Estonia is making the most of its small size as its startups ride the artificial intelligence boom to the forefront of Europe.
“Experience the true power of EX-oriented leadership! Empower your team! Try our tool for continuous employee feedback. Get data insights and AI-driven management tips.” This is how the Estonian company Moticheck advertises the working life monitoring platform it has developed, which Aidan, the world’s first
artificial intelligence management consultant has become a kind of virtual advertising face.
Aidan is “an always-on business advisor who provides a neutral perspective on improving productivity, employee engagement, and leadership skills” and is “capable of considering the wider needs of the
organization and has access to a vast amount of data”.
Moticheck’s CEO and one of the founders, Martin Rajasalu, says he got the idea for Moticheck from his own and other managers’ experiences. “When managing work communities of different sizes and located in
different places, the question often arises as to how they are really doing. How do employees really feel about the organization and its leaders, and what do they think about their own work?” Rajasalu talks about
Moticheck’s background in his office in Tallinn’s Veerenni.
“But there are usually only very limited resources for communication and asking questions, despite the fact that the company probably holds annual development discussions and mood measurements and the like. There is no dialogue when it is really needed. Moticheck changes all that.”
Moticheck’s story is just beginning. It was founded three years ago and has a couple of desks in a large shared office. After getting the idea, Rajasalu and his partner needed both b2b sales experience and a financier who believed in them. They found an investor in the Estonian software developer Progmatic, and they got Pille Parind-Nisula, a respected mentor and ex-banker in Estonia, to lead the sales.
Moticheck’s language selection now includes 16 languages, including Finnish. “Moticheck has users in Europe and Asia in about 20 countries. As a rule, our customers are local companies operating in several countries, as well as some international brands,” says Rajasalu. “Of course, we also want to break through in Finland and we have already organized sales pilot projects there. One way to speed up the Finnish market would be to find an influential investor or customer there. We are confident.”
Estonia is currently experiencing an artificial intelligence boom, and Moticheck is one of the many startup companies riding on its crest and seeking a foothold in the international market. One of the advantages of Estonia’s small size is precisely that, to be successful, a company has to aim immediately beyond the country’s borders.
There are plenty of encouraging examples of Estonian startups that utilize artificial intelligence and have grown to be big. Such are, for example, the identity verification platform Veriff and Ready Player Me, which creates game avatars.
Estonian Alpha3D, which uses artificial intelligence, automatically converts 2d images into 3d format, and also has its goals in the big world. Alpha3D’s customers and partners include companies from the gaming
industry and the world of fashion, as well as large international companies such as the French car manufacturer Renault and the American graphics processor producer Nvidia.
Alpha3D was founded five years ago by Estonian serial entrepreneurs Madis Alesmaa and Rait-Eino Laarmann, both of whom are involved in many other companies, even though they are only in their thirties. Alpha3d’s journey so far has not been a triumphant ride from the start. It finally completed its own platform only at the beginning of 2023, and the financing guarantee has not been poured down its neck either. Alesmaa mentions Meta and PwC as financiers, and in total, the company has raised two million euros in funding so far, which is a fraction of the amount collected by many other Estonian startups.
In Estonia, startup entrepreneurs are almost in the position of rock stars.
90 percent of Alpha3D’s turnover comes from the United States and Asia, and according to Alesmaa, they want to open their own offices in the United States and somewhere in Asia already this year. Internationality can also be seen in Alpha3D’s office in Tallinn, whose 40-person work team has 15 nationalities represented. Alesmaa lavishly praises the Estonian business development foundation EAS, which has made it easy to set up a company in Estonia.
“EAS has not only opened doors for us, it even rolled out the red carpet for startups in front of us,” he characterizes. EAS is often considered the main reason for Estonia’s large number of startup companies and now also companies utilizing artificial intelligence – but also two other Estonian state actors: Startup
Estonia and AIRE, i.e. AI & Robotics Estonia.
Even though Estonia believes in a free market economy and self-sufficiency, the country has no shortage of helping hands, midwifery, and wooing of start-up technology companies. And that’s not all, because in Estonia, the ministries have jointly created a special state artificial intelligence development program, the purpose of which is to develop the data management of the public sector, but also to support the AI efforts of the private sector.
