How FinestLove VC is reshaping the Estonian-Finnish startup scene

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While Estonia’s startup ecosystem regularly attracts ambitious newcomers, seasoned entrepreneurs are also drawn by its opportunities and flexibility. Last year, Finnish innovators Peter Vesterbacka and Kustaa Valtonen decided to establish their new investment venture, FinestLove VC, in Estonia.

The duo is known for many things. Peter is known for Slush and the Angry Birds phenomenon and, collectively, they are famous for their Helsinki-Tallinn tunnel project and work with startups. The tunnel, which is still in the proposal phase, would enable high-speed train travel between the two capitals, reducing the journey time to about 30 minutes. It is designed to support both passenger and freight transport, integrating with the broader Rail Baltica project, which connects Estonia and Central Europe.

Now, Vesterbacka and Valtonen are running a new ambitious project, pairing a €10M venture fund in Estonia with an extensive education program that already spans 100 schools across Finland. In this interview for Invest Estonia, they share their vision for transforming the FinEst Bay Area through strategic investment in both education and early-stage startups.

The education pipeline: creating new talent

Can you explain the FinestLove VC project and how it started initially?

Kustaa: We aren’t newcomers by any standard. Together with Peter, we’ve been business angels investing for a long time through our jointly owned investment company, Random Ventures, with 60-70 companies in our portfolio. We work very actively with early-stage companies, helping them in practical ways.

There’s also the Helsinki-Tallinn tunnel project that we’ve been leading, which is progressing nicely. Since it’s still in the early stages, the tunnel project gives us time to focus on other initiatives, and Peter has been especially focused on the education sector.

Peter: Our spearhead program is called “Finest Future,” which teaches life skills needed for success in Finland, including language and startup entrepreneurship. We started it at scale four years ago. Our alumni attended high schools in small towns around Finland, graduated last June, and are now at the University of Helsinki or Aalto, doing really well.

I was recently in Rovaniemi, Lapland, right next to the eastern border. One of our partner high schools has more than one-third of its students from abroad, mostly from Asia. Similarly in Salla, another border county. We help them to integrate and succeed. The students have really invigorated the economy of the small municipality.

Kustaa: Lapland is an overlooked hotspot with the highest growth in the country. Tourism is booming there—people come to see Santa Claus, snow, and everything else. We need more people, so our program is essentially producing more Finnish people.

Peter: After four years, we have 2,300 students in more than 100 schools, and we plan to scale to 30,000 students annually. We’ll handle half of Finland’s immigration needs—60,000 immigrants—and provide our half through careful selection.

We’re already seeing amazing results: two of our students have been part of the Finnish national team for the Math Olympics, and we’ve recruited the world’s top young chess players from Vietnam, who are now Finnish champions.

Real success stories

Peter: Take Sakari and Milan, who came to high school in Salla in 2016, before we officially started. They learned Finnish, excelled in high school, went to Aalto University, got their bachelor’s degrees, and now run an AI-powered dance app for studios and dancers called Dancecovery. They’ve hired people from Lithuania, Poland, France, and Spain—everyone in their company except these two Finns is originally from other countries.

Another example is Moses, who came from Tanzania to Slush two years ago after winning a startup competition. I convinced him to join the Finest Future program. Now, he’s in high school in Finland and spends two hours every day after school coding AI services for a company started by my friend Juhani, who built the backend for Rovio. Moses just started his own company and is being personally mentored by one of the best.

We’re creating a massive talent pool. We are already seeing startups being created, but when we reach 30,000 students, we expect at least 10% to start companies—that’s 3,000 new startups annually by brilliant, carefully selected people! Ten years from now, economists will come to the Finest Bay Area and ask how we created this economic miracle in the north. We’ll tell them we made it happen by investing in young people.

The FinestLove VC fund

Kustaa: We calculate that our current 2,300 students generate about 250 million euros of GDP impact in Finland. We anticipate doing something similar in Estonia.

