The Baltic startup ecosystem continues experiencing a funding downturn, but the market seems to be stabilizing, according to a new Baltic Startup Funding H2 2024 report by Change Ventures and FIRSTPICK. The report offers comprehensive insights on startup deal numbers, volume, and trends, including transaction data for over 60% (564) rounds closed over the past six years.
AIN shares key figures and insights from the Baltic Startup Funding H2 2024 report below. You can read the full report by following the link.
The number and volume of funding rounds
Screenshots are taken from the full report
The pre-seed funding landscape in the latter half of 2024 is characterized by larger rounds, primarily raised by AI and deep tech startups. Additionally, a growing number of bootstrapped companies are seeking funding at later stages.
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The total number of rounds in the second half of 2024 is showcasing stabilization with 70 closed rounds (only 5 rounds short of H1 2024 numbers and 12 rounds short of H2 2023).
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While the median round size has decreased from its first-half peak to approximately €400,000, valuations have stabilized at €3.85 million.
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Top-tier startups continue to attract higher valuations, indicating that investors prioritize high-potential opportunities while maintaining caution.
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Although the number of seed-stage rounds decreased slightly in the second half of 2024, the investments were larger, suggesting a healthier pipeline of early-stage companies progressing.
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Activity at Series A and growth stages remained steady. However, the growth-stage funding amount in the second half of 2024 was at its lowest since 2019 due to investor caution.
Regional analysis
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Estonia maintains its lead in the number of Series A and growth rounds. Nevertheless, both Lithuania and Latvia have overtaken Estonia in median valuations for pre-seed rounds.
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Startups in Lithuania and Latvia are achieving valuations approximately 30% higher than those in Estonia. This indicates that the early-stage startup landscape in the Baltics is becoming increasingly competitive.
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Additionally, the data suggests that Lithuania and Latvia have the potential to follow in Estonia's footsteps toward a mature startup ecosystem.
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Similarly to 2023, in 2024, many pre-seed startups raised rounds with none or hardly any revenues, i.e., top-performing startups raised with just around €10,000 in revenue.
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At the seed stage, the median revenue declined somewhat to €38,500, while the lower and upper quartiles increased, reflecting the overall trend since 2022 towards higher traction needed at seed to raise a round.
Summary
Despite a decrease in overall funding, investors in the Baltic region are prioritizing high-potential startups, particularly those with strong leadership and AI focus. This is evident in the larger pre-seed rounds and higher valuations secured by AI startups and those led by experienced founders.
The eagerness of investors to support promising ventures is further emphasized by the sustained high pre-seed valuations, defying the trend of a more selective market.
Read more: Baltic startup funding in H1 2024 — FIRSTPICK and Change Ventures report
