With its own set of challenges, 2024 has proven to be a year of both reflection and renewal. In this interview for the Estonian Startup Awards, Linda Võeras and Margus Uudam from Karma VC, one of Estonia’s most active venture capital firms, share their firsthand insights on what’s been happening in the market and what to expect from 2025.
Karma VC has been at the forefront of funding high-potential startups since 2013, focusing on deep-tech, scalable solutions, and long-term partnerships with visionary founders. With years of experience in the local and European startup scenes, Linda and Margus offer a unique perspective on the shifts in startup funding, the impact of emerging technologies like AI, and the growing importance of sectors such as sustainability and healthcare.
Margus Uudam from Karma VC presenting an award at Estonian Startup Awards 2024
How would you sum up the startup investment landscape in Estonia in 2024?
MARGUS: It feels like 2018 in terms of total funding—a fresh start with great times ahead! The main difference? There are significantly more investors and experienced founders in the ecosystem now than back in 2018.
LINDA: For early growth investors like us, there was an increase in deals compared to the previous year. Many companies that emerged in 2021-2022 or before, have now proven their resilience in the downmarket and are continuing to grow. Diamonds are indeed forged under pressure.
At the later seed stage, startups are navigating a kind of limbo. With 2024 dubbed the first “normal” year in a while, many are focused on proving product-market fit and scalability. It’s exciting to see innovation across sectors like fintech, healthcare, cybersecurity, and sustainability.
Meanwhile, pre-seed activity has slowed, which isn’t surprising given the economic climate. The real question is: how do we inspire potential founders to take the plunge and start building? That’s a challenge for all of us.
What have been the major shifts or trends you’ve noticed?
MARGUS: AI is busy commoditizing much of the tech landscape. The real question is whether we’re underestimating or overestimating its impact—both in the short and long term.
LINDA: We’re seeing exciting growth in sustainability, energy, and healthcare. Fintech is still producing interesting companies, but it’s stepped out of the limelight compared to previous years. Interestingly, AI agents haven’t made a big splash in Estonia yet—at least not like they have in Lithuania or in Western Europe. I’m curious to see how that evolves.
What are the most exciting developments you expect FOR 2025?
MARGUS: Great if the pace of founding new startups will pick up and additionally to keep it balanced, we should start seeing more exits, the market has been too quiet for too long!
LINDA: Selfishly, I hope to see more early growth rounds and startups taking bigger leaps, scaling internationally. AI isn’t going anywhere, so I expect we’ll see more automation in SaaS products. On a macro level, global events like the U.S. presidential change could influence the tech landscape in Europe. It’s something we’ll be keeping a close eye on.
Any particular industries or innovations that have caught your eye?
MARGUS: Well… Estonia’s tax collection has been... “effective”. Let’s just say it caught up with a significant portion of startups in 2024. Hopefully quite many founders will launch something new this year!
LINDA: AI has now become truly mainstream in the B2B side. We are seeing many industries more systematically adopting tooling and this is making the legal, hospitality and and even public sector into more attractive markets.
From a VC perspective, what do you think have been the biggest challenges for startups, and how have they coped?
MARGUS: In tough times, investors tend to get overly pessimistic like there is no tomorrow. We need to be long term partners for founders’ more often instead of pulling back.
LINDA: Budgets have been tight (both in startups and corporates), and competition has intensified as building and funding technology has become easier than ever. Startups that focus on getting their product right from the start and cutting through the noise are the ones staying ahead.
What role do VC firms like Karma VC play in helping the startup ecosystem thrive, especially in challenging times?
LINDA: We focus on supporting our companies however we can—whether that’s extending runway in tough times, helping them bridge to better fundraising terms, or providing M&A guidance when that’s the best outcome. Sometimes, just offering a bit of perspective and humanity is as valuable as any financial intervention.
How do YOU decide which startups to back, and what’s the most important thing you look for?
MARGUS and LINDA (joint response): It’s a team effort. We make about 4-5 investments a year across Europe, so the process is deliberate and thorough. We look for defensible deep tech, scalable potential, and founders aligned with our long- term vision. These partnerships last for years, so mutual trust and alignment are critical. And of course, we aim for companies with the potential to become fund-returners (€1B+ valuations).
Margus from Karma VC announced the winner in the Investor of the Year category at Estonian Startup Awards 2024. On that note—what makes a good investor?
MARGUS: This is a question for founders! We’re naturally inclined to think we’re special, but the real measure lies in how founders view their investors over good and bad times. A good investor represents a willingness to aim higher with bold and unique views on new deals. And of course, demonstrates good evidence of supporting founders through great exits.
LINDA: A great investor is someone founders trust and want to work with. Needs vary by company, so there’s no one-size-fits-all answer—but trust and collaboration are universal. I believe that a good investor should be display transparency, honesty, collaboration, and empathy toward founders and executives.
Finally, is there a startup, a founder, or a deed that inspired YOU last year?
MARGUS: All the founders who started their journeys in 2024 despite the challenges—they’re the real inspiration.
LINDA: Definitely echo Margus, but also the teams that kept pushing, e.g. the team at Featurebase. Three young founders built a product they believed in, solving a problem many companies face. They’ve bootstrapped and grown exceptionally well. It’s a beautiful reminder that curiosity and passion can often outshine experience even in the toughest of markets.
The winners of Estonian Startup Awards 2024
about estonian startup awards
Estonian Startup Awards 2024 Gala took place on January 23, 2025. Over 400 founders and community-activists gathered to the Nobel hall in Noblessner to officially wrap up 2024 and celebrate the biggest wins of the year.
The awards were presented in a record number of categories – a total of 11 – and while 2024 was a challenging year, the wealthy selection of nominees running for the buzzing trophies this year undoubtedly demonstrated the ongoing vitality of the Estonian startup sector.
The organizing team is proud to have Karma VC as a long-time partner of the initiative. Head here to read all about the winners and nominees in the official summary of Estonian Startup Awards 2024.