Estonia – a small European country mostly known for Skype and e-Residency – continues getting noticed in the world. A small country with only 1.3 million in population is the world leader in digitalising multi-sector administrative work. It has changed the country into the start-up hub, venturing out many entrepreneurs to conquer the world. Many do not even recognise that Skype that got extremely popular around the world over ten years ago has been made in Estonia. Since then, more Estonian companies have been emerging, and just like Skype, people aren’t aware of their Estonian roots. Let’s look out for the most prominent ones that have spread out globally.
TransferWise is a famous international money transfer service, enabling making payments without hidden fees in numerous currencies and countries. To be correct, it has 57 currencies in its arsenal and can send money from 43 countries, with 71 countries able to receive it. The company was founded by two friends, Taavet Hinrikus and Kristo Käärmann, who were not happy that the conversion charges between pounds and euros were taking a significant portion of their salaries. A fun-fact – Taavet Hinrikus was Skype’s first employee.
Although TransferWise was not the first money transfer system on the market, it became a new and better one as it has improved the present market by dropping the exchange rate mark-up. Instead, they take a small fair fee which is always shown beforehand. The transfer fees are generally between 0.5-0.7%, although, some currencies may have a slightly higher price, that is still 83% to 90% cheaper than what banks can offer. TransferWise locks the current exchange rate up to 48 hours to prevent constant rate changes – meaning that you are safe from any exchange rate changes for that period. This way, they maintain transparency with no hidden costs, and you’ll know what fees are incurred. Transactions usually take less than two days.
TransferWise has made sure that their FAQ covers everything, and in case of hacking and complains, they still have their support emails open.
The company follows the market demand, so they offer multi-currency – borderless – accounts for people and businesses. Opening a bank account in every country to receive money in local currency online is now a new norm. They are offering to have a dedicated local account, thus introducing a life without a bank.
TransferWise has shifted more than £3 billion of clients’ money since 2011 and turned in profits since 2017. Their venture and subsequent success became a massive inspiration to local Estonian and world entrepreneurs, as some of their employees went on to fund their own companies at a later stage.
Quanloop is another excellent service having its roots in Estonia. It enables you to invest capital and grow your wealth in a totally renovated way online. The founder of Quanloop is Estonian financier Valentin Ivanov, who invented the investment model called “investment loops” – short-term recursive debt-agreements – that keep reinvesting your money every day. Quanloop core technology is based on this business model offering annual interest revenue from 5.5 to 15.7%. If you are familiar with peer-to-peer platforms, Quanloop operates similarly, but instead of connecting borrowers to lenders, it borrows the money and repays it by itself.
Quanloop earns by borrowing at a cheaper rate and lending further at a higher rate while making its profit from the spread. The money is lent to professional financial companies having established business in leasing or factoring.
As the investor, you can start as low as €1. Every single euro makes a separate tiny loan agreement covering valid for 24h. Signed at midnight, the money should be repaid in full by the next day, thus restarting the loop and re-pooling the long-money credit.
Quanloop focuses on responsible and sustainable investment; hence, risk diversification is one of their foremost priorities. Focusing on the risk-averse investors, they also offer excellent IRR to investors with higher risk tolerance. Three risk plans introduced by Quanloop allow investing of all the capital within the low-risk plan, up to a half of the money within the medium-risk plan and a maximum of one-third of your capital balance within the high-risk plan. The rates are set upfront: low-risk rate of return starting from 5.5% p.a., medium-risk rate of return beginning from 9% and high-risk rate of return from 13%.
The competition involved, Quanloop borrows money at the least possible rate of return, so all the investors bid their APR and the lowest wins. Also, an investment placed within the medium or higher risk plan does not necessarily mean that it is prone to lose. Instead, it means that you are merely giving Quanloop approval against softer security. Investors would still have their investments intact despite any losses suffered by Quanloop. It is possible due to their collaterals and underwriting reserve.
Unlike other similar investment platforms, Quanloop offers inflation-safe investing. Meaning, the money being held and invested with Quanloop is guaranteed from inflation – any loss of the value is compensated to the investor once a month.
Quanloop has an excellent liquidity backup by maintaining an underwriting reserve – Quanloop reserves the money of their own on top of the capital it borrows and holds it to support quicker exits. The withdrawals are speedy and usually reach investors account within one working day; also every transfer within EU/EEA zone in euro currency is free of charge. If Quanloop is unable to offer a next-day exit, a premium of 2% per annum is earned for every single delayed day.
Since its launch in February 2020, Quanloop has accumulated over 600,000 euros in investment and has ventured out in Spain, Romania and Greece. Watching them borrowing from investors from the whole of Europe, and their fast growth, they seem to become another global investment unicorn investors should adhere to.
Veriff is one more online service from Estonia leading the compliance market all over the world. The company was founded in 2015 by Kaarel Kotkas when he was only 20 years old. Their company is dedicated to online identity verification, and now it is used by such prominent organisations as Berlin’s public transport company BVG, Remote Scooter Sharing Platform goUrban, a cross-platform asset manager OSOM, etc. The idea of cross-verification came to Kaarel when he helped TransferWise to test the verification systems of their customers.
Their verification method requires the user to provide a photo of a valid ID and a picture of themselves, while Veriff records a video of the process. They check the validity of the document and match the face to it while analysing the data from your device and network. The data points are, then, linked to make sure that the person is who they claim to be. If, however, the customer does not pass the automatic check, the manual verification will take over to ensure that no users are excluded for a machine’s mistake.