When we started seeing where this was heading, we realised we couldn’t fund everything ourselves, so we set up the fund. We found friends in Estonia who said it was convenient to start funds here, so we established the structure with local regulators. And it’s indeed convenient with the digital services and e-Residency. Estonia has done a fantastic job: essentially replicating the Luxembourg model for fund management, plus enabling foreign talent with e-Residency. It’s very easy for us to manage things remotely!

Peter: We want Estonia to become the Delaware of Europe. You can set everything up here because it’s easy, online, and in English.

What’s the team composition for your fund?

Kustaa: We’re the general partners, with a couple of gentlemen managing the fund licence and regulatory aspects. We have a fantastic Estonian lady managing all accounting, KYC, AML, and fund operations. We’re looking to expand and potentially invite others to create funds through our FinestLove fund management platform.

What’s the fund size and average check?

Peter: One problem we see in Finland and elsewhere is that funds typically start small, then get bigger and bigger. Eventually, when you pitch, they say their ticket size is €2M, so they can’t help early-stage companies. We want small funds.

This first fund will be €10M. We do very small, very early-stage tickets at a scale. When these young people start companies—even before they have their company set up—we’re there at the very early idea stage, helping them get everything going.

Kustaa: In maybe five years, when we’re at full scale with the student program, we’ll have thousands of startups. One fund won’t be able to invest in all of them, so we want to create a blueprint that others can follow. Ideally, we should have 100 of these funds,  €1B across 100 funds.

We believe the best way to scale isn’t through billion-euro funds because then they become dinosaurs. We’re agile and quick to move and react to the changing world.

How many investments are you planning?

Kustaa: The whole fund looks to do about 80–100 investments over a two to three-year active investment period. Ideally, we’d do maybe 40 investments per year, which is a lot.

Investment approach and the Estonian market

Kustaa: Estonia is a fantastic place. We have many Estonian companies in our portfolio already, and we meet companies at events like Latitude 59. Since we’ve been around so long, companies tend to find us. It’s about screening and finding the ones we believe in.

FinestLove VC invests in founders who love what they do; that’s our thesis. We’re looking for passionate founders, good entrepreneurs who can take an idea and make it fly. Sometimes, it’s not about finding the greatest AI tech but finding a good entrepreneur who can create a solid business. Estonia has a lot of talent.

What are three tips for founders to pitch successfully to you?

Kustaa: First, keep the pitch relatively brief and to the point. Since we invest in founders who love what they do, we want to hear about the founder—why they’re doing this and what they’ve accomplished.

Peter: Second, explain why your solution is different from everything else out there. Different means better. We’re not looking for just another AI take on something that already exists—we want more fundamental innovation.

Kustaa: Third, it’s surprising how many founders don’t do this but always tell investors how they get their money back. It’s not necessarily an exit strategy, but how you make money, how that benefits investors, and some kind of timeline. Explain your business model and how you make it work.

The DeepTech trend

Do you see a shift toward DeepTech, hardware, and defence in the Baltics and globally?

Peter: It’s everywhere, globally. DeepTech is somewhat of a broad buzzword—everything is AI, and everything is DeepTech now. I’d say it’s more about R&D-heavy innovation. But while technology innovation is important, you can also innovate in business models.

Look at gaming, where I have a background. The biggest enabler of growth in Finland’s gaming industry was free-to-play models, which had little to do with technology initially. There are many ways to innovate and create successful businesses, not just through deep tech.

Infrastructure and future vision

What about the Helsinki-Tallinn tunnel timeline?

Kustaa: We forecast the tunnel to open in 2032. Building the tunnel only takes about two years, with five years to complete the entire project. Thankfully, it’s high on the agenda of the current government.

Right now, Estonia’s economy is moving relatively slowly because of legislation. The current government wants to fix these issues since they make it hard to build other infrastructure like bridges, data centres, wind power, or factories fast enough. For example, the current legislation doesn’t allow things to be done in parallel—everything must be done sequentially. It’s really limiting Estonia’s economic growth for no good reason.

Peter: What we set out to do with the tunnel is to create gravity and economic growth for the whole FinEst region. More important now than ever. The thing that’s very important for both Finland and Estonia is investing in the future, and by that, I mean specifically education. Better teachers lead to better outcomes, better economy, and a better nation. It’s all about human capital!