E-Residency and the World of Tomorrow
Regardless of whether or not the e-residency program can make you money, you have to admit it’s an original and ground-breaking idea. Estonia’s innovation is poised to change the world of international business… or, at the very least, challenge the way we think about it in the digital era.
The timing seems appropriate as well, with a global initiative towards greener, paperless systems and political circumstances that can benefit from less border restrictions. It seems almost serendipitous that e-residency emerges at the same time as its need in the world.
In this chapter, we explore how e-residency fits into the current global climate, and its position to shape it.
UN Partners with E-Residency for Digital Trade Initiative
You can’t get a much better vote of confidence than support from the United Nations.
Just a month prior to the Holvi announcement, April 24-28, 2017, the UN Conference on Trade and Development (UNCTAD) gathered the world’s digital entrepreneurial leaders in Geneva for Ecommerce Week. Their goal was to publicize their e-Trade for All initiative — with Estonia’s e-residency program as a founding member.
At the event, the Special Advisor to UNCTAD Jack Ma (founder and chairperson of Chinese ecommerce goliath Alibaba) speculated that 90% of all business will be digital within 30 years; however at present too much of the world’s population can not take part in this growth simply because of where they live.
Following that point, the United Nations recognized e-residency’s role in leveling the playing field for entrepreneurs around the world, regardless of location.
“Small businesses shouldn’t need to wait to integrate themselves into global trade,” the Estonian e-residency program director Kaspar Korjus said at the event. “Why not support these entrepreneurs, while at the same time helping entire countries overcome infrastructure deficiencies?”
And one of the developing countries that stands to benefit most from the e-residency program is India, currently in the midst of a startup boon.
Indian Startups Stand to Thrive Thanks to e-Residency
The UNCTAD alliance isn’t Estonia’s only international partnership to promote more equal entrepreneurship opportunities on the global scale. The country is also working together with India on a bilateral program known as the India-Estonia Startup Exchange.
In particular, Estonia is aiming to empower women in the region, working in conjunction with the Indian Institute of Technology Delhi’s program called Women Entrepreneurship and Empowerment (WEE). The e-residency program and WEE are working side-by-side to provide opportunities that disenfranchised women wouldn’t otherwise have working within their local business structures.
But how does it work? Basically, the e-residency program gives entrepreneurs from India and similar countries access to stakeholders, project developers, workers, and the benefits of EU trade protections — all of which aren’t necessarily available in their native countries, whether for financial or prejudicial reasons.
There’s also the streamlined banking and online bureaucratic features that e-residency offers. Let’s be honest, banking and bureaucratic institutions don’t always work as they should, even in the most prosperous nations, and Estonia’s online services remove aspects like corruption or lost time due to laziness or incompetence. Add to that the tax breaks for undistributed profits, and you can see the value e-residency has on startups from developing countries.
Going beyond e-residency, select Indian startups are invited to come to Estonia to further their companies, namely in the Information and Communication Technology field. Not just India, either: as of January 2017, Estonia’s Startups Visa program allows foreign entrepreneurs to extend their stay in Estonia up to 18 months. At the same time, the Estonian government is relaxing its laws on hiring foreign and expat workers.
British Companies Can Remain in the EU
Prior to the Brexit vote on June 23, 2016, the Estonian e-residency program had only three applications from the United Kingdom. Since the vote passed, the number of U.K. applicants shot up to 1,086 (as of June 4, 2017).
Many British companies have spent years building business relations within the EU: partnerships, employees, and above all customers. The decision to abandon the EU meant abandoning all the special affordances that made these relations possible, i.e., open trade agreements, inevitably erecting new barriers and red tape to prevent the day-to-day interactions these businesses became accustomed to.
The e-residency program provides British businesses with a way around these new obstacles. While their international business may still be interrupted, they’ll be able to retain some of the trade laws and protections they enjoyed prior to Brexit. Moreover, they even have the option of opening a physical business address in Estonia.
And Estonia is well aware of its advantageous position; they’ve even launched a site How to Stay in EU that explains the e-residency program specifically for British companies.
E-Residency by the Numbers
So far, we’ve been discussing a lot of theoretical data — what e-residency is capable of, who could benefit from it. But how is it performing in actuality?
An eye-opening series of graphs presented by Cyfe shed some light on the reality of the e-residency program using hard, indisputable numbers. Let’s take a look at what we can ascertain so far, as of this writing on the week of June 5, 2017.
(Don’t be confused by the weekly metric. The numbers at the bottom measure the amount of weeks passed since the report started, counting up to 52 and resetting to 0 at the beginning of each year.)
- To date, there are 19,254 Estonian e-residents.
- The total acceptance rate has been 94%, with an additional 2% currently under review.
- Finland is by far the country to take advantage of e-residency the most, with 3,001 applicants making up almost 15% of the total applications sent in. Russia comes second with about half of that, followed by Ukraine, then the U.S., and then the U.K.
- The most popular reason for applying is to start a location-independent business.
- 88% of all applicants are male, with only 12% female.
- The 31-40 age demographic is the most popular, comprising 33% of all applicants.
- 1,675 new businesses have been started under the e-residency program. The total amount of businesses owned by e-residents is 3,256.
Perhaps the most important takeaway from examining the Estonian e-residency program is this: we’re only witnessing the beginning. As we mentioned in the first article in this series, new ideas always take some time to come into their own. With something as revolutionary as digital residency, at this time in history, the potentiality of what it can do overweighs the existing practical benefits.
That’s not to undermine the current advantages the program offers. As we just explained, startups in developing countries ,as well as British companies struggling with Brexit, are already reaping the benefits of this unprecedented program.
But the engineers of e-residency are working on further developments at this very moment. The recent Holvi partnership proves, if nothing else, that the young e-residency program will continue to roll out more and more improvements as time goes on.
In the future, how will Estonian e-residency change? Or, perhaps the better question is, how will Estonian e-residency change the future?
This post is Part 5 of our 5 part “Complete Guide to Estonian e-Residency.” You can find the others here. We’ll be releasing an eBook with bonus content in the coming weeks, give us your email and we’ll let you know when it’s ready!