EIF IN
ESTONIA
Investing in the future of Estonian SMEs
Small and medium-size enterprises are the heart of the Estonian economy.
Representing 99% of all businesses and more than two thirds of the workforce, Estonia's 77,000 SMEs are responsible for driving innovation as well as spurring on growth, and their daily routine is what ensures the competitiveness of the Estonian economy. But to do that, they often need finance.
At the same time, as the smallest actors in the economy, they are often the hardest hit when the economy encounters turbulence, which is why it is so crucial for them to have financial options in order to maintain and eventually grow their businesses.
At the EIF, our mission is to improve access to finance for small businesses across the EU. In addition to building a sustainable venture capital ecosystem through dedicated financial instruments in Estonia, we have been supporting Estonian SMEs using a broad range of instruments, including many tailored to the needs of the Estonian market and designed with the Estonian government and local authorities.
As a result, we've been able to support more than 7,000 Estonian businesses, ranging from companies specialising in the creative industries, elder care, and maths education for primary school students, making sure they have the financial fuel they need to pursue their ambitions.
Our intention is to continue to extend this type of support to the Estonian market, making access to finance easier as we collectively move towards a greener, digital and more inclusive Europe.
Success stories
Music Estonia
Success stories
Music Estonia
“This is an economically one of the biggest fast-growing sectors with lots of potential,” says Ave Tölpt, Director of Music Estonia. “The creative industries have a deep connection with tourism and a strong impact on other sectors. We saw during the COVID-19 lockdowns how people want to experience those emotions gained from culture.”
Music Estonia is an organisation founded in 2014. “We aim to develop the Estonian music industry into a profitable and innovative sector that exports its services, products and trademarks worldwide,” says Ave. The organisation provides a membership platform for local music businesses, representing the sector globally, developing the international network, organising seminars and workshops, and participating in international projects and organisations.
“Music is important in the Baltics—let’s not forget the singing revolution. We’re a small country, but we have some big names in various genres, like composer Arvo Pärt and rapper Tommy Cash. Supporting this vibrant industry can help secure more deals abroad, get greater visibility, make connections… we’ve seen some great outcomes, and we look forward to doing more,” Ave concludes.
Viru Haigla
“Elderly care will in one way or another relate to all of us. Life expectancy is increasing year on year, with the Estonian average now having reached 75 years. Proper services to care for the elderly are increasingly needed, especially for those suffering from dementia and other health issues,” says Ermo Kosk, co-owner of Pihlakodu, a chain of modern elderly care homes with approximately 600 beds.
Ermo’s journey with Pihlakodu began in 2017 when he was approached by colleagues with a proposal to acquire the then-distressed company. Since then, Pihlakodu has grown from strength to strength, opening numerous new facilities in and around Tallinn as well as offering limited medical services. “We want people to enjoy their lives” reflects Ermo, “we are also working hard on changing perceptions in Estonia to remove the stigma associated with care homes. For us Pihlakodu is a business, but it’s also a way to make a difference in peoples’ lives.”
Gustav Cafe OÜ
Gustav specialises in producing patisserie in-house using fresh and local ingredients. “The most distinctive part of our business is the decoration of our patisserie. It’s almost a form of art. We put in a lot of creativity and precision,” explains Rivo Sisas, co-founder of Gustav. The company is a testament to the founders’ resilience and teamwork. Rivo was a salesman for a coffee brand and Joel worked at a hotel restaurant.
“We became friends and eventually business partners. When a restaurant located in the historical centre of Tartu closed and its premises became available, we jumped at the opportunity to pursue our own project,” says Rivo. “We hired a third partner to manage the business: Siim Liivamägi. Siim knew the industry and had experience in business management. He is now the CEO of the company, and he is an essential part of the business,” adds Rivo. With the three partners at the helm, the future looks bright. “The objective now is to expand the business further –production and retail points - across the national and European territory.”
Shiftworks
“We need to be sensitive to what’s happening in society, constantly on the lookout, picking up trends, reacting to them, and making them visible and understandable for our audience. We want to be one step ahead, asking ourselves what’s around the corner and how can we introduce this to the market?” says Helen Sildna, founder and CEO of Shiftworks, the company behind Tallinn Music Week (TMW), a festival held annually in Tallinn since 2009. It has three main programmes: the music festival, conference and city festival.
