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The Estonian government has announced a €50M investment over 4–5 years in a venture capital fund managed by SmartCap, the national investment fund.
As put by the Ministry of Economic Affairs and Communications, the idea is to improve capital access for Estonian entrepreneurs and encourage private investors to take more risks in the local startup ecosystem. The new investment will also enable SmartCap to finance private equity funds focused on traditional economy companies.
The funding will be distributed in phases:
- €17M from the state budget in 2025
- €32.2M in subsequent years from Baltic Innovation Fund 2 and EstFund repayments
Economy and Industry Minister Erkki Keldo said that government support is crucial where market failures occur, particularly in bridging the gap between early-stage and large-scale investments that many growing companies face. As for those investors eyeing bigger deals, the government recently introduced a large-scale support incentive worth €100M in total.
SmartCap, established in 2021 as a subsidiary of Enterprise Estonia (which also includes Invest in Estonia), manages multiple funds, including the Risk Capital Fund and Green Fund.
The organisation has already scored numerous high-impact investments through various investment vehicles and programmes. This includes technology giants Veriff and Bolt, public transport payment solutions provider Ridango, which now operates in over 25 countries, sauna and thermal wood producer Thermory, which has expanded to Finland, and healthcare company Meliva, which employs more than 800 people.
Overall, across the Baltics, €460M has been invested through 12 different funds, supporting over 90 companies and creating 14,500 jobs.
