Estonia is the 132nd-smallest country in the world by land mass, yet it produces more start-ups per head of population than any other country in Europe. It has a population the size of Copenhagen but has one of the world’s most advanced e-governments.
Of the 20 finalists in January’s Seedcamp, an entrepreneur-mentoring program, four were Estonian—including the eventual winner, GrabCAD, a social network for engineers which has 10% of the world’s mechanical engineers registered.
According to Antti Vilpponen, CEO and co-founder of ArcticStartup, a site that follows entrepreneurship in the region, Estonia has three things in its favor: political leadership, the success of Skype, and its culture.
President Toomas Hendrik Ilves, the country’s fourth president in modern times, wouldn’t be offended to be described as a geek. On the desk in his personal office is a 27-inch iMac; he owns a MacBook Air and an iPad2 as well. He is also an active Twitter user.
The country is lauded for its flat tax, which helped build support for e-government, said Mr. Ilves. “If you combine a flat tax with a computerized system you end up with a system that is easy to computerize because it is flat, and because it is flat and computerized then people can—and indeed do—do their taxes really quickly.”
The country has since adopted e-voting, an e-health system and introduced the ability to sign documents using an electronic signature.
Then there is the vital role played by success. Talking to Estonian entrepreneurs, one company crops up time and time again: Skype. While the company was founded by a Swede and a Dane, it was built by Estonians.
A view shared by Andrus Purde, co-founder of Achoo, a social-networking website for professionals. “Many people realized that if the guy you used to play basketball with can change the world from Estonia, then so can you.”
The Wall Street Journal writes that then, crucially, there is the culture; in Estonia it was forged in the years of brutal occupation. “The crucial element is the psychology of having been oppressed,” said Mr. Ilves. “You get rid of everything you had before. Few people in Estonia found any value in maintaining the traditions of the Soviet system.”
A key role is played by Estonia’s size. It is simply too small to support local players, therefore entrepreneurs are forced to think about global ideas and sell them all over the world.