This is how it's supposed to work. A team of super-smart engineers/entrepreneurs comes up with a radical plan to disrupt a huge industry. It builds its technology, gets traction, and, in a few years, sells the venture for over a billion dollars. What do these super-smart engineers do with their new-found wealth? They create a VC fund to invest in early-stage deals with which other entrepreneurs/engineers can disrupt very large industries. Their fund has been investing since 2003 and has a portfolio of around 30 companies.

Meet Ambient Sound Investments (ASI).

Meet the Team

  • The company founded by these engineers that created this wealth: Skype.
  • The VC fund they subsequently created: Ambient Sound Investments (cool name).
  • The location: Talinn, Estonia. (Yes, that Baltic state you might have to look up on a map. Skype's technology was built there.)
  • The engineers who founded ASI: Toivo Annus, Priit Kasesalu, Ahti Heinla, Jaan Tallinn.
  • The person we spoke to who does the investment deals: Margus Uudam.

Listen to the Interview

Download the MP3.

Questions and MP3 Guide

Question: What does the early-stage innovation scene look like in Estonia?

Answer: skip to 1:54 in MP3.
Summary: Estonia is close to Scandinavia and Finland, which are hotbeds of innovation, particularly in wireless. Estonia has been free of Soviet rule and communism for 15 to 20 years, so entrepreneurial roots run pretty deep now. Being a bit further east than most of Europe makes it a good location from which to work with large markets in Russia and further east in Asia.

Question: How is the VC model changing, if at all, and how does the global financial crisis impact this change?

Answer: skip to 4:25 in MP3.
Summary: The VC model in the Baltic region has been pretty stable... small, but stable.

Question: What percentage of your investments targets a local or regional market as opposed to a global market?

Answer: skip to 7:12 in MP3.
Summary: ASI's portfolio companies are mainly located in the Baltics and Scandinavia but almost always target a global market. Thinking globally is essential when you start in a country like Estonia, which has only about 1.4 million people.

Question: What market segments excite you today?

Answer: skip to 9:04 in MP3.
Summary: ASI has a broad focus. It is no longer interested in bio tech. It sees interesting clean tech ventures but has not done any deals there yet. Web tech innovation, both consumer and business, is still its core focus.

ASI's Portfolio

Marguus highlighted two companies in ASI's portfolio that would likely be of interest to ReadWriteWeb's readers:

  • Senseg: core tech from Finland that provides tactile feedback for touch-screen interfaces.
  • DailyPerfect: incubated by ASI in Estonia and focused on adaptive content personalization: a crowded field, but who has really cracked it yet?

Our Take-Away

ASI's portfolio seems to lack focus, but one thread running through most of the companies is hard-core technology innovation. Many VC funds shy away from pre-revenue ventures whose technology is hard to understand. ASI, founded by engineers, has the tech chops to evaluate these. That gives it an edge. It doesn't rely on consumer adoption as the primary validator before investing.

Listen to the Interview

Download the MP3.