For the years 2022 and 2023, the program received 20 million euros in funding from the state. As the name suggests, AIRE is focused specifically on artificial intelligence, and especially its utilization in industry. AIRE is located in connection with Tallinn University of Technology Taltech in Tallinn’s Mustamäki, where it organizes club and networking evenings for industry players from Estonia and abroad, among other things.
Lower labor productivity is one of the Achilles heels of the Estonian industry. It could be raised to the level of Finland and the Nordic countries with the help of artificial intelligence.
AIRE’s marketing manager Kaire Tammer immediately gives top-of-the-list examples of Estonian industrial companies that have started to take advantage of the possibilities of artificial intelligence or with which a demo project has already been done: printing house Print Best responds to requests for quotations automatically, machine shop IntelliDry automates a grain dryer, packaging house Raiku Packaging develops production technology so that production can scale globally, the pharmaceutical factory Chemi-Pharm improves productivity and logistics with the help of artificial intelligence.
Although Estonia is often named one of Europe’s leading countries in the development and utilization of artificial intelligence, Tammer is a bit over the top. “That is too bold a claim. Estonia has its own pluses and minuses, but undoubtedly one of our strengths is our small size. That is why we are able to react quickly to everything new and we are also able to quickly adopt new solutions.” According to Tammeri, there are many promising AI companies bubbling under the surface in Estonia, which are still being heard about. Estonia’s
reputation as a promising country for startups is by no means exhausted yet.
It is reported by Startup Estonia that startups in Estonia have said that they work in deep tech. Startup Estonia’s communications partner Marina Bachmann mentions Pactum AI, a virtual negotiation environment that uses artificial intelligence, and Auve Tech, which develops self-driving vehicles and transport systems. “And let’s also mention Fyma, which develops real-time video analyses, and Better Medicine, which shortens the analysis time of radiologists.”
In Estonia, startup entrepreneurs are almost in the position of rock stars, and the amount of money they collect and earn is closely monitored. According to Bachmann, the turnover of Estonian deep technology
companies is growing rapidly, and in 2023 they paid about a quarter more in employer contributions than the previous year.
The companies that were founded with the help of Estonia’s e-citizenship program also make their own contribution to Estonia’s artificial intelligence boom, i.e. their owners are so-called e-residents. These are
foreigners who do not necessarily live in Estonia, but who are allowed to use Estonia’s advanced online citizenship services to run their company.
among other things, compiled a list of names of possible partners in Finland. Such local know-how is worth its weight in gold.”
The year 2023 was challenging for startup companies around the world, but it was especially challenging in Estonia, where the technology sector attracted investments exceptionally well before investors’ money taps turned tighter as a result of, for example, the war in Ukraine. “The world has not run out of money, but now it is smarter to focus on serving our own customers, sales work, and developing our own product,”
says Rajasalu. “We have such a small team that if someone focuses on looking for money,
that time is taken away from the core work itself.”
Recently, several Estonian companies have moved out of Estonia, or at least their owners have said that they are thinking about such an option, but in Rajasalu’s opinion, Estonia is still a good country to try. He doesn’t
even complain about Estonia’s rapidly growing energy and labor costs. “Estonia’s tax system is favorable for any company, including a company in the growth phase. Due to its limited size and technological development, Estonia is a good growth platform for developing and testing your own product, which is also reflected in a positive way in how many new startups developing artificial intelligence there are in Estonia,” he says. “There is a lot of unnecessary hype, but the AI industry is currently developing very quickly both in Estonia and elsewhere.”
Rajasalu considers the lack of expertise of potential customers to be a challenge for the artificial intelligence company. “I participated in a funding competition, where it was really difficult for me to try to justify in a short time the value of artificial intelligence that improves the quality of management. The competition’s jury included people who themselves had no experience in management,” he says as an example. “We have also seen AI solutions designed for children with special needs, which are very necessary for the user, but which potential financiers or supporters do not understand. That’s why big things are being done behind the scenes right now without a bigger halo.”
An article by Sami Lotila.
Originally published in TIVI (Alma Media) 20/02/2024.
