Capital looking beyond Estonia

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PHOTO: AFP / Scanpix

Members of the Estonian Business Angels Network (ESTBAN) placed €11.3 million in startups last year a record-breaking part of which went out of Estonia.

If in the three previous years over 70 percent of investments went into Estonian startups, just 59 percent of the money was placed in Estonian ventures in 2017, with 26 percent placed in startups of other European countries.

Members of ESTBAN invested 15 percent of their money outside the EU last year, up from just 6 percent in 2016 and 3 percent in 2015.

More popular countries included Finland, USA, UK, Germany, Denmark, Croatia, and Norway.

Estonian startups count a total of €3.1 million from Estonian investors in 2017, while the sum was €12 million the year before.

Head of Startup Estonia Marika Truu said that ESTBAN members include a growing number of foreign investors which supports the fact more investments go beyond Estonia.

“That said, Estonian angels are also moving around more and communicating with the startup communities of other countries; in other words, they have extended the reach of their investment portfolios, and this global view has helped manage fears tied to foreign investments,” she added.

ESTBAN brings together investors from 11 countries who invested into startups of a total of 17 countries in 2017. The total volume of ESTBAN investments grew 28 percent year-over-year and reached 108 ventures.

Angels invested the most (39 percent) in IT firms, followed by financial services, mobile and medical tech developers.

President of ESTBAN Rein Lemberpuu said that the total volume of investments has grown every year, and 2017 was no exception.

“The volume of Estonian business angels’ investments in GDP has been on the highest level in Europe for years. However, it is last year’s result that is remarkable. If Italian business angels invested a total of €14.1 million in startups in 2016, the volume of ESTBAN investments in 2017 make up 80 percent of that sum in a situation where Estonia has 50 times fewer people. It is a remarkable result,” he said.

Most investments reached startups in the early phase – 41 percent of all transactions for a total of €2.1 million. Statistics suggests an investor places €12,500 on average in early phase companies.

Successful sales of startup companies amounted to 15 last year, 14 in 2016, and 12 the year before.