Estonia, Good for Business, Internet, Investments, Technology

In four years, ASI has provided more than 17.3 million euros of funding for more than 30 technology or Web companies. At the start of 2010, ASI still had over 50 million euros of liquid assets in its accounts, some of it in term deposits. Besides that, the four men have millions of euros in personal funds. This is too much money; it is not possible to invest all of it in Estonia, informs LETA.

About one-half of Estonia's current technology or Internet businesses – the ones expected to run like gazelles or start a revolution – got their seed capital from ASI, run by the Skype engineers.

The best-known of these ambitious players are Modesat and Guardtime.

Modesat is developing a communications technology that will make it possible to introduce ultra-high-speed broadband Internet aboard jets and high-speed trains. The company is working with the world's biggest telecom giants, such as Ericsson, Nokia, Siemens and others, and recently hired a former vice-president of Samsung as their director of technology.

The other company, Guardtime, has developed a time-stamping technology for secure digital data and is now trying to find an application for it. Asian investors led by billionaire Li Ka-shing and the Singaporean government recently invested close to 6.4 million euros into the company.

The name of Skype has been used to every possible effect to promote Estonia, and many know Estonia as the land of Skype. In the Wikipedia entry on Estonia, Skype is the only local IT company mentioned.

Heikki Haldre, the founder of virtual mannequin technology development firm Fits.me, says he once met a venture capitalist in the US who said that Europe had produced only one credible IT company – Skype.

"I have basically quit talking about Estonia in the US," says Haldre. "When I am asked where I am from, I ask, Have you heard of Skype? Well, I come from the same country as Skype!"

Martti Paju, the sales director of Erply, which supplies hundreds of US firms with business software, concurs: Skype is an important argument for introducing Estonia's IT development abroad. But a much more practical way of doing this would be to take an Estonian ID card out of your wallet and say it can be used to elect parliament.

Skype, which put a squeeze on telephone companies around the world with its free phone calls, has become synonymous with "breakthrough product".

TechCrunch called Erply the "Skype of business software" and Fits.me was called the "Skype of clothing retail."

Someone once said that the biggest benefit of Skype will be revealed when various people start sloughing off the organization and looking for a new challenge. And that is what has happened.

The former Skype personnel have founded tens of companies, primarily related to Internet services, some of which been successful.

Skype has had its biggest influence on the people in Estonia's IT sector.

One old hand in IT says Skype has clued people in on how the technology business works in the world as well as how and at what rate organizations are established. Above all, Skype has shown the importance of networking and establishing contacts in the nerve centers of the world’s technology sector.

"About ten years after I started going to conferences in the US at the expense of my family budget, there was an understanding in Estonia that wow, something cool is happening over there, across the ocean!" says that same IT veteran.

Venture capitalist Yrjö Ojasaar says that the example of Skype is a good lesson for Estonian entrepreneurs as to how important it is to think globally.

Skype Estonia's CEO Sten Tamkivi goes from one seminar to the next, lobbying for solutions to several vexing problems. Skype, Playtech and Webmedia have, between the three of them, snapped up the majority of Estonia’s IT personnel and additional ones hard to come by.

Skype is also a leader in terms of being an employee-friendly company, supporting employee-founded extreme sports, kitesurfing, snowboarding, cooking and running clubs as well as semi-professional cyclists. In 2009, the value added per employee at Skype was close to four times greater than on average in Estonia. The same indicator was twice as high as the average for the IT sector. That makes Skype a classic example of effective business administration.

In addition, the company is a key taxpayer. Altogether, Skype has paid 12 million euros of social tax in the past five years, which is only 2.5 times less than Estonia's largest telecom firm, the former monopoly Elion.

Last quarter Skype accounted for a quarter of Estonia's computer and information service export (one-sixth in 2005) and almost 1% of total export Estonian service.

Skype employs one of six people working in the IT sector. The company has approximately to 400 employees earned an average of 2237 euros per month after taxes. This is almost four times higher than the average salary in Estonia.