STARTUP ECOSYSTEM
Latvia Funding volume
Latvia’s Investment Landscape in 2023: A Comprehensive Overview
In 2023, Latvia’s startup ecosystem experienced notable developments in venture capital (VC) investments, reflecting both significant achievements and ongoing challenges. The year was marked by a record increase in investment activity, yet the country continued to face hurdles in matching the venture capital attraction levels of its Baltic neighbours.
Total Venture Capital Investment: Record Growth
Latvia’s venture capital (VC) investment landscape saw a significant increase in 2023, despite global economic challenges. The total investment volume reached €65 million across 93 transactions, marking a 260% increase compared to 2022. This surge was primarily driven by private equity (PE) funds, which accounted for 91% of the total investment amount.
VC Investments in Latvia
Source: Latvian startup and VC Ecosystem overview, Vestbee report
Key Sectors and Investment Trends
In 2023, Latvia’s venture capital landscape was shaped by investments in several high-growth sectors. The business and industrial products sector led in total funding, followed by energy and environment, reflecting a shift toward sustainable and technology-driven innovation.
- Business & Industrial Products (36% of total VC investment) – Manufacturing, automation, and industrial technology startups attracted the largest share of funding.
- Energy & Environment (27%) – A growing focus on renewable energy, cleantech, and sustainability-driven solutions.
- Software & AI (15%) – AI-driven startups, SaaS platforms, and machine learning applications gained traction among investors.
- Fintech & Insurtech (12%) – Digital banking, blockchain, and alternative financing solutions continued to attract funding.
- Healthtech & Biotech (10%) – Innovations in medical technology, digital health, and biotech solutions remained a growing focus.
The Latvian startup ecosystem also experienced a rise in early venture investments, signaling a growing interest in nurturing pre-seed and seed-stage companies. However, later-stage funding remained limited, requiring startups to seek international investors for Series A and beyond.
Government Support and Initiatives
The Latvian government demonstrated a strong commitment to fostering the startup ecosystem by investing over €4 million in 2023. This funding was allocated to support various initiatives, including startup events and ecosystem development projects, underscoring the state’s role in promoting innovation and entrepreneurship.
Challenges and Regional Positioning
Despite the record growth in investments, Latvia continued to trail behind neighbouring Estonia and Lithuania in venture capital attraction. In the second quarter of 2024, Estonia led with 31 funding rounds, followed by Poland with 30, and Czechia with 18. This disparity highlights the need for Latvia to enhance its competitiveness in the regional startup ecosystem.
Notable Funding Rounds
In 2023, the largest funding rounds in Latvia included:
- Naco Technologies: Secured €10 million in early venture funding, with contributions from the European Innovation Council (EIC) and additional investment capital.
- MYCABIN: Raised €1.6 million in a seed round, with Merito Partners as the primary investor.
These investments reflect a focus on early-stage funding, with a notable absence of large-scale deals exceeding €10 million.
Sources:
Latvia Startup density
Latvia's startup ecosystem has been steadily evolving, marked by significant developments in global rankings, regional standings, and ecosystem valuation. The nation's focus on innovation, particularly in sectors like fintech, deep tech, artificial intelligence (AI), and health tech, has been instrumental in this progress.
Latvia Export/Import Ratio
In 2023, Latvia’s foreign trade experienced notable shifts, with exports totalling approximately €18.94 billion, a decrease of 11.2% from 2022, and imports amounting to €23.2 billion, down 12.5% from the previous year. This resulted in a trade deficit of about €4.26 billion, highlighting Latvia’s continued reliance on imports, particularly in the technology and machinery sectors.
Latvia Investment in key sectors
Latvia has made significant strides in fostering technological innovation and strengthening its education sector. Despite economic fluctuations, public and private investments in these areas have remained robust, highlighting a long-term commitment to economic development, digital transformation, and talent growth.
Latvia Innovation index
Innovation is a key driver of economic growth and technological advancement, and Latvia has been making notable strides in this area. Recent data indicates positive trends in both patent filings and research and development (R&D) investments, reflecting the country's commitment to fostering innovation.
Latvia Funding volume
In 2023, Latvia's startup ecosystem experienced notable developments in venture capital (VC) investments, reflecting both significant achievements and ongoing challenges. The year was marked by a record increase in investment activity, yet the country continued to face hurdles in matching the venture capital attraction levels of its Baltic neighbours.
