Rando Rannus

General Partner at Siena Secondary Fund

A New Wave Is Coming — and It's Younger and Smaller Than We Expected

A year ago, the argument was that Estonia's startup scene was waiting for a new wave of success stories. At the top of the TopTech rankings, the same names kept repeating year after year, fewer new startups were being born, and the open question was where the next wave would even come from. Today it's fair to say: the new wave is arriving. It just doesn't look the way we're used to. The founders are younger, the teams are smaller, and the pace is faster than in any earlier generation of Estonian startups.

Five people, not fifty

Look at what's been born in Estonia over the past year. Creem is building a payments and billing service for software companies of the AI era. In two years its team grew from one person to fifteen, and recurring revenue grew into the millions of euros. The same product would once have taken a team three to four times larger and three to four years. Zobi's founders, still in their twenties, are posting growth numbers Estonia hasn't seen before — and doing it without a single middle manager. Featurebase's three 23-year-old founders grew a profitable software business selling worldwide with a team of eight, without taking a cent of investor money. And there are more: Modash, Bilt.me, Userjourneys, and a whole line of founders most of us haven't even heard of yet.

None of them is, on its own, a success story at scale yet. Together, though, they're the first pieces of a pattern starting to reveal itself. A generation of companies is growing out of Estonia that reaches, with five to fifteen people and a couple of million euros, what once took fifty people and tens of millions.

What's changed?

Over the past few years, three important shifts have taken place, and together they add up to this result.

First, technology — specifically AI — which today handles a large share of the work that used to require hiring people: customer support, marketing, a good part of the coding, and so on. A software company's cost structure looks nothing like it did ten years ago, and the world's fastest-growing stories today come out of Stockholm and Warsaw as much as Silicon Valley. Over the last thirty years, every decade has lowered the financial bar for starting a company: what once took a million now takes, in practice, a few thousand.

Second, the generation itself. Today's founders in their twenties are the first who have never built anything without AI. They don't ask how many people they'll need — they ask how few. A new hire only joins once the machine genuinely can't keep up. It's a completely different mindset from 2021's "grow at any cost."

Third — and maybe the most important — the ecosystem's own flywheel is working. These young founders are increasingly advised, and sometimes funded, by the previous generation of Estonian founders themselves. The people who built Bolt and Wise are sharing what they know about scaling up, and when it makes sense, writing the first check for the next generation themselves. A lot has been written about the "Skype effect" — the hundreds of startups whose roots trace back to Skype's sale. The same machinery is running again, a generation later, only faster.

A reality check

What's easy to build is easy to copy. If five people in Tallinn can ship in months a product that used to take years, five people in Berlin or San Francisco can do the same. So can the companies whose AI this entire new wave is built on top of. Speed isn't a moat yet.

The real value of these companies won't come from how fast they grew. It will come from what's still theirs once AI gets even better: their own data, their own customer relationships, their own sales channel.

And a small team doesn't mean a small price tag. Today's young companies are raising funds earlier, and at higher valuations, than any previous generation. That raises the bar for everyone who walks in later — including anyone looking at these companies at a later stage.

Happy end

But the bigger picture is a positive one. Two years ago, the story was a liquidity drought: the whole ecosystem waiting on one big exit to get capital and talent circulating again. That need hasn't gone away. But in the meantime, something has appeared that a liquidity drought can't stop: companies reaching real revenue before they need much capital at all. When every euro goes further, founders keep a bigger stake, investors get a simpler cap table, and the ecosystem gets more mature companies in the years ahead. And their first employees and angel investors become, in turn, the next people putting their own money back into circulation.

Estonia's startup DNA — grit, resilience, not giving up — is still there. For years we said our edge was being a small country, which forces you to think globally from day one. Now there's an advantage none of us saw coming: in a small country, small teams have always come naturally. The world moved toward our model, not the other way around.

A year ago, we were waiting for a new wave. Today, I'd suggest that anyone watching Estonia's tech sector look beyond the top of the TopTech list as well — at the companies that don't make the table yet. The ones with a dozen or so employees, founders in their twenties, and a few million in recurring revenue. That's where the next TopTech leader will grow from. And probably faster than we're used to.