Money that Estonia set aside for venture capital has been sitting in the bank instead of in companies, Estonian World reports, citing a review by the National Audit Office. The funds are run by SmartCap, which belongs to the Estonian Business and Innovation Agency, and have received almost EUR 466 million from the state budget.
By the end of 2025 SmartCap had put money into 17 companies and 16 sub-funds. Agreements were worth EUR 230.4 million and EUR 119.5 million of that had actually been paid. Another EUR 261 million was still unused and was kept mostly in deposits with a fixed term, while the finance ministry sold short-term bonds to pay for ordinary state spending. This approach is not responsible,
said the auditor-general, Janar Holm.
SmartCap answered that a venture deal can need several years, because many projects are looked at before one is signed. The auditors replied that venture investors normally hand over money when a commitment falls due, not in advance.
The report has a second finding. The funds are meant to help innovative companies reach capital, to develop green technology and to strengthen the defence industry, yet nobody had written down targets that can be measured, or dates. More than half of the value of the commitments went to fund managers from abroad, and the rules for investing were scattered over several documents, most of them confidential.
Source: Estonian World, . The text above is our own summary; the words in quotation marks are the source's.
What this means for an Estonian entrepreneur
For a founder who seeks venture money and for a team that plans to manage a fund, the audit shows how state capital travels in Estonia: mostly through sub-funds and their managers, not straight into a company. A fund manager that asks for such a commitment can expect closer questions about measurable targets, dates and costs, because the auditors found these missing.
A team that sets up a venture fund in Estonia starts with the fund manager itself: we prepare the registration of a small fund manager. Registration of a small fund manager