Tech Haven Estonia Attracting U.S. Defense, Cybersecurity Business

Estonia Defense Industry Association’s Chairman of the Board Kuldar Väärsi (left), Prime Minister of Estonia Taavi Rõivas (center) and Dave Chesebrough, of the National Defense Industrial Association.

Technology executives from the Republic of Estonia have been touring the United States this week, and found an especially receptive audience in Washington, where they met with top U.S. defense and cybersecurity industry executives to strike up business alliances.

In the global tech community, the small Eastern European nation occupies a unique position. After it suffered one of the world’s most devastating cyber attacks in 2007, the country placed a laser-like focus on network security and in the process created a business-friendly environment that draws out-of-the-box tech developers.

Estonian firms make desirable partners for American tech companies, said Ryan Gillis, vice president of Palo Alto Networks. “Having a country that is nimble, able to identify trends and ideally, in some cases, move ahead of those trends is a real advantage,” he said March 22 at a cybersecurity and defense industry conference at the George Washington University Center for Cyber & Homeland Security.

That culture stands in contrast to the government contracting sectors of countries like the United States, with large entrenched bureaucracies “that aren’t always the fastest technology early adopters,” said Gillis. The Estonians “understand the value and necessity of security so it makes it a really attractive place."

The keynote speaker at the GWU event was Prime Minister Taavi Rõivas, who was on an official visit to the United States. At the conference, the Estonian Defense Industry Association signed a cooperation agreement with the National Defense Industrial Association.

“Estonian companies operating in the field of defense are focusing more and more on export markets,” particularly in cyber and data security, border defense and robotics, said an association news release. “One of the main objectives of the visit is to lay this foundation for the Estonian defense industry enterprises,” Rõivas said.

The United States, for instance, has commissioned Defendec, a supplier of autonomous and fully automated land border monitoring systems, to provide technology developed in Estonia to a number of third countries, said Kuldar Väärsi, chairman of the management board of the Estonian Defense Industry Association.

Among the deals signed was one between Estonian drone manufacturer Threod Systems and U.S. defense contractor Momentum Aerospace Group. MAG provides intelligence surveillance and reconnaissance services to the U.S. government and NATO allies.

During a NATO project in Kosovo, MAG ran into major technical difficulties with its tactical drones. Threod helped fix the problem and the companies agreed to partner for future work.
“When we went looking for the right technological partner to solve that problem we found an Estonian company,” said Joe Fluet, chief executive of MAG. “We found innovation, we found hunger, they were responsive, they were aggressive about getting the problem solved.”

Like other U.S. executives, Fluet was impressed by the country’s pro-business ethos. “We found in Estonia an atmosphere and a culture of entrepreneurship,” he said. “I’m not in the business of making gadgets. I take the best gadgets in the world and create solutions for customers. When we can partner with innovative companies, that allows us to be better.”

Financial incentives — a flat tax, tax exemptions for companies that reinvest their profits, regulations that encourage companies to innovate — are helpful, Fluet said.

Estonia allows tech developers to become “e-residents” even if they don’t live there, noted business professor Juan Pablo Vazquez Sampere in a Harvard Business Review article. While e-residents don’t have full rights as citizens, the government will grant them a “digital identity” with full rights to do business in Estonia and in most European countries, depending on the industry.

“This enables the Estonian government not only to foster entrepreneurship in their economy but to generate revenue through the e-card subscriptions, wrote Vazquez Sampere. “Estonia is suddenly making it possible for a whole new cadre of startup founders to operate in Europe at a fraction of the cost of living there.”

Photo: NDIA

Topics: Infotech, International