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Taavi Tamkivi: Estonia is an excellent place to experiment, but growth will come from foreign markets

In the coming years, fintech company Salv´s primary business focus will be on Europe: Scandinavia, the Baltics, Central and Eastern Europe, said Taavi Tamkivi, the CEO of Salv. Photo: Ministry of Foreign Affairs

Taavi Tamkivi, head of the technology company Salv, believes that new companies have little chance to succeed by focusing purely on the local market. The only way to grow is to expand to foreign markets—the faster and more, the better. The fintech start-up also had the goal of expanding to Great Britain immediately.

In spring, an information day for Estonian entrepreneurs was held in Tallinn on the export possibilities of the British market, where, among others, the start-up company Salv, which offers financial crime prevention tools, shared a fresh view on entering the British market. We asked the company’s CEO, Taavi Tamkivi, why they expanded to the UK market and what the unexpected, unusual aspects of the process were.

Salv has been operating for about six years. The company’s head office and development centre are in Estonia. In addition, you have employees in Great Britain, Lithuania, Latvia, and a subsidiary in Poland. How difficult was it to move your business outside of Estonia?

We started our business actively during COVID-19, when it didn’t matter where someone was physically. Whether you were in the forests of Aegviidu, London, or Mauritius, there were people and companies everywhere, and everyone communicated through the Internet. Our first contract was in Estonia, the next in Lithuania, and then in England—it all went smoothly thanks to the virtual and remote work.

The other side is how to expand operations in different countries – that’s already a much bigger headache. In other words, how much paperwork and legal support do you need to open your office in Poland or recruit employees in England. The process is tedious, expensive, and time-consuming but necessary.

Third, I would add finding people. Identifying the right partners for hiring is crucial, and once accomplished, yields positive results.

What motivated Salvi to expand into the UK market?

This was the company’s so-called innate thinking. My previous experience in Skype and Wise was related to London—it was a significantly more home market for me than Estonia and other countries. There were also contacts in England with a Wise background who had created fintech companies. The network of customers to talk to was, therefore, available. Moving on from there was more accessible.

Today, the Estonian and Baltic markets and customer base are significantly larger than in England. However, at one point, we had five clients in France, although we had not made a conscious decision to expand there at that time.

In other words, in our case, for example, in London, the first customers came through personal contacts, and things started to develop from there.

What kind of homework did you do before entering the market?

Our clients are mainly regulated financial institutions. That´s why it was easy to look at the numbers. Each country has a local financial inspectorate that issues licenses to financial institutions. From the data provided by these regulators, it was easy to determine the number of banks, crypto companies, and payment institutions in the country. In this way, we ranked the countries according to the target market size. There are 1,600 banks in Germany, many of them very small. There were 600 banks in Poland and 400 in England. These numbers directed our focus.

Another aspect was to see how big the problem we are solving is—money laundering scandals. If you look at the map of international crime, it shows that the most significant number of criminal organisations are operating in England. In addition, all the money of the Russian oligarchs is moving through the rest of Europe through thousands of shadow companies.

If you look at the south of Europe, where the problem exists, local authorities and, because of that, companies do not take it seriously. At the same time, the prevention of money laundering is implemented very seriously in Estonia and everywhere in the Nordic countries, and such a background also favours anti-money laundering activities in business.

What is the UK customer like? What are his wishes, needs, preferences, and demands? How does the UK customer differ from clients from other countries?

It depends more on the company’s field of activity and license type than its operating country.

However, one common denominator is that the bigger or smaller companies in each country, usually the bigger ones, say they are unique and that it will still be difficult to enter their market. Everyone says this, whether they are German, Polish, Lithuanian or English. Not that it’s easy, of course (entering the market, ed.), but everyone thinks they are unique.

The competition in the English market is much tighter because there are many smaller and larger providers. We recently discussed how many new sales he could make in a year if we had one salesperson in Latvia compared to one person in London, England. The initial feeling was that there could be much more sales in London, as there is a larger market than in Latvia. On the other hand, there is a tighter fight for the market in London than in Latvia, where fewer serious competitors exist. This feature of such a large and dense market is worth keeping in mind.

What cultural differences or nuances have you considered when doing business in the UK?

One interesting observation I’ve made is the desire to belong to associations. Whether joining the local banking association or a costly payment service association, the need to belong stands out.

In previous years, when I used to visit Great Britain frequently and interact with people to discuss work, the first question would often be about whether I was a member of a specific professional association. It felt like a status symbol. Now that we are members, things haven’t really changed, and there isn’t any significant added value from being a member, except that I can say that, yes, we are members. This used to be unique in the UK market.

In different markets, various factors come into play. For example, in Lithuania, if a person with a local background, connections, fluency in the local language, and previous experience in the field approaches the target client instead of me, they are likely to be taken more seriously. Building a connection will be much easier in this case.

In other words, these professional associations are everywhere, but they are more important in the UK market than in other countries.

Salv Technologies has redesigned the structure of its sales team, replacing part of the Estonian team with sales professionals familiar with local financial companies in Lithuania, Latvia and Great Britain. Was it challenging to find workers in foreign markets?

Anyway, finding good employees is difficult everywhere. The methodology for finding them varies significantly from country to country.

In Estonia, we had founders on site, and everyone had their own contacts. Thus, for example, we found early software developers and product managers among our contacts. We tried the same tactic in other countries, but it didn’t work.

The methodology for finding people in other countries is different. We had to hire a very strong recruitment partner, through whom we finally started to find professional people. However, it took time and a considerable amount of reviewing CVs. It is wrong to assume that the same things that work in the home market will work in the foreign market. It does not work that way. In foreign markets, using other methods is necessary, according to our experience.

What are Salvi’s next steps in expanding into foreign markets, especially given your operations in Great Britain, Lithuania, Latvia and Poland?

In the coming years, our main focus will still be on Europe, Scandinavia, the Baltics, Central and Eastern Europe, England, and Ireland. But we also look to the south, i.e., Malta, Cyprus, Portugal, and so on, where we are already quietly building up our presence.

Allegedly, 60% of the world’s compliance (compliance control, ed.) costs are incurred in Europe, 40% elsewhere. So, the market in Europe is the largest in the world, regardless of the fact that Europe is small in terms of territory and population.

Although we also sell in the USA and Africa through partners, Europe is our home market and main focus because we know this market best.

What would you say to Estonian entrepreneurs currently operating in Estonia but are thinking/planning to expand to foreign markets, such as the UK?

One recommendation is to calmly think and analyse why and where to expand the company. There still has to be some reasoning behind targeting one region or sector.

At the outset, I believed that as a SaaS company, we operate virtually. I thought there was no difference since everything is accessible via the internet, whether in England or New Zealand. In other words, we underestimated the fact that there are actually multiple markets, and you can’t address them all with the same approach. In my case, the experience of Skype or Wise didn´t initially help. I thought the whole world was our home market.

An ambitious start-up company that wants to expand globally should avoid making hasty decisions about which markets to enter. It’s important to carefully analyse the specific reasons for entering a market, such as the size of the potential market, the demand, and any legal or logistical considerations.

If we take a broader look at this question, the Estonian local market was divided mainly between companies already in the 90s. New companies today have limited potential for success if they only focus on the local market. The financial, automotive, and software industries already have a strong presence here. Companies must expand into foreign markets as quickly and extensively as possible to grow and succeed.

Overall, it’s essential to consider that while I may experiment and gain experience in Estonia, it’s not the market where my company will truly thrive and grow.

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