its promise. Ultimately, a new idea cannot be without risk. Nonetheless, this challenge has enticed the Estonian government to become an international hub for deep tech startups through the efforts of the Ministry of Economic Affairs and Communications and the Startup Estonia initiative.

Nearly a quarter of a century ago, the government launched the e-Estonia initiative, establishing a system that delivers most public services digitally, from mobile networks and data exchange to digital IDs, which Estonia was a pioneer in adopting as a means of identifying individuals in the digital world, managing many of their banking activities, and enabling this digital dimension to emulate the real world.

In addition to the digital ID, which was the most prominent step, Estonia established a special data management infrastructure to avoid collecting data on a single digital platform that is easy to hack. By decentralizing the process and linking between government entities, Estonia facilitated access and made it cheaper, and more secure. This is an ideal option for a country like Estonia, with a population of only 1.3 million.

Building on strong local experience, the government looked to global leadership, developing a plan to double the number of deep tech projects by 2025 and then reach five times that number in 5 years. The plan focuses on company founders, their teams, and the capital market, as it is intended to be a tool to guide them and establish transparent regulatory environments for them, with tax systems that take into account the nature of startups, and with as little bureaucracy as possible, so that a company can be registered in a matter of hours.

A mechanism has also been put in place to monitor the progress of the plan and its achievement of annual targets, with regular meetings to be held between the key partners of the initiative to assess the situation and chart future steps.

The launch of the government's first e-Residency program in the world was one of the important steps it took to attract foreign entrepreneurs by granting them privileges traditionally reserved for citizens, allowing them to establish and manage their companies virtually and receive banking services or pay taxes, and even access European markets. All of this is done through a smart card that can be used to sign documents.

Estonia fostered a digitally literate population by equipping every classroom with computers and providing internet access to all schools before 2000. Simultaneously, Estonia invested in adult digital literacy by providing free computer training to 10% of the population. Building on this foundation, and with over 90% of citizens digitally proficient, the country implemented a lifelong learning strategy. This initiative included a digital transformation program to enhance the technological skills of both teachers and students.

However, there are challenges that must be addressed, the first of which is the difficulty of finding unique local and global talent. The key here is to maintain open communication channels with academic institutions, to help them build knowledge and skills on the one hand, and to rely on them to supply the market with the best of their graduates on the other.

This seems necessary to address the second challenge, which is cybersecurity threats, especially after the attack on the digital infrastructure in 2007, which disrupted many services. Estonia responded by making cybersecurity a national priority, developing security tools and launching numerous initiatives. It also established the Information Systems Authority's "red team," whose mission is to try to hack the system to identify any security gaps. This idea can be expanded in conjunction with efforts to raise awareness of cyber threats and launch a platform to educate government employees on how to maintain cybersecurity. Furthermore, the government established a volunteer force of technology experts to swiftly respond to large-scale cyberattacks.

Estonia has set an ambitious goal of nurturing over 500 startups by 2030. Of these, 75 are projected to expand significantly, creating employment for more than 50 specialists each within the country.

Estonia’s digital infrastructure allows for secure and immediate sharing of information between two government agencies, which alleviates the burden of bureaucracy, ensures quick access to key services, and creating a favourable environment for startups to access the European market.

Estonia's government efforts contributed to advancing the country’s position in the global technology landscape. In 2022, Estonia hosted a significant number of tech companies and witnessed many success stories like Skype, solidifying its reputation as a fertile ground for nurturing innovators from around the world.

References:
• https://www.oecd-ilibrary.org/sites/510a82b5-en/index.html?itemId=/content/component/510a82b5-en
• https://e-estonia.com/in-2022-estonia-had-the-highest-number-of-cyber-attacks/
• https://investinestonia.com/estonia-lays-down-an-action-plan-to-reach-500-deeptech-startups-by-2030/
• https://investinestonia.com/estonian-startup-sector-finds-its-new-triumph-in-deeptech/
• https://estonianworld.com/knowledge/how-did-estonia-become-a-role-model-in-digital-education/
• https://www.gemconsortium.org/news/the-entrepreneurial-ecosystem-in-estonia%3A-strengths%2C-weaknesses-and-the-role-of-a-new-gem-national-team
• https://startupestonia.ee/about