Fintech Frontiers: Estonia’s thriving fintech ecosystem
Forget New York, Frankfurt and London. Yes, the world has traditional financial centers – but there is a new group of cities challenging the status quo. They are Fintech Frontiers, tearing up conventional wisdom about where in the world a startup should be located. Like the frontiersmen of the Wild West, they push the boundaries of the fintech landscape and shine a light on new cities that deserve to be discovered.
In this series, we take a look at some of the most unexpected and underrated cities hosting fintech innovation. To kick us off, we’re going to Tallinn in Estonia.
Estonia is working hard to shake off old stereotypes
Doing business in Estonia is incredibly easy. “It takes three hours to set up a company and one or two minutes to file taxes,” says Marek Pärtel, CEO of real estate finance platform EstateGuru. “Estonia is ranked number one in the OECD’s Tax Competitiveness Index and 99% of all public services are online 24/7.”
Since gaining independence from the Soviet Union in 1991, the country has modernized and gotten rid of traditional misconceptions. Today, this small Baltic outpost is a member of the EU, NATO and part of the Eurozone. English skills are high and the country’s capital, Tallinn, is a thriving fintech hotspot. It has spawned successful fintechs such as Wise, Zego and Veriff, as well as new players – including Lightyear, the investment app that earlier this month secured €25m to expand.
“Estonia has long ceased to be a country with cheap labour, and the cost of living is getting higher, but compared to big European cities and technology hubs like Berlin or London, Tallinn is still very affordable,” says Kalli Kulla, Head of Marketing and Communications for Tuum.
Tallinn-based Tuum is on a mission to build a next-generation core banking platform. It was called Modularbank until 2021, when it changed its brand name, choosing the Estonian word for “core” in recognition of its roots. Tuum was founded in 2019 by a group of experienced IT experts, who came together in the software development company Icefire, which was eventually sold to Checkout.com, whose CTO, Ott Kaukver, is an Estonian formerly of Wise.
Estonia home to a ‘close-knit’ fintech community
In Estonian business, everything eventually comes full circle. “All these stories about signing deals on your phone from the sauna or filing taxes in minutes are actually true,” says Single.Earth CEO Merit Valdsalu, who describes Tallinn’s fintech scene as “supportive and very close-knit”.
Founded in 2019, Single.Earth seeks to reward landowners for conserving the forest. Founders Merit Valdsalu and Andrus Aaslaid were introduced to each other by a mutual connection – Ragnar Sass, one of the founders of Estonian unicorn Pipedrive. Single.Earth has launched a digital currency called Merit, which is directly linked to the amount of CO2 fixed in the landowner’s forests.
It is perhaps an idea that can only come from Estonia: the country consists of 56% forest, equivalent to 2.2 million hectares.