“We felt that more could be done to promote the local scene and local talent in Estonia. We started with the music festival, showcasing local talent, and then came the conference part, to explore various topics and offer networking opportunities for actors in the sector. The city festival came later, focussing on design, arts, the food scene, city talks to discuss societal issues, shining the spotlight on parts of the city that are not so well-known. It became a tool to promote music and Tallinn in general. Festivals can be a very effective way to promote a city.”
99 Math
“If you have to go to school for 6 hours a day, why should you not enjoy it?” asks Timo Timmi, the 20-year-old co-founder of 99Math, an Estonian e-learning maths platform built on the principle of something far more entertaining: gaming. “As a student, maths is traditionally a very boring subject. When we spoke to maths teachers and parents, the struggle was apparent for them too.”
99Math offers a platform for teachers, students and parents alike to practise their math skills in a fun and engaging way. Teachers can assign homework & receive data on results, while students can play with their friends competitively both at school and at home. “I’m so glad that I was able to put my three passions together” says Timo, “gaming, sports and maths. There are so many things in the world that are exciting, why shouldn’t we revolutionise education so that students have more to look forward to than just the school holidays?”
Key figures
Over
of EIF financing
Transactions with financial intermediaries
Equity investments since inception
Guarantees support since inception
made available for
Estonian businesses
Mandates in focus
The EIF continues to deploy capital in Estonia under a wide range of strategic programmes and mandates. Below are brief summaries of our main initiatives in Estonia.
InvestEU
The InvestEU programme provides the EU with crucial long-term funding by leveraging substantial private and public funds in support of a sustainable recovery. It is helping to mobilise private investments for the EU’s policy priorities, such as the European Green Deal and the digital transition. The InvestEU Programme brings together under one roof the multitude of EU financial instruments previously available to support investment in the EU, making funding for investment projects in Europe simpler, more efficient and more flexible. The programme consists of three components: the InvestEU Fund, the InvestEU Advisory Hub and the InvestEU Portal. The InvestEU Fund is implemented through financial partners that will invest in projects using the EU budget guarantee of €26.2 billion. The entire budget guarantee will back the investment projects of the implementing partners, increase their risk-bearing capacity and thus mobilise at least €372 billion in additional investment.
RCR
The EIB’s Risk Capital Resources (RCR) is the core pillar of the EIF’s equity activity. It has enabled us to pursue our equity strategy in the venture capital and growth segments for more than 25 years. In 2023, RCR accounted for 25% of our equity activity, committing €1.4bn to financial intermediaries.
EFSI
The European Fund for Strategic Investments formed part of the EU’s Investment Plan for Europe, launched by the European Commission in 2015. EFSI addressed market gaps in financing - whether in infrastructure, research, energy efficiency or risk finance for SMEs – and mobilised private investment into these areas. Through EFSI the EIF deployed €10.5bn in resources of the European Commission, the EIB and the EIF to improve access to finance for SMEs and small midcaps.
EstFund
ESTfund is a €60m Fund-of-Funds initiative launched by the EIF in 2016 in close co-operation with KredEx and the Estonian Ministry of Economic Affairs and Communications to stimulate equity investments into innovative and high growth-focussed enterprises in Estonia. EstFund is the first fund-of-funds that the EIF invested into, combining resources from the European Structural and Investment Funds (ESIF) resources and from EFSI. Its objective is to support smaller risk capital funds targeting smaller and often earlier stage investments, operating in a complementary way to the BIF initiative that targets larger and later stage deals in Baltics. Co-investment from EFSI by the EIF into the underlying funds will encourage private investors to commit additional resources into these funds. In total, this initiative mobilised more than €400m for Estonian businesses.
REPowerEU
The EU launched REPowerEU in 2022 to reduce dependence on fossil-fuel imports and accelerate the green transition. To support the plan, in October 2022, the EIB Group developed a package of measures focussing on renewable energy, energy efficiency, electricity networks and on deepening its engagement in green innovation and breakthrough technologies. Under REPowerEU, the EIF will invest €4.5bn by 2027 through EIF equity products.
Baltic Innovation Fund
The Baltic Innovation Fund (BIF) is a fund-of-funds initiative of €130m launched by the EIF in close co-operation with the Baltic national promotional institutions – KredEx (Estonia), Altum (Latvia) and Invega (Lithuania) to boost equity investments made into Baltic SMEs with high growth potential. BIF 1 was launched in 2012 and is fully committed. BIF 2, a €156m fund-of-funds initiative building on the success of its predecessor programme, continues to sustain investments into private equity and venture capital funds focused on the Baltic States over a period of 5 years – following its signature in 2019 – to boost equity investments into SMEs with high growth potential.
Find out more
