INVESTMENT CHALLENGES AND RISKS

Latvia Market entry barriers

Navigating Market Entry Barriers in Latvia: Venture Capital Landscape & Key Industries

Latvia’s startup ecosystem is growing steadily, supported by an increasing number of venture capital (VC) funds that provide funding across various industries and investment stages. However, market entry barriers still exist, particularly in early-stage financing, regulatory frameworks, and the need for international expansion due to the country’s relatively small market size.

Venture Capital Landscape in Latvia

Despite its compact size, Latvia has an evolving venture capital ecosystem that supports tech-driven startups. Over the past few years, the number of active VC funds has increased, with notable government-backed initiatives and private investment firms driving growth.

However, access to early-stage funding remains a challenge as Latvia still lacks a strong network of angel investors. Most funding is concentrated in later stages, meaning startups must demonstrate significant traction before securing larger rounds.

Key Industries of Interest

Latvian VCs focus primarily on technology-driven sectors, including:

  • Technology: Software development, SaaS platforms, and AI-driven solutions.
  • Fintech: Digital banking, payment processing, and blockchain solutions.
  • Deep Tech: Robotics, artificial intelligence, and automation.
  • Health Tech: Digital healthcare, biotech innovations, and medical devices.
  • B2B Software: Enterprise solutions, SaaS applications, and cloud-based services.

These sectors align with Latvia’s innovation strategy and government incentives, positioning the country as a rising player in the Baltic startup ecosystem.

Investment Stages and Ticket Sizes

Latvian VC funds cater to different startup growth stages, from pre-seed to Series C. Here’s a breakdown:

  • Pre-Seed & Seed:
    • Investment Range: €50,000 – €500,000
    • Purpose: Product development, early market traction
    • Key VCs: Change Ventures, Overkill, New Nordic Ventures 
  • Series A & B:
    • Investment Range: €1M – €5M
    • Purpose: Scaling operations, expanding to new markets
    • Key VCs: BaltCap, Rubylight, Expanse Capital 
  • Series C & Growth Stage:
    • Investment Range: €5M+
    • Purpose: Market dominance, acquisitions, global expansion
    • Key VCs: iTech Capital, ZGI Capital

Startups in high-growth sectors like fintech and deep tech tend to secure the largest funding rounds, while smaller rounds are common in B2B SaaS and digital health.

Market Entry Barriers

Despite the growing VC ecosystem, startups in Latvia may encounter several challenges:

  • Limited Access to Early-Stage Funding: The scarcity of angel investor networks restricts the availability of seed capital, making it difficult for startups to secure initial funding.
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  • Regulatory Hurdles: Complex regulatory frameworks can pose challenges for startups, particularly those in highly regulated industries such as fintech and health tech.
  • Market Size Constraints: As a relatively small market, Latvia may require startups to consider early international expansion to achieve significant growth, which can be resource-intensive.

List of Active VC Funds in Latvia

Below is a comprehensive list of venture capital firms in Latvia, their focus areas, and notable investments:

Change Ventures

  • Year of Inception: 2016
  • Stage: Pre-Seed
  • Focus: Technology
  • Notable Portfolio: Veriff, Planet42, Printify, Monetizr, Werk
  • Website: Change Ventures

Overkill

  • Year of Inception: 2018
  • Stage: Pre-Seed, Seed
  • Focus: Sector Agnostic
  • Notable Portfolio: Skin Bliss, Paul-Tech, Medinav, Meredot, Agently, Noscos
  • Website: Overkill

New Nordic Ventures

  • Year of Inception: 2021
  • Stage: Seed
  • Focus: B2B Software
  • Notable Portfolio: Petabox, Cross Creators, RDA, Green Growth
  • Website: New Nordic Ventures

Expanse Capital

  • Year of Inception: 2019
  • Stage: Seed, Series A
  • Focus: Technology
  • Notable Portfolio: Sintez, Warden AI Lab, Smart Rehab Technologies
  • Website: Expanse Capital

Rubylight

  • Year of Inception: 2010
  • Stage: Seed, Series A
  • Focus: Technology
  • Notable Portfolio: Bolt, Sweatcoin, Jodel, Tandem, Ask.fm
  • Website: Rubylight

Baltic Tech Ventures

  • Year of Inception: 2013
  • Stage: Seed, Series A
  • Focus: Technology
  • Notable Portfolio: Perks, Corebook, Got Foods, Efectio
  • Website: Baltic Tech Ventures

Imprimatur Capital

  • Year of Inception: 2010
  • Stage: Seed, Series A
  • Focus: Technology, B2B Software & Data, Digital Health, Learning & Training, Robotics/Automation
  • Notable Portfolio: Anatomy Next, Edurio, MolPort, Sonarworks
  • Website: Imprimatur Capital

BaltCap

  • Year of Inception: 1995
  • Stage: Series A, Series B
  • Focus: Deep Tech
  • Notable Portfolio: Starship Technologies, Kognic, Ready Player Me, DappRadar
  • Website: BaltCap

ZGI Capital

  • Year of Inception: 2005
  • Stage: Series A, Series B, Series C
  • Focus: Metalworking, Woodworking, Logistics, IT, Engineering, Retail, Service, Food
  • Notable Portfolio: Mobilly, Hansamatrix, Art Fairs Service
  • Website: ZGI Capital

iTech Capital

  • Year of Inception: 2010
  • Stage: Series A, Series B, Series C
  • Focus: Technology
  • Notable Portfolio: Aviasales, Bitfury, Amulex, Ecwid
  • Website: iTech Capital

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