Buildit founder talks Estonia’s success and startups’ mistakes

On February 9-10, Latvia’s capital city Riga hosted TechChill event that gathered more than 1000 investors, startup founders, entrepreneurs and other representatives of the ecosystem from 26 countries.

TechChill was organized by TechHub Riga and sponsored by ALTUM, TWINO and Printful.

Aleksander Tonnisson is co-founder and CEO at Buildit. Buildit is the first accelerator in Northern and Eastern Europe, which focuses on investing in hardware startups. Startups worldwide can apply for the accelerator program. Selected teams receive 3.000€ flat investment apart from consultation and contacts from mentors.

Itel.am attended TechChill and talked with Aleksander Tonnisson.

- Did Buildit ever have Armenian startups?

- No, there weren’t any. I don’t know how many applications we have had from Armenia, I think a few, because all together we have had applications from 60 countries. Yes we mostly look for hardware, but also companies in creative industry space. We specifically try to find companies which combine those two.

Right now we have two rounds per year. One program lasts for 6 weeks. Startups can apply through the website.

-Based on your experience on reviewing the applications, what are the main mistakes that startups make while filling them?

- The biggest problem is that teams have been thinking about their idea for so long time that they sometimes forget that people who are reading their applications are hearing about their idea for the first time.

So what we see are very short descriptions to actually fundamentally important questions like “Who are your competitors” often has a very typical answer “We have none” which is always wrong. There’s no single product worldwide which doesn’t have competitors. Giving more information is always better.

Other thing which teams don’t realize or maybe don’t pay attention to is that in the early stage it’s more a team investment, rather than a product investment. You have to put emphasis on the team in the application (what is the relevant experience, what you’ve done together, etc.).

From investor perspective it’s super important that it’s not the first product that the team does together. “We have known each other for six months” doesn’t really help me a lot. I want to know where you met, how you got there. So provide as much information about the team, the team background and the relevant experience as you can because you need to convince that the team is strong.

You can easily change the idea, the business model, but it’s very difficult to change the team.

Aleksander Tonnisson and Narine Daneghyan
photo © Photo by Ruslan Zavacky

- How did Estonia become one of Europe’s innovation hubs?

- Estonia launched startup visa to be able to bring people to the country, where they could start a company and also work. So now all startups, even outside Schengen Area, are welcome to Estonia.

Estonia’s success is a combination of everything. There is no single thing. One is the fact that we have had few success stories. It all started with Skype as everybody knows, and that was kind of a trigger for many new companies. There are lot of companies that were started by Skype or former Skype employees.

Another thing is that it’s extremely easy to open up a company in Estonia. In a lot of countries it’s quite expensive to have a company, in Estonia it literally doesn’t cost anything.

Of course you have the e-governance, so you can do everything online and you don’t have to leave your office. Everyone can become e-residents of Estonia. We already have ten thousand people who became e-residents. It basically means that you get the identification card and run a business online.

The corruption index and bureaucracy is very low in Estonia.

Then on top come initiatives from startup community, like startup visa, which was a grassroot movement.

The investors are educated. Estonian Business Angels network has done an excellent job in educating potential investors to become angel investors. Now we have over a hundred members, who actively invest in local startups, so it’s easier to attract capital to the country.

I’d like to stress the success factors are the result of joint efforts. It’s always small steps which in the long run end up making a huge difference. It took Estonia 25 years to get where we are now.

Narine Daneghyan talked to Aleksander Tonnisson