Three to watch: New deals for a trio of Estonia's homegrown IT companies

The start of the year has seen notable announcements from some of Estonia's fledgling entrerprise tech firms, including deals, acquisitions and takeovers.
Written by Kalev Aasmae, Contributor on

Estonia's position as one of Europe's up and coming startup hubs is gathering momentum, with several of the country's IT companies inking new deals in recent weeks.

Mobile payments company Fortumo announced at the end of February that Intel Capital and Greycroft Partners were to be new investors in round of financing - the first outside shareholders to do so. Prior to the funding, the company was owned by local company Mobi Solutions, which will still remain the biggest shareholder after the investment.

The investment (although its size hasn't been officially announced), is thought to be around €10m and will mostly be used to strengthen Fortumo's positions in new markets. "The deal does not change much in terms of Fortumo's strategy or day-to-day operations. However, it will help us better pursue more growth opportunities in the $200bn mobile payments market, including additional business lines, strategic partnerships and acquisitions," Rain Rannu, Fortumo's co-founder, wrote on his blog.

Fortumo's business is built around direct carrier billing. Its customers pay for digital goods via their mobile billing plans rather than with cash, credit or debit cards.

Founded just six years ago in Estonia's second city Tartu, Fortumo now has offices in San Francisco and Beijing and has already signed deals with 300 mobile operators in 80 countries.

Among them is China Mobile, the biggest mobile operator in the world by subscribers, and signing such an agreement with the carrier is a feat no other foreign-owned competitor has yet been able to replicate.

"There is a competition with local service providers, but Fortumo's advantage is global coverage which means that we can help local companies to earn money in foreign markets and foreign companies to enter and earn money in the emerging Chinese market," co-founder Martin Koppel said.

With tens of carriers already in the bag, the company will in future focus more on the development of software and services as well as on expanding the business into new territories, according to Koppel.

"We have covered a large part of the world and in the next few years we would like to focus more on developing platforms and billing connections. Also, we are going to focus on broadening our business in North Africa, the Middle East and India," said Koppel.

At the end of March, Fortumo announced a partnership deal with Barnes & Noble, bringing in-app purchasing to the bookseller's Nook tablets.

In-app purchasing is a relatively new addition to the Nook – it will gradually be added to popular apps and games following its announcement in late March – but will be underpinned by dashboards and analytics from Fortumo.

Losing top developers

One of the most successful Estonian startups ZeroTurnaround also generated some headlines last month: it announced its first acquisition. The deal saw ZeroTurnaround buy Danish start-up Javeleon and its intellectual property - and get some extra staff to boot.

The two founders of the company, Allan Gregersen and Michael Rasmussen, are relocating to ZeroTurnaround's home turf: "I'm excited to have Allen and Michael on the engineering team, which has grown to over 40 as of February 2013," ZeroTurnaround's CEO and founder Jevgeni Kabanov said in a statement. Or, as the title of a ZeroTurnaround blog post put it: "Denmark loses two top developers to Estonia".

Javeleon was founded just last year to commercialise technology built on research from the Maersk McKinney Moeller Institute at the University of Southern Denmark. Javeleon's dynamic updating tool gives developers a way of tracking changes made to Java code over time and will now be integrated with ZeroTurnaround's JRebel product line.

Compared to Fortumo, founded in 2007, and ZeroTurnaround, established in 2009, fellow enterprise-orientated tech company Now Innovations is quite mature having been around for over a decade already.

A deal with BMW

Estonia-based Now Innovations develops and sells various software applications for the parking and transport industry. It operates in eight countries across three continents and is closely tied to mobile payment for electric vehicle (EV) charging: at the beginning of the year, as a part of the consortium led by ABB, it helped launch the first countrywide EV fast-charging network in the world.

According to the company, its most successful product is ParkNOW! — a digital parking transaction and management system enabling mobile payments — which has processed more than 10 million transactions since its launch as one of the first commercial parking systems in the world in 2000.

In the middle of March, Now Innovations announced that it had signed an agreement with BMW i Mobility Services, which will see its billing and payment platform underpin the mobility services offered by the BMW Group and its partner companies.

It means that BMW is extending the scope of its own ParkNow service beyond parking garages to include on-street parking as well. ParkNow (not to be mistaken with Now Innovations' ParkNOW!) is a part of BMW and a joint venture between BMW and Urban Mobility, providing electronic mobile parking service that allows users to reserve and pay for their parking place in advance.

"Now Innovations is a perfect match for us. The current scope of our ParkNow service is off-street parking. With the on-street capabilities of Now Innovations we will soon be able to strategically enhance our product offer and be even more attractive for our customers. The integration of on-street parking is a major step in creating a one-stop parking experience. Given our investments in Park@MyHouse and Parkopedia, we have a sound parking portfolio," Joachim Hauser, director of BMW i Mobility Services, said in a statement.

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