Mattias Wallander | Unicorn coming to Tallinn Stock Exchange?

Mattias Wallander, Founder and Analyst of

It is hard to understand how Estonia’s growth can be among the best in the world. However, reading the TopTech list makes it easy to understand. The list includes global leaders in the Fintech (Wise), the Mobility (Bolt), and the B2B (Pipedrive) space. If this was the 2018 FIFA World Cup, Estonia would in the semi-final together with France, Belgium, and England – this is how good the Estonian players/entrepreneurs are. It is not surprising the best investors in the world are actively scouting Estonian start-up teams.

In addition to nurturing local talent, these unicorns or baby unis attract top talent from all over the world – and given that these are well-paid positions, each position is likely to create at least 3-5 additional jobs according to economic theory. So actually, it is quite easy to understand how Estonia can have world class economic growth. I mean if you have Messi, Ronaldo, Neymar, Mbappe, De Bruyne (Villig, Ragnar, Madiberk, Kotkas, Aho), you are bound to have one of the best leagues in the world.

But there are always things to improve, and I believe the lowest hanging fruit right now is to get the Estonian Stock market as vibrant as the Estonian start-up market. You might say the Estonian stock market can never compete with US Nasdaq or London, but the Estonian start-ups have proven that wrong. I believe it is a matter of convincing the founders of the benefits to list on the Tallinn Stock Exchange. So below is a Top 5 list of why an Estonian startup should list on the Tallinn Stock Exchange:

  1. Premium valuation.Estonian companies used to trade at a discount to international peers, which deterred owners from listing in Estonia. This is NOT true anymore. For example, LHV, which has become a proxy for growth investing on the Tallinn Stock Exchange is the second highest valued bank among all listed banks in USA, Europe, and Japan based on P/BV (only Italian FinecoBank has a higher valuation, peculiar is that they also have ROE around 20% and an office in UK). Another example is Harju Elekter whose share has gained over 50% this year, not because people got excited about electrical equipment manufacturing (actually more exciting than people think), but because of their ownership in Skeleton Technologies (no. 4 on the TopTech list).
  2. Attract Swedish risk capital. Being an active investor on the Swedish stock market, I once a year ask my Swedish broker at the leading Swedish online brokerage house, Avanza, why they do not open trading lines to Nasdaq Baltic. The answer is always, “too small market, no interesting companies.”. I am quite sure that if a company like Bolt would list in Tallinn, the leading Swedish and Finnish brokers would light up the trading lines in less than a month. This would give Estonian companies access to the most active tech investors in Europe – Sweden is the most active market in Europe for listed innovative companies – larger than both London and Frankfurt.  
  3. Giving back. Listing on the Nasdaq Tallinn is the best way to share wealth with the people who live in the society where your company has grown up. And I refer to the so-called regular people who invest one hundred to five hundred euros. Most of these investors do not buy shares listed in London or New York. Given the high recognition of Bolt in Estonia, it would not surprise me if around half the population would buy shares in the Bolt IPO (just like about half the population has a Kaubamaja loyalty card). To put this in perspective, the most owned share in Sweden is Investor B with around 250K shareholders i.e., not even close to half the population of Estonia.
  4. Tallinn is cool. London, and New York are cool cities. But Tallinn is way cooler. In London and New York, you will commute for 1-2 hours if you need to go to the office or if you want to see the nature or the beach. In Tallinn, anything you want - beach, forest, office - is within 15 minutes. In London or New York, you pay 30 euro for the lunch special, in Tallinn you pay 6.85 euro. In London or New York, you pay 1m+ euro for your child’s education, in Tallinn it is free – and the basic education is ranked best in Europe according to PISA.
  5. Nationalism in a positive way. If business is like professional sports, which I often think it is. Then building your company in Estonia and then moving the headquarters to London and list in London, would be like Katrina Lehis changing citizenship to United Kingdom and represent them in the Olympics. I fully realize the large investors want their companies based in their home jurisdictions, but at the end of the day, it is the great company they want. One nearby example is the Swedish unicorn, Sinch, who kept its HQ in Sweden and listed in Sweden, despite having less than 5% of its sales in Sweden and lead Series A investors from the UK, and USA. Perhaps a dual listing in Tallinn and London/New York is feasible for Estonian unicorns? I think all will be surprised of how much trading will take place in Tallinn.

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