Estonia’s ambitious goal to establish 500 deep tech startups by 2030 faces both encouraging progress and significant hurdles, according to the latest ecosystem report by Startup Estonia. The report reveals a sector that’s gaining momentum but struggling with the well-known startup challenges – funding, talent, and commercialization.
Deep tech’s share grows
Estonia currently is home to 165 deep tech startups, including 12 scaleups or mature companies. Deep tech companies represent 10% of the country’s total startup ecosystem – an increase from 8% in previous years.
Despite a decline in the number of investment deals – 20 in 2024 compared to 29 in 2023 – the sector still attracted €206.2 million. That is 63% of all startup investment in Estonia. This demonstrates a relatively stable funding environment, even amid broader European and global funding slowdowns. Across Europe, deep tech investment has declined by approximately 28% since 2021.
The sector recorded a 19% increase in turnover, reaching €325.3 million, and employed 3,395 people in 2024. Women made up 29% of the workforce, highlighting a continuing gender gap in the industry. Deep tech startups also contributed €112.1 million in taxes.
Health technology leads the sector, accounting for 23% of startups, followed by enterprise software, energy, defense, and green tech. Artificial intelligence emerged as the most popular technology in 2024, adopted by 18% of startups, aligning with global trends. Notably, intellectual property ownership among deep tech startups increased to 34%, with R&D expenditure being 7% of total business sector spending.
At the same time, the report reveals a concerning slowdown in new company formation, with only one new deep-tech startup registered in 2024. According to the authors, this reflects broader economic challenges, including economic cooling, funding challenges, and low risk appetite among scientists transitioning to entrepreneurship. The 28% decline in European deep-tech investments since 2021 has clearly impacted Estonia’s ecosystem as well.
Policy support is in place
However, Estonia’s strategic positioning appears sound. The country’s focus areas – AI, quantum technologies, space tech, and new energy – align with global growth trends. The government has responded proactively with initiatives like the “Ärgas” funding program for international expansion, the Entrepreneur-in-Residence program, and targeted public procurement in health technology.
The emphasis on intellectual property transfer and commercialization addresses a critical bottleneck. With top universities and research institutions providing a strong foundation, Estonia’s challenge lies in bridging the gap between academic research and commercial viability.
