Baltic startup ecosystem in H1 2023 — Change Ventures and Firstpick report

In the Baltic region, the number of series A and growth rounds has significantly decreased, both raising over two times less than in H2 2022. On the contrary, the number of pre-seed and seed rounds in H1 2023 has increased.

Change Ventures and FIRSTPICK have published the Baltic Startup Funding Report, a semi-annual publication about funding rounds for startups in the Baltics: Estonian, Lithuanian, and Latvia. AIN.Capital shares the key figures.

Baltic investment slowdown

The funding market downturn observed in H2 2022 continued to have an impact on startups being able to attract funding in H1 2023. 

• The number of series A and growth rounds has decreased to the pre-pandemic levels.
• The series A startups have raised €38.5 million and growth startups — €75.5 million, both over two times less than in H2 2022
• However, the number of pre-seed and seed rounds has increased to 58 in H1 2023.
• Pre-seed stage startups have increased the total capital raised from €16.5 million in H2 2022 to €22.7 million in H1 2023. Total capital raised by seed stage startups remained almost the same — in H1 2023 they have raised €52.1 million, just €2M less than in H2 2022.
• On Average, round sizes across pre-seed and seed are relatively steady, hovering around €300,000 for pre-seed and €1.75,000 for seed during the past 18 months.

• While median pre-seed round valuations remained fairly stable with a slight decrease in the first half of 2023, median seed valuations jumped to almost €12 million as fewer early seed rounds were closed.
• Compared to the previous years, the majority of startups raising pre-seed rounds do not have any existing revenues. As for the seed startups, the median monthly revenues have increased from €12.500 to €50,000.
• The use of convertible notes for pre-seed rounds jumped to 71% versus only 40% in 2022.

Estonia still solid leader in the Baltics

• Estonia’s leadership of early stage investing a few years ago has translated into a solid lead at later stages, with unicorns like Skype and Veriff spawning a new generation of startup founders.
• In terms of startups per capita, Estonia is already far ahead of Europe and Israel and the Baltic states. However, Baltic valuations are relatively consistent across the region, with the biggest difference being pre-seed rounds that are slightly higher priced in Estonia.