Founded in 2016, Cleantech Estonia is “the Estonian cleantech sector development centre empowering research and innovation towards impactful and systematic sustainability.” The non-profit has created a supportive ecosystem for Estonian clean and green technology startups, advanced green export relations, spearheaded diverse research and innovation programmes, promoted environmental awareness and sustainability topics and helped spur the implementation of numerous green policies.
As of today, Cleantech Estonia has financially supported 88 early-stage green and clean technology startups from within and beyond Estonia – the figure runs into hundreds for other forms of support – and enabled them to gain momentum. Its alumni startups have raised over €87M in funding while the organisation itself has raised about 2,5M in non-equity & equity investments. Also, Cleantech Estonia has hosted some of the biggest cleantech startup and accelerator programmes in Europe including ClimateLaunchpad, Climate-KIC Accelerator, and Climathon.
Estonia as a hotspot for Cleantech startups
According to Erki Ani, the CEO of Cleantech Estonia, the current state of the Estonian cleantech sector is very different from how it was years ago. He reveals that the availability of tangible data to back the essence of the cleantech sector and the influx of diverse funding opportunities like the SmartCap Green Fund, Green ICT fund, and grants from the Estonian Business and Innovation Agency (EAS) have benefited the sector and made Estonia itself a hotspot for green and clean innovations.
He also points out that the active role of Estonia as an incubating and piloting cradle has enabled diverse startups, including cleantech startups, to test their solutions and pilot them swiftly and seamlessly. Meanwhile, the availability of well-defined ecosystems means it is easy to find like-minded individuals, startups, experts, forums, and initiatives, to collaborate with and bring new ideas to life. And it doesn’t stop there.
“Our scientific knowledge levels are very high and so are our research outputs. These make Estonia a good testbed for innovations,” Erki highlights. “Also, geographically, we are centred between the Nordics which is the most developed for clean technologies, and then the Baltics, which Estonia is a role model for in numerous aspects,” he adds.
Tackling the energy crisis
As would be anyone’s wild guess, the energy sector is the most in need of cleantech players right now due to the global energy crisis. Thankfully, there are already pretty intriguing players in the space, from big Estonian companies like Skeleton Technologies to startups like Solarstone. Cleantech Estonia’s alumni, such as Fusebox and Sympower, continue tapping into segments like energy efficiency, clean energy and storage, and green building.
“The energy sector definitely is where we need the most innovation at the moment because of the energy crisis,” says Erki. “There are pretty strong cleantech startups in the energy sector already. They’ve had the opportunity to scale because of the huge demand. But innovation remains hungry. There is always room for innovation in the cleantech sector. So, we call on more startups with solutions to save our planet,” he adds.
However, while the renewable and efficient energy sector remains cleantech’s favourite child, Erki reveals that the bio-based sector is not sidelined. “What is maybe fascinating about Estonia and, not known to many, is that the raw materials and biochemical sector are also hitting new highs,” he says. “There’s a lot of developments in here as well. I’m talking alternative meat production, alternative leather, biowaste upcycling, and the like,” he continues. In particular, Cleantech Estonia has a number of superstars in this terrain, including Suckõrs, Äio Tech, Smobya, and Decomer Technology.
Current challenges in the sector
Although the cleantech sector is developing exceptionally, some challenges exist. This includes the capital intensiveness of the sector, the relative difficulty in selling the sector, and its solutions to investors. “Tapping into the traditional or standard Estonian investment sector is still difficult because cleantech can be tricky to explain and sell to investors. Aside from that, our technologies are capital-intensive because they’re hardware-related and quite often science-based. This means it takes a lot of money to get the business up and going from the revenue model into the revenue mode,” Erki explains.
Another challenge is the sector’s reliance on enterprise clients. According to him, since cleantech solutions tend to be quite expensive, the target users are usually enterprise clients who can afford to buy the solutions. However, to get these corporate customers and clients to implement these cleantech solutions, there is the need to convince them to perceive the value in the solutions for their companies and persuade them to see the potential of these new green technologies for productivity, efficiency, and sustainability both in the short and long term.
On the positive side
Notwithstanding the challenges, Erki assures that the road ahead is awesome. “I think that so much is changing because there are more support mechanisms now than ever before. And still, more support in the form of grants, acceleration programmes, and ecosystems continues to come up. So, that’s an assurance that even if you’re a hardware startup or science-based startup, your investment proposal can be levelled on the same or similar level as typical ICT sector startups that are most prominent in Estonia,” he highlights.
Truly, the Estonian cleantech sector is thriving. The landscape has grown huge and diverse with startups working on everything from autonomous vehicles to renewable energy to Green ICT. Particularly, Cleantech Estonia’s alumni are flourishing:
- Woola – replacing plastic packaging with leftover sheep wool to reduce plastic waste. The startup founded in 2019 has raised a total funding of €3M.
- Reverse Resources – developed a tracking and trading platform for recyclable textile waste and now has an extensive network of 51 recyclers, 19 waste handlers, and 945 manufacturers.
- Gelatex – specialises in the custom development and mass-manufacturing of nanofibrous materials through its proprietary technology, HaloSpin™, which is up to 20 times faster than electrospinning.
- Roofit.solar – offers aesthetic steel roofs integrated with photovoltaic solar cells, replacing traditional roofing materials. The startup has raised over €10M in funding.
- PowerUp – develops and produces sustainable energy generation products and custom energy solutions. The startup’s portable hydrogen fuel cell-based generator is the world’s first of its kind.
- Vok Bikes – founded in 2019, the startup developed a faster, safer, and greener last-mile solution. Today, their cargo bikes are used by delivery and logistic services such as Omniva and Wolt.
- Up Catalyst – produces sustainable carbon nanomaterials and graphite from industrial CO₂ emissions. The startup has so far raised €2,1M in funding.
Out with greenwashing, in with real action
According to Startup Estonia, there are currently 76 startups in the cleantech sector, and they accounted for 3% of the total turnover generated by the Estonian startup sector in the first half of 2022. Compared to the first half of 2021, the generated turnover by the sector increased by 160%, with Cleantech Estonia’s Roofit.solar and Single.Earth being two of the top players. Yet, more still needs to be done before the green economy can be achieved.
Since cleantech startups are already playing their part, how can other companies help forward the agenda? Erki emphasises that greenwashing needs to stop and be replaced with real effort. “Stop making greenwashed promises and start making specific plans and taking concrete steps towards making your company, your business model, your production lines, your manufacturing plant, or your industry itself more sustainable,” Erki says.
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