Estonian state-funded VC, Estonian Development Fund promises to double its investments portfolio by the end of 2010. Ten new investments into technology companies are currently in pipeline, with total amount of money to be invested reaching over 50 million EEKs (3,2 million EUR).

Estonian Development Fund was established few years ago. Benchmarking the Finnish SITRA model its main functions are providing economic forecast and ideas how to create growth, but also developing venture capital market in Estonia.

The fund has invested into seven companies thus far: SmartPost (a logistics company offering modern parcel sending solutions), Golitah Wind (developing next generation wind turbine), Massi Miliano (the virtual fitting room developer Fits.me), United Dogs and Cats (social network for pet owners, has failed for good recently), BiotaP (a biotech company) and GrabCAD (a CAD library provider).

Nevertheless, skeptics say the portfolio is weak and insufficient to justify the fund’s existence. Before the Estonian Development Fund started off many people thought we do not really need an extra state VC. Now these people say that the new exceptional investment round, that we are going to see, is giving the fund “a mandate for existence”, because once you already invest, you apparently have to work with the companies.

Heidi Kakko (pictured) and Andrus Oks, the investment people from Estonian Development Fund disagree with this standpoint, of course. And many people think efforts of the fund have been very valuable. It is always easier to criticize and believe me, Estonians are world champions on this.

One of the fund’s investments – United Dogs and Cats – has failed recently. Now the fund is looking for a new investor to take the company over. Two candidates are currently being heavily negotiated with. I think I know one of them (a foreign businessman living and working in Estonia), but I will not say it, because I do not want to blow this thing off.