TopTech: how to ensure sufficient birth rate in Estonian tech sector
Allan Martinson
President of the Founders' Association
Despite the fact that our tech companies are getting bigger and more mature, on the other hand, this is also a problem. Today, the Estonian tech sector is like a middle-aged, successful family of professionals who are earning more and more and have achieved recognition. But they have no children. We need to think and act in order to achieve sufficient birth rate for the sector to regenerate and grow, says Allan Martinson, President of the Founders' Association, in his analysis of the latest TopTech 2025 ranking.
The Estonian tech sector has entered a new and unprecedented phase of development. On the one hand, after years of sluggish growth, it has picked up again - this year, total sales volume is expected to increase by 20-25%. The sector's added value has grown particularly fast: as efficiency and profits are higher, it has more than doubled in five years!
The innovation sector is now healthily profitable and no longer dependent on investor money. While we are still a long way from the record of 2022, when 1.3 billion new capital was raised, it is likely that capital will also come in higher than in the two intervening years. This in turn will boost growth in the years ahead.
Our technology companies are getting bigger and more mature. On the other hand, this is the problem. The tech sector is like a middle-aged, successful family of professionals who are earning more and more and have achieved recognition. But they have no children.
The number of new start-ups has fallen from 350 to about 150 in three years. Most of the growth in turnover and added value has also come from mature companies. The new and the fledgling ones are not getting off the ground well because early-stage capital is scarce. More and more, the same faces are at start-up events. There are few new entrepreneurs or those who dare to leave a stable job and start their own start-up.
Is this stagnation and should we be worried? In some ways, certainly. But can we do anything about it? A little, certainly - by encouraging and helping newcomers to the unknown, attracting foreign investors to Estonia, etc. But there are also things that cannot be fought. At the beginning of the 1990s, the birth rate fell by nearly twice. If there is a dip in our demographic pyramid, what Rein Taagepera aptly called the 'demographic toilet bowl', it will also bring a drought among the founders.
So now is the time for Estonia to think about how it can do more with the same number of founders and workers. The key word here is AI! I'm sure we will see one-man-businesses reaching tens of millions in turnover. And eventually there could be a unicorn in Estonia founded by AI. This may not be a joke.
