22 September 2011

Investors, Cheer Up: Estonian Start-Ups Are Waiting For You

Everything seems miserable in Europe and in the so-called advanced economies: sovereign debt crisis, weak and overleveraged banking sector, economic divergences between the Eurozone countries, political challenges and no such thing as “safe haven”. Indeed, a few days ago I wanted to write an article entitled “Europe’s Drama: Act Two” for Seeking Alpha, but ended up with an article that can be summarised as “No Safe Havens Left in Europe”. The latest World Economic Outlook by IMF is not encouraging either (the forecasted numbers seem pretty ok, but the analyses clearly imply much more severe scenarios).

Traders can find good opportunities as markets are volatile but investors are confused: what to do with their money so that it would not lose its real value? Gold price seems speculative, investing into stocks is risky, emerging economies may be overheating, currency rates are very volatile and subject to political decisions, and so one. Well, my most sincere suggestion in the current times of uncertainty is this: invest into yourself and invest into relationships.

But if you still have money to invest, then invest it from inside, i.e. invest into the businesses that you understand, that you can shape and to the fortunes of which you can contribute. I do not need to look far away to find tens of such potentially interesting start-up companies. Their founders, the authors of innovative, scalable business conceptions meet here in Estonia, just a few quarters away from where I live. The place is called Garage48 HUB.

The mood in start-up community is pretty different from the general pessimism: the focus is not on what all could go wrong (this despite of the fact that, by definition, a large proportion of start-ups does not turn out to be a success); the focus is on our positive role model Skype (I’m sure you know and perhaps even use it) and on the others that are currently creating buzz among venture capitalists and angel investors (such as Erply, GrabCad and Fits.me). There are also local examples to follow starting from e.g. Rate.ee and Cherry.ee.

Of course, simple websites, apps and common platforms already exist today. That’s neither the point nor a suggestion to invest into something similar. The point is in the environment that fosters innovation and creativeness, and in people who are hard-working, enthusiastic and not too comfortable for changing the courses of their lives, and learning and starting new things. Yet despite of this and the success stories the roots of which are in Estonia, venture capital is still scarce here – and that’s precisely the opportunity for an investor from US or UK.

So look closer; if you look close enough, you most probably find ingenious new solutions which you might be interested in to invest (a collection of new innovative ideas from all over the world, including from Estonia, can be found e.g. from HumanIPO). Furthermore, many young people in Estonia are “citizens of the World”, I mean ready to come and work wherever it’s needed. That means that given some guidance, introductions and contacts in your location, you may pretty easily increase the value of your investment maybe twenty or thirty or more times. Easier access to other markets is also quite an argument from an entrepreneur’s point of view to accept the investment offer.

Ok, at the end it will most likely turn to just another tech bubble, but if you are investing as insider, you should be able to see when it’s time to exit. And there is still time to this point...

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