During the last few years, Baltic countries are almost at parity with Europe’s best both in terms of startups and unicorns per capita. But after a dramatic rise in capital raised by Baltic startups fell back significantly in 2H 2022. While pre-seed round valuations continued to rise during the second half of 2022.

Change Ventures, Tallinn-based VC fund that backs founders from Estonia, Latvia, Lithuania, and the diaspora around the globe has prepared a semi-annual publication of detailed data about funding rounds for startups in the Baltics (rounds through H2 2022). AIN.Capital shares the key points.

  • The Baltic countries have a lot of unicorns, including Veriff, Bolt, Skype, Vinted, Wise, boredpanda, pipedrive, Printful, Kilo.Health, playtech, NordVPN, ZEGO.
  • Pre-seed and seed investing dropped significantly during 2022, evidence of the risk aversion in the global venture funding market and also increasing selectiveness of investors. However, Series A rounds were still healthily above pre-2021 levels. 
Baltic startup funding report -3
Image: Change Ventures
  • After continuing to blow past the €1 billion milestone in early 2022, Series A and growth funding slowed dramatically since then. All funding stages experienced a rapid drop in capital deployed in 2H 2022.
Baltic startup funding report -2
Image: Change Ventures
  • Pre-seed round size dropped back from a peak of €400,000 in 2021 to €200,000 in 2022. This reflects the increasingly hesitant angel investor market, coupled with a continued strong core of investments by accelerators.
  • The median size of seed rounds continued to grow significantly during 2022, reaching almost €2 million, with top and bottom quartiles also rising. It shows that with the less number of rounds, fewer startups can raise seed funding, but those that do raise are able to attract increasingly competitive valuations.
  • The peak of the highest valued startups was in 1H 2022 as the top quartile passed €16 million, approaching the USA’s median value of $20 million, but dropped back rapidly to just over €10 million in 2H 2022.

Baltic region’s pre-seed and seed rounds closed during the past 4 years:

  1. About 60% of pre-seed rounds and over 70% of seed rounds are closed via equity investments, the remainder via convertible notes. 
  2. 60-80% of pre-seed and seed rounds closed in the Baltic jurisdictions.
  3. Valuation caps on pre-seed round convertible notes have, however, risen sharply from €1.2 million in 2019 to over €3.5 million in 2022, reflecting the general rise in pre-seed valuations. 
  4. Mean discount percentages on those notes have hovered in the 15-20% range, with the median discount consistently at 20%.
Baltic startup funding report -1
Image: Change Ventures
  • Estonia is still a leader in a number of funding rounds across the Baltics. However, during the coming years, Latvia and Lithuania catching up as their pre-seed and seed rounds start to approach Estonian levels.