The willingness of entrepreneurs and investors to invest continues to exist and neither money nor our position is an obstacle, writes Andres Sutt.
Foreign investments continue to be important for the growth of economic competitiveness and social well-being. The volume of private investment must grow again and foreign investment plays an important role in this. Looking at statistics and communicating with investors, I see a different picture than the one that caught my attention from the “AK. Week” program on January 21.
The drawing shown in “Actuals Kaamera” was gloomy at first glance: it all arrived in Estonia last year about 300 million euros of investments. However, the reality is different and Estonia continues to be attractive as an investment destination.
According to Eesti Pank, the value of direct investments in Estonia increased in the nine months of last year about part of two billion. That’s more than in 2022 combined. In addition to the magnet factory of the Canadian Neo Performance Materials in Narva, important investments in Estonia have also been decided by two other G7 countries: the investment of the Japanese Marubeni in Skeleton and the French Corsica Sole and the joint investment of the Estonian Evecon to build continent’s largest battery bank Europe near Tallinn. Ericsson’s decision to build the next generation European 5G development and manufacturing center on the Ülemiste campus belongs to the same category.
The start-up industry’s year 2023 was the fourth best in history
Although €400 million seems like a terribly poor result compared to the results of the seed sector in 2021 and 2022, it is actually the fourth best historical result since 2006. It should also be noted that the total number of operations has not changed much. Bolt’s €600 million funding rounds fell behind the record of 2021 and 2022. If we subtract them from the total amount, we get an idea that in reality investments made in other startups were relatively same level in recent years.
2022 was a particularly active year for fundraising, as scare stories from the Great Recession plagued the seed industry. However, the predicted severe economic recession did not materialize (at least in Estonia).
Furthermore, recent news about the success of the 400 million investment round of the Plural investment fund with the participation of Taavet Hinrikus and Sten Tamkivi demonstrates investment confidence.
It’s hard to draw the line
Whether investors will prefer to invest in technology rather than industrial companies in the future is an important question. But in which category should, for example, the Baltic Workboats be placed? A company that operates in the shipbuilding sector, but whose greatest added value for the customer is the individual technological solutions created according to the customer’s wishes.
As a member of the advisory board of AIRE (AI and Robotics Estonia), I see great Estonian companies investing in technology to increase their competitiveness with the help of artificial intelligence and robotics. For example, in the last round there were three companies of very different sizes, ages and business sectors, but united by the desire to use computer vision and artificial intelligence to increase the efficiency of quality control. For me, all these industrial companies were also technology companies.
The defense industry is a new opportunity
The defense industry is sure to be one of the fastest growing sectors globally in the next decade. In cooperation with partners from NATO and the European Union, Estonia’s ambition could be to develop an international development center for innovative defense technologies here. The Estonian defense industry sector itself has set itself the goal of tripling growth by 2030 about A sector with a turnover of 450 million euros, of which 70% is represented by exports.
Therefore, it is important for the Estonian defense industry to participate in technology transfer in international defense procurement and defense cooperation in Estonia through industrial cooperation with procurement winners, thus consolidating its place in the value chain global defense sector. This is important from both a safety and innovation perspective. However, it would be wrong to think that this is the only sector that attracts investments or grows.
Five areas where Estonia could succeed
The creation of the applied research center was preceded by an in-depth study of areas where Estonia could have an advantage, comparing our companies, their growth potential and the capabilities of universities with global trends. Five areas emerged from this work: biorefining, drone technology, autonomous vehicles, hydrogen technology and healthcare data.
In each of the fields mentioned, there are breakthrough companies or ideas in Estonia that, thanks to the ambition and entrepreneurship of the founders, will help achieve the goal of having five hundred technology companies in Estonia by 2030 (there are currently around 120 They).
The willingness of entrepreneurs and investors to invest continues to exist and neither money nor our position is an obstacle. Success is driven by our ability to digitize, to use artificial intelligence as a tool to free people’s time from work that can be done more accurately and efficiently by technology. The most important thing is to have the ambition to achieve more than we can do now and see the opportunity in change.
I experienced this attitude of seeing opportunities again at Startup Day in Tartu. So that communities do not separate, I recommend visiting the next Startup Day to everyone who wants to be inspired to notice opportunities regardless of the field of life. Then we will be able to jointly offer people a world-class quality of life and increase the well-being of society, and do all this while taking care of the environment.
2024-01-27 07:51:00
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