They also do a device and network fingerprinting to ensure that the devices or systems have not been used for any fraudulent activity. And unlike other verification companies who treat every single verification separately, Veriff crosslinks the data from different sessions to detect systematic fraud.
Veriff does not charge users a fixed or monthly fee; instead, they charge per verification. Meaning, users only pay for what is actually done.
In today’s digital world, where the demand for identity verification is ever-increasing, Veriff has come up with a solution being of high demand. Currently, they are operating in more than 190 countries in 34 languages in sectors, such as finance, transportation and e-commerce.
Bolt, formerly known as Taxify, is a transportation company fused with tech that was founded in 2013 by Markus Villig. He was only 19 years old, studying computer science at the University of Tartu when it first took off. Now in 2020, he is the youngest head of a billion-dollar company in Europe. Villig started the company with only 5000 euros, which he borrowed from his family.
Bolt makes it easy for clients to hail a ride in minutes to wherever they need to go and offers it through an easy to use and intuitive app. Along with the transportation service, they also have companion apps for food deliveries and electric scooters rental. It’s a great competitor to Uber and thus helps keep prices lower.
They also introduced Business Delivery as their latest product that offers businesses a distribution partner so clients can get same-day delivery.
Their services are available to over 150 cities worldwide with 30 million customers globally. The prices for the services are relatively low compared to their competitors. The support is fast and available at any time of the day.
All drivers undergo a criminal background check and in-person training and must be over the age of 21 and have a driver’s license for at least three years before they can apply for a driving position. The drivers have solid wages as they earn more because commission rates are low.
Bolt has also made a commitment to reduce the carbon footprint to the planet. Their rides in Europe are now carbon-neutral, and they put a small sum aside from every ride made and use it to fund projects that can help reduce the effects of global warming.
Previously, this year they raised €100m to scale their products throughout Europe and Africa. It got the unicorn status in May of 2018 when it reached 1 billion in valuation.
EveryPay was founded in 2012 to offer businesses world-class digital payment solutions both on the web and on apps. It was created by Lauri Teder, a former head of development at Fujitsu who has previously participated in many of the e-Estonia projects. He built the company from the ground up and in the process accumulated a broad knowledge of the global payments industry.
EveryPay is entirely cloud-based and has one of the lowest processing rates available anywhere. Unlike Stripe, it doesn’t have flat fees. Furthermore, there are no licensing fees or any need for external hardware.
Every time a payment is made in an online store or application, a payment gateway is responsible for processing that payment. That is what EveryPay does. But it’s different from other services, as it is built in-house with the future in mind, so whenever they have a new feature they want to add, they can easily make adjustments and implement it.
It is suitable for online stores and other business models alike. The platform can accept all kinds of payment methods from credit cards to alternative payments. Businesses can monitor transactions in real-time, make refunds and prevent fraud through managing security settings in the Merchant Portal. It is very flexible; its API can be used in any system as it can be adjusted to the customer’s preferences.
EveryPay enables its customers to scale their businesses through the same features as all the 3rd party PSPs to increase profits and secure more merchants. The platform is easy to use and manage. It can grant businesses with more capable cash flow management via automatic payment processes. To provide customers with a better service, they also have an automatic account and billing updater.
The platform is continuously upgraded with new payment methods and features to stay ahead of the times. PayTech Awards 2020 named EveryPay the world best payment service.
The last but not the least firm to be mentioned is Funderbeam – a p2p crowdfunding and trading platform that connects investors with start-ups in need of equity funding. They equip their investors with valuable and specific information about the start-ups, which allows for better and firmer decision making. In turn, start-ups get access to funding at a diminished cost.
It was founded by Kaidi Ruusalepp in 2013, who previously worked as an IT lawyer tasked with building Estonia’s IT landscape. She had an essential part in developing the Digital Signatures Act. After which she led the Central Securities Depository for four years until she was offered an executive position at the NASDAQ Tallinn stock exchange. She came to the idea of Funderbeam when she noticed that Estonian investors and companies didn’t have access to global capital markets.
Funderbeam’s main aim is to promote small and medium businesses, as they deem to creating large-scale employment opportunities and are an integral part of the economy. Hence, they made their system easy to use with most of the procedures automated. So far, the platform has gathered over €20 million in funding, while €4 million worth of investment shares have been exchanged on the secondary market.
Funderbeam uses syndicates to organise fundraisings. Each of them has a lead investor and backers. The lead investor negotiates the terms for the syndicate and charges a fee of around 1-3%. If the fundraising is successful, Funderbeam takes another 3%. It also motivates the lead investor to always do its best to make sure every investment is beneficial. All of the backers receive blockchain digital tokens that prove their investment. The tokens can be sold on the secondary market at any point.
Although it does not guarantee any profit since you are investing in start-ups, if a particular start-up enjoys enormous success, you’ll also get to profit from it.
Currently, Funderbeam has its offices in the UK, EU and the Asia Pacific and has helped start-ups from various sectors, like, transportation, beverages, services and many other.
As of today, the start-up sector is the fastest expanding arm of the Estonian economy and accounts for 2.5% of the country’s GDP. Estonia has many more wonderful companies that were not included in this, but deserve attention. So check online for various other Estonian businesses that can offer you the most value.