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Estonia - Europe's under-exploited El Dorado for digital enterprise

business planet

Estonia - Europe's under-exploited El Dorado for digital enterprise


Estonia is Europe’s most connected country for business.

Guiding us through its digital landscape is Mikk Vainik, an expert in digital development from Tallinn’s University of Technology. We asked him why European SMEs (small and medium-sized enterprises) are lagging behind when it comes to digital

“Only 2% of European companies are taking full advantage of the digital world and many are doing nothing. So yes, we are clearly behind our own ambitions and we are also behind the US,” explained Vainik.

And yet there are numerous digital opportunities.

Fortumo, an SME based in Tartu, has taken advantage of them. We met the people behind the firm four years ago in the very first season of Business Planet.

Today the company has been celebrated with a commemorative stamp to mark Estonia’s centenary. That alone says a lot about the journey of this company created in 2007 by young graduates, to become the pride of the small Baltic State.

Its smartphone payment system allows internet users to make online purchases without a credit card. These expenses are charged by the mobile operator – a widely popular solution in emerging countries.

Its chief executive is Martin Koppel:“Since 2012, we’ve expanded to 35 additional new markets and our services are available to 3.2 billion people in 95 countries, and our billing platform is used by the world’s biggest digital merchants.”

Among them: Google, Microsoft, Sony and others have joined the company’s initial customers: game developers. The Estonian SME had to massively recruit in order to meet increasing demand.

“Fortumo’s revenue has been growing 50% every year and we hire three times more people than in 2012. By that, we’ve opened offices in India, China, Singapore and Vietnam,” said Koppel.

The company hires 70 people today. Its target: to increase its revenue fivefold over the next three years, which would enable it to double its workforce by 2020.

Digital technologies are not restricted to digital entrepreneurs. They can also help traditional SMEs improve time management for example, and thereby invest the energy and costs savings into developing or diversifying their business.

According to Mikk Vainik the job creation potential for digital is enormous: “More than a million jobs could be created by getting all the European states where the US stand now. Not just jobs, but jobs that create more value and satisfaction.”

BP asked Vainik where should a SME that wants to tap into digital opportunities start?

“Most probably, there is a start up out there that has done some of the digitalising for you. Find them and learn from them. Any start up ecosystem may help but I suggest start-up Estonia!, said Vainik.

The digital promise in figures

  • The digital economy contributes up to 8% percent of the GDP of the G-20 major economies, powering growth and creating jobs.
  • The huge potential of the digital economy is underexploited in Europe, with 41% of enterprises being non-digital, and only 2% taking full advantage of digital opportunities.
  • It is estimated that if all EU countries mirrored the performance of the USA or the best-performing EU countries, 400,000 to 1.5 million new jobs could be created in the EU.
  • Fortumo is an Estonian digital company founded in 2007 by a group of students. They wanted to create mobile phone payment systems for young people without credit cards. To boost their business, they turned to Enterprise Europe Network (EEN) and haven’t stopped growing since. They are now a global player, providing jobs to 70 people and their carrier billing services are available to more than 3 billion people.
  • Watify is an EU platform for start-ups set up by the European Commission with inspirational examples of digital opportunities for all European SMEs.

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