Estonian government to invest into venture capital?

The new coalition agreement among Estonian parties once again mentions the need to set up a government-funded venture capital fund to support innovation and development of technology-oriented companies. The initial thoughts have been about a smallish (around 30 mEUR) seed and start-up capital fund, that would invest either on its own, together with private venture capital funds or into the capital of private funds.

Somehow I am not able to buy the idea.

The main reason that gets mentioned is that there is a lack of venture capital in Estonia (or Baltics, or Central and Eastern Europe). The people who mainly say this are small startups who have not been able to sell their ideas to anyone. Probably most of US or Western European VC’s would turn them down as well, and for a reason.

Then there are private VC funds, who are looking for the government to cover part of their risks. This seems connected to the previous point, since it is very hard to find good ideas (or teams) to invest into. If the projects are of low quality, to invest into them together with state money seems like having 50% less risks. Why not do that, if there is a chance. If the projects or people would be any good, the VC of course would invest on their own and not give 50% or even 30% to the government.

As someone who has raised over 4 mEUR for CV-Online from LHV in Estonia, Esther Dyson in the USA and 3TS Venture Partners (a mix of 3i, Technologieholding and Finnish Sitra money) I believe there actually is an excess of local money and lack of people and ideas. I frequently hear both wealthy individuals who could be angels as well as private funds mentioning they do not find any objects to invest to.

It is easier to find quite OK ideas around here, but there are almost no people with international business management, sales or marketing experience. According to a survey reviewed on, there is rarely any one person who can handle all that entails the running of a company, as there are many marketing needs for example when it comes to running a site. Some people hire programmers and marketers to try to get their exposure, and hiring is often the right thing to do. Branding your company using trCREATIVE, a company specializing in this aspect could really make a difference to for a start-up.  Meanwhile all of the government initatives are also channeled into product development, not bringing in experienced (foreign) management or supporting international sales or marketing.

The best thing the government could do is to invest the 30-40 mEUR into hiring people with previous successful experience in business management, technology sales and marketing and bringing them to Estonia to work at local startups. 30-40 mEUR should buy you at least 100 ex-enterpreneurs and managers from US for 2 years. When invested into technology, you only get around 20-30 struggling small companies, who have the beta version of the product ready, but no idea how to take that onto world markets.

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