Lithuanian startups lead in investment growth in the Baltic region

The most recent Baltic Startup Funding Report, a collaborative effort by FIRSTPICK and Change Ventures, offers a comparative analysis of startup funding in the Baltic states against European frontrunners.

The report, covering the second half of 2023, details both the peaks and troughs in startup funding peculiarities.

1st February 2024: Last year, startup funding witnessed a global downturn, with a 38% reduction from 2022. U.S. startups experienced a near 30% decrease in funding compared to the previous year. However, Baltic startups have maintained strong investor support, as highlighted in the new Baltic Startup Funding Report by FIRSTPICK and Change Ventures. This bi-annual report for the latter half of 2023 examines 370 pre-seed and seed funding rounds, representing 60% of the total closed over the past 42 months.

The report positions the Baltic states – Lithuania, Latvia, and Estonia – on par with the UK and Nordic countries in terms of the number of funded startups per capita.

Lithuania emerges as a regional leader

The report reveals that during the last six months of 2023, 23 Lithuanian startups raised €262 million, 38 Estonian startups secured €243.5 million, and 19 Latvian startups obtained €34.7 million. Despite Estonia's previous lead in all categories, including pre-seed, seed, and series A rounds, the surge in capital raised by Lithuanian startups indicates the country's rapid catch-up in growth rounds, positioning it as the new market leader in terms of growth capital and the number of growth rounds.

Both Lithuania and Latvia have shown an increase in early-stage activities, indicating potential for further advances in subsequent funding stages.

Growth and seed rounds experience uptick

The latter half of 2023 saw a substantial rise in growth investments. Nine growth rounds generated five times more capital in the second half of the year compared to the first, totalling €425.7 million. Lithuania significantly contributed to this trend, with three rounds generating €200 million, accounting for 47% of all Baltic growth funding. Notably, Nord Security, Lithuania's second unicorn in cybersecurity, and PVcase, a cleantech startup for solar plant design software, attracted the largest investments in the country at €100 million each. Seed funding also saw an increase, reaching €69.2 million.

In contrast, pre-seed and series A funding experienced declines in the second half of 2023. Pre-seed startups, which raised €22.7 million in the first half of the year, saw a decrease to €14.6 million in the latter half. Series A funding remained stagnant, with only four A rounds totalling €30.7 million.

Outlook for the Baltic startup ecosystem

The past year reflects a burgeoning interest in the startup ecosystem of the Baltic countries. After a modest beginning, the region is gaining momentum among investors, a trend likely to continue into 2024. Investments in mature startups are also accelerating, indicating that the Baltic region is aligning with Europe’s top tech hubs and is on track to nurture the continent's next major unicorns. Factors like advanced digital governance and an environment conducive to innovation enhance the region's attractiveness for foreign direct investment, further boosting investor confidence in Baltic equity.