The Estonian defence industry’s turnover will reach a record 400 million euros this year. However, the sector’s ambition is high—by 2030, it aims to reach a turnover of billions and be a respectable export partner among countries developing defence technology.
Marko Kaseleht, head and co-founder of defence industry startup SensusQ, believes several factors are behind this year´s record turnover of 400 million euros. “Firstly, the environment and greater attention to the field of defence and its growth. Increasing defence budgets have created a fertile ground for corporate growth. Secondly, the uniqueness and innovativeness of Estonian products have attracted great interest in the international market,” he mentioned.
According to him, Estonia’s political support and active contribution to the Ukrainian conflict have also contributed to the sector’s growth, which has increased the country’s credibility at the international level, including the visibility of Estonian products.
A functioning ecosystem paves the way to a billion
However, the growth ambition of companies in the sector is much higher. In an interview with Äripäev radio on June 12, Taavi Veskimägi, partner of 2C Ventures and chairman of the council of Estonian Defence and Aerospace Industry Association, predicted that by 2030 it could already reach 1 billion euros.
According to Marko Kaseleht, it is necessary to focus primarily on creating a working and efficient defence industry ecosystem to achieve this. “It should include production capacities, research and development, as well as human resources. It also means strengthening the local supply chain. A good example is Milrem Robotics’ supply chain, where 65% of the components come from Estonian subcontractors,” Kaseleht said.
SensusQ has developed Winning Mind software for military technology. It helps end users collect information from various sources, analyze its accuracy and provenance, and make connections based on the collected data. The platform has digitized the intelligence cycle and already saves 30% of valuable time compared to the methods still in use today. The company’s information management software is used in NATO countries and Ukraine.
An up-to-date political support and regulatory framework are also needed. “Thus, government support is essential, including the creation of investment funds and the improvement of export guarantee mechanisms,” stressed the CEO of SensusQ.
Partners open doors to the global market
It is essential also to consistently focus on promoting innovation, exports and investing in research and development. For example, according to Kaseleht, the Estonian Defence Industry Association has set the goal of increasing the number of its members and promoting innovation to strengthen its competitiveness in international markets.
“The growth of export volumes is also supported by close cooperation with strategic partners and finding new markets. A vivid example of an international partnership and strategic alliance is Milrem Robotics’s cooperation with the UAE military industry, EDGE, which helps increase investment and expand the market scope. Such partnerships are necessary to ensure the growth of the global competitiveness of the Estonian defence industry,” noted Kaseleht.
The defence industry needs domestic references
At the same time, references in the defence industry are needed to reach strategic partnerships. “The international market does not want to buy or use products and services that do not have domestic references,” Kaseleht explained. Their lack is currently one of the obstacles to the growth of Estonian defence companies.
“This context (historical experience with Russia) is essential for NATO and EU member states, which value Estonia’s expertise and strategic solutions.”
Marko Kaseleht, CEO and co-founder of SensusQ
For example, the Estonian Defence Forces could start using more local products and services. “Unfortunately, suppliers often prioritise the cheapest price, giving an advantage to larger international manufacturers. This means that money and references end up leaving the country,” shared Kaseleht.
According to him, Estonia could also improve its inclusion of foreign investments, which has so far been poor. Estonia´s neighbours are in a better position because they have created a functioning defence industry ecosystem and adopted the necessary decisions at the political level.
The key strength lies in extensive historical experience
Estonian defence industry companies stand out in global markets due to their innovative and distinctive products. For example, Kaseleht pointed out unmanned land vehicles developed by Milrem Robotics, drones from Threod Systems, the Vegvisir Situational Awareness system, and SensusQ‘s intelligence management software.
According to Kaseleht, Estonia’s strength over other countries is its geographical location and historical experience with Russia, which gives it a unique perspective and understanding of security threats. “We know and can successfully communicate this to our partners. This context is essential for NATO and EU member states, which value Estonia’s expertise and strategic solutions,” he stressed.
The Estonian defence industry has a crucial ability to make quick and flexible decisions in response to market needs and technological changes. For example, the rapid expansion of Milrem Robotics and the opening of new production capacities demonstrate the sector’s dynamism and adaptability. According to Kaseleht, government support, including investment funds and export guarantees, is also essential and plays a significant role in developing the defence industry and expanding export capacity.
GOOD TO KNOW
SensusQ
Founders: Marko Kaseleht and Villiko Nurmoja
Year of establishment: 2020
Sector: defence industry
Employees: approx. 40
Raised capital: 4.8 million euros
Investors: New North Ventures, Specialist VC, StartUp Wise Guys and Lemonade Stand.
www.sensusq.com
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