Estonia’s start-up boom looks north

In on our work as coaches and mentors in the Zebra ScaleUp project, we have heard Estonian start-up founders often describe Finland as the obvious first step abroad. Our view is that Finland can be a natural first scale-up market for Estonian start-ups whose value travels as a product, but not necessarily for those providing services or platforms. Geographic and cultural proximity lower the cost of entry, but they do not remove the institutional differences that ultimately decide whether a business model can scale.

For this article we interviewed the founders of two Estonian companies in their growth phase and analyzed their market-entry reasoning against our own experience as international business practitioners.

Why Finland looks like the obvious choice

Estonia has the most start-ups per capita in Europe, and it ranks second globally and first in the European Union in unicorns (companies valued at over one billion US dollars) per capita (Fintech Baltic). With a home market of well under 1.5 million people, Estonian start-ups must internationalize early, and Finland is the first candidate that comes to mind.

The economic case is strong. Finland is Estonia’s largest trading partner, and Estonian exports to Finland totaled 2.8 billion euros in 2025 (Statistikaamet). Tallinn and Helsinki are only a two-hour ferry ride apart. Finland’s population is about four times that of Estonia, and higher purchasing power generally means higher price tolerance than in the domestic Estonian market.

Cultural closeness is also usually cited. The languages are related, and business communication in both countries tends to be reserved, direct and to the point. However, this similarity should not be overstated. An Estonian law firm with long experience of Finnish-Estonian deals describes the shared language and culture as a potential ‘false friend’ that can create an illusion of understanding (Ullman 2017).

In our view, the most important differences are institutional rather than cultural. After 1991 Estonia rebuilt its economic institutions almost from scratch and chose a lightly regulated, digitally run model. Finland developed a Nordic ‘welfare state’ model built around negotiated labor markets. For a scaling company operating in platform economy, this distinction matters more than any similarity in communication style.

Two start-ups, two answers

Urban Farm is one of Estonia’s first organic vertical farms and has grown into a smart greenhouse platform for retail, education and food-service partners. We interviewed CEO Artur Sirkel and partner Markko Mäll.

The company is already present in Finland through a wholesaler that supplies microgreens to five Helsinki restaurants and through an Estonian-owned distributor. Currently it is developing an export model in Germany together with an organic farm in the Hamburg area. The founders see Finland as a clearly larger opportunity than Latvia or Lithuania, despite higher freight costs and strong domestic production. Regulation is not an obstacle, since the company’s organic certification is valid across the EU, and there is no direct competition in microgreens.

The real constraint is the current model: shipping products in the traditional way would not scale nationwide. Therefore, the plan is to combine the product with their own growing technology and sell it to large retailers, ideally to a store that is either just opening or currently is process of renovating and wants to stand out.

Urban Farm is a case where proximity genuinely works. The value is produced in Estonia, the relevant rules are harmonized at EU level, and logistics cost is the main friction. The challenge lies in the channel. Finnish grocery retail is exceptionally concentrated. In 2025, S Group held 49.0 % and K Group 33.5 % of the market (PTY), so two groups control over 80 % of sales. This makes Finland a gatekeeper market with few buying decisions, each of them decisive.

The founders’ instinct to target individual stores fits the Finnish structure well, because K-stores are run by independent retailer-entrepreneurs who work with the chain but have room to build store-specific concepts (Kesko). One visible, successful in-store installation can serve as the reference that opens the rest of the channel.

Wiseclean is a cleaning platform operating in Tallinn that plans to expand into AI-powered data products. According to CEO Vlad Belopolskii, the company’s gross merchandise value for completed cleanings has grown by about 40 % year on year.

Belopolskii’s view of Finland is two-sided. For an average Estonian company, he considers Finland the best market to scale, thanks to the language, mindset and closely connected economies. For Wiseclean, however, Finland is a small market for a platform, labor regulation is in his estimate several times heavier than in Estonia, and a dominant cleaning platform already holds a strong position.

The difference between the two companies is not the market but the business model. A cleaning platform does not export a product. Its service is produced by local workers, so its unit economics are set by the labor institutions of the destination country. In addition, platform businesses benefit from network effects, which makes a late entrant’s position against a dominant incumbent much harder than in product markets.

The labour market: where the neighbours differ most

Wiseclean’s concern about Finnish labour-market rigidity is well founded, but the rigidity is of a specific kind. In Finland about 89 % of employees are covered by collective agreements (Härmä 30.6.2026). The main reason is the system of generally binding collective agreements: when a sector agreement is representative, all employers in the sector must follow its minimum pay and working conditions, whether or not they belong to an employer organisation. Around two thirds of Finnish employees were trade union members in 2018 (OECD 2019).

Estonia is at the other end of the European spectrum. Union density was 5.6 % in 2023, collective agreements covered about 19 % of employees in 2021, and bargaining takes place mainly at company level (OECD & AIAS). In practice, most Estonian employers set pay and terms through individual contracts.

An Estonian service company entering Finland therefore does not simply face ‘more regulation’. It moves from a system where terms are mostly negotiated one-to-one into a system where the floor is set collectively for the whole sector and cannot be opted out of.

Platform work adds another layer. The EU Platform Work Directive must be transposed by December 2nd 2026, and Finland’s draft act introduces a legal presumption of an employment relationship, shifting the burden of proof about employment status from the worker to the platform company (Finnish Government 2026). Estonia must transpose the same directive, so platform-specific rules will converge, but the difference in the collective-bargaining layer underneath will remain.

One could argue that the Finnish system brings predictability, protects compliant companies from being undercut, and supports the trust that customers expect from a responsible service provider. However, in this case, the start-up sees it as an entry barrier.

Finland the first scale-up market – natural, but not automatic

Is Finland the natural first scale-up market for Estonian start-ups? Based on these interviews the answer is yes, but only when three conditions are met.

• The value is produced in Estonia and exported, as with products or software, rather than delivered locally by workers in Finland.
• The regulation that matters for the business is harmonized at EU level, such as certifications and product standards, rather than national, such as labor law and collective agreements.
• The company has a concrete route to the few buyers or partners who control access to its channel.

Urban Farm meets these conditions, so for it Finland could be a natural next step. Wiseclean does not meet the first two, and for it Finland is better seen as a later market, to be entered through a partnership, an acquisition, or a model designed around Finnish rules from the start. For labor-intensive service platforms, a market whose institutions are closer to Estonia’s may be a better proving ground.

The practical lesson for founders is to screen Finland by the cost drivers of their own business model, not by distance or cultural closeness. The ferry ride is short, but the institutional distance can be long.

What this could mean for scale-up coaching

For us as coaches in the Zebra ScaleUp project, the interviews showed that general advice to ‘start with Finland’ is not enough. We recommend that scale-up coaching includes a structured institutional screening of the target market:

• Which collective agreement would apply
• How concentrated the sales channel is
• Which regulations are national rather than EU-wide

Equally important is connecting Estonian teams early with the Finnish channel gatekeepers, whether retail chains, independent retailers or industry partners. Both Urban Farm and Wiseclean continue to develop their business models and to look for new opportunities to scale at home and abroad. Helping such companies choose the right market in the right order is where project like Zebra ScaleUp with cross-border cooperation between Tehnopol and Haaga-Helia can add real value.

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