With a market size of just five million, Singapore is home to hundreds of startups looking to grow up and go global — and they’re in luck if their aspirations involve tapping into the EU market.
Entrepreneurs in Singapore will soon be able to apply and claim e-residency status in Estonia, a member of the European Union and also one of the most advanced e-societies in the world.
Besides being the first country to hold legally-binding general elections over the Internet, Estonia is also home to the core team that built Skype. Having an Estonian digital ID lets anyone incorporate in Estonia while running a location-independent company from anywhere. For example, a Singaporean entrepreneur can run their Estonian startup from Thailand while working with their customers in the UK.
“If you have a business and you deal with the European Union, Estonia can be a great entry point because we have tools that actually allow for location-independence. You can run your bank account and your company from a distance. Basically, you are interacting with the EU through Estonia,” Taavi Kotka, CIO of the Estonian government, told e27.
Estonia’s innovative way of boosting the economy
With just 1.3 million people, the EU member state is a tiny nation with big ambition and the e-residency program is a part of the Estonian government’s plan to multiple the market size. Situated at the same latitude as Alaska, Estonia is a wintry country that neighbors larger tech ecosystems Finland and Sweden which puts them at a disadvantage when persuading foreign talent to move in. Granting digital identities is an innovative workaround and, in fact, Kotka’s ambitious plans include enrolling 10 million e-Estonians by 2025.
A software engineer by hobby and profession, Kotka was a serial entrepreneur before he stepped up to the CIO post in 2012. For over a decade he was the managing director of the largest software development house in the Baltic region and was lauded as Estonia’s ‘Entrepreneur of the Year’ in 2011 by Ernst & Young. He now brings his entrepreneurial spirit to the Estonian government and is running the e-residency program exactly like one of his startups.
“We deal with everything like a normal startup, we first wanted to see if there was a market, if there was a need there. So for us, it was very important to come out as fast as possible after our beta phase,” he said. “Governments can’t do startups because startups might fail and the government can’t fail, so it makes it extremely difficult to justify all my actions. There weren’t any government startups before that.”
Still, Kotka plodded along the path of most resistance, began a pilot programme in December 2014 and officially “launched” in May of this year. To date, the e-residency programme has more than 20,000 sign ups and 5,000 paid “customers.” After launching in Singapore, the programme will also open up to other Southeast Asian countries including Indonesia, Malaysia, Thailand, Philippines and Vietnam.
An Estonian digital nomad and entrepreneur weighs in
Silver Keskküla, an Estonian entrepreneur who has been running his startup out of Silicon Valley and Tallinn (Estonian capital), said that beyond the economic benefits for his home country — e-residency can also have great impact for entrepreneurs in developing countries that want to run a global business.
“If you have some dude in New Delhi that’s creative, his options are going to be limited if no one trusts him online. So if there’s going to be an e-residency programme where the Estonian government vouches for this guy, basically we’re loaning trust to him,” Keskküla told e27. “Then he can set up a company, a website and have presence in the EU.”
Having lived in nine countries and counting, Keskküla is a digital nomad and was also the first researcher to join Skype’s core team. He’s since Co-founded Teleport, an Andreessen Horowitz-backed startup that enables location-independent workers and companies to optimise their lives through geo-arbitrage.
Having experienced running a business in digitally-savvy Estonia where e-signatures are widely accepted, then filling out 60 pages of paperwork for his US federal tax returns — Keskküla is proud of his home government for helping location-independent companies save time. And he chalks it up to Kotka, who is just 36-years-old, leading the charge and running the e-residency initiative like a startup.
“You need to have young people in the government to be open to such things. Like for e-residency, not everything is set in stone and it isn’t a perfect product — but it’s this awesome idea that has bits and pieces that we used ourselves for a decade and now we want to take it to the world,” he said. “And it’s operating on a startup level, it’s really cool to see a government try to listen to the user. It’s a totally different mindset.”
According to Keskküla, one of the benefits of being a tiny country is that the government is not made up of politicians, but mostly specialists in certain fields. This has had a positive impact because while politicians may not understand how it feels to work in these fields, these specialists do.
The rough and tumble of running a government startup
Kotka was the President of the Estonian ICT Association before joining the government. As any seasoned tech entrepreneur knows, a startup needs around four years to mature before yielding real results. But as the government is spending taxpayers’ money on the e-residency programme, the pressure is on for Kotka to deliver in a much shorter time frame.
“For me, startups are in my blood and I have done many of them in my life. But government officials have never heard of it: ‘What do you mean I have to act fast? If I don’t do it this year, I will do it next year,’ and that’s the attitude that I have to struggle against and fight back,” he said. “On the positive side, compared with other government reforms, I have to admit that I’ve been lucky because while we’re not moving as fast as private-sector startups, we’re still moving as fast as a government startup can be.”