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Baltic Startup Funding Report

February 2023 update (rounds through H2 2022)

Change Ventures Baltic Startup Funding Report is a semi-annual publication of detailed data about funding rounds for startups in the Baltics, including companies with HQs elsewhere but with a dominant base in Estonia, Latvia or Lithuania.

Part of Change Ventures mission in the Baltic region is to bring more transparency to the investment landscape. To assemble this report, we have tracked all the venture funding round news in the region and reached out to founders to gather, in confidence, valuation and other investment terms for pre-seed and seed rounds. As a result, we have transaction data for almost 60% of the pre-seed and seed rounds closed during the past 36 months, so now founders and investors can understand where they stand relative to market transactions.

We are grateful and honoured to be trusted by founders with this sensitive data.

Highlights & conclusions

In terms of startups per capita, Estonia is already far ahead of Europe and Israel and the Baltic states together are almost at parity with Europe's best both in terms of startups and unicorns per capita.

Sources: State of European Tech 2021 &, Delloitte.

After a dramatic rise along with the global venture industry, capital raised by Baltic startups fell back significantly in 2H 2022 as less capital was invested across all stages, especially growth.

Total capital raised by stage

While pre-seed round valuations continued to rise during the second half of 2022 (for the smaller number of rounds closed), seed valuations were already impacted by the broader adjustment in pricing.

Median pre-money valuation for pre-seed/seed rounds
The Baltic states punch way above their weight, generating startups per million inhabitants across the Baltics on par with the UK and the Nordics, in Estonia exceeding all of Europe and even the “startup nation”, Israel. In terms of unicorns per million inhabitants, the Baltic states are also catching up fast.
The global funding slowdown is clearly felt also across the Baltic states, with the number of rounds dropping by 30% from 1H to 2H 2022 and capital deployed from €1.5B to ~€325M.
Having grown to about €400k, median pre-seed round sizes dropped back by almost half during 2022. Median valuation continued to rise, hitting €4M in 2H 2022. This reflects a continued convergence to Western European funding round metrics for the best teams in the market, as the upper quartile round size is steady at €600k. This also reflects the lack of the funding downturn hitting pre-seed as of today, plus some pre-seed extensions as teams need more capital to reach seed rounds.
Seed round sizes show clear convergence to Western Europe with the median rising to almost €2M and upper quartile to €3M. The venture industry pullback has, however pushed valuations back down from a peak of €10M median to just above €8M.
Round mechanics and structure in the region have reached a stable pattern where about 60-70% of pre-seed and seed rounds are closed via equity investments, with about 70% of those investments in companies registered in Estonia, Latvia or Lithuania. Uncapped convertible notes are very rarely seen. Caps have grown with market valuations but discount rates have held steady at around 20%.)
During H1 2021 investors seemed to get more aggressive in funding startups with less revenue, but the second half of the year saw a return to the norm, with the median pre-seed startup able to garner €5,500 in revenues per month at the time of funding, the median seed startup €30,000.
Estonia still receives the lion’s share of funding rounds, especially at later stages, though Lithuania and Latvia are growing and their early stage round trend indicates that they will also develop larger growth stage funding opportunities in the coming years. Median valuations are not that different between the markets, despite Estonia’s “hot” market.

The Baltic states are a unicorn factory

Veriff was recently crowned the latest unicorn from the region, adding to the list of success the region has experienced to date, including both bootstrapped and venture-funded unicorns.

Global investment slow-down felt across stages, especially at growth stage. But A & growth rounds share of total funding rounds is much stronger than a few years ago.

The funding market downturn clearly hit the Baltics hard during 2022, especially in the second half of the year, even though the number of growth and Series A rounds was still healthily above pre-2021 levels. 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. We know that bridge and extension rounds have proliferated, many of which are undisclosed, so the actual number of pre-seed and seed rounds is, we believe, somewhat undercounted as we are aware of many, but not all, of these.

Total capital raised by stage

After continuing to blow past the €1B milestone in early 2022, Series A and growth funding slowed dramatically since then, echoing global venture markets. Despite the market turmoil, top venture funds Atomico, Founders Fund, Northzone, Union Square Ventures, Creandum and Lightrock all deployed fresh capital in the region during 2022. All funding stages experienced a rapid drop in capital deployed in 2H 2022. Many stronger teams tightened belts, reduced cash burn and put off raising capital in an unfavourable market, leaving investors sifting among startups for those that merit backing versus those that don’t meet a higher quality bar.

Baltic pre-seed & seed round sizes not really affected by broader market pull-back as convergence to W. European & US norms still has some way to go

During 2022, pre-seed and seed round size trends exhibited opposite tendences. Pre-seed round size dropped back from a peak of €400k in 2021 to just over half that, with the bulk of rounds centered around that mark. This reflects the increasingly hesitant angel investor market, coupled with a continued strong core of investments by accelerators. The top quartile, however, continued to rise, as the “best” teams were able to attract increasingly large pre-seed rounds, even in 2H 2022, as they continue to be valued closer and closer to their Western European & US equivalents.

Median pre-seed rounds shrink while top quartile rises

The median size of seed rounds, on the other hand, continued to grow significantly during 2022, reaching almost €2M, with top and bottom quartiles also rising. With the number of rounds having fallen, this reflects the reality of fewer startups raising seed funding, but those that do raise able to attract increasingly competitive valuations. Since the Baltic states round sizes never expanded as rapidly as those in more mature markets, the downward pressures from other markets are less seen here.

Seed rounds continue to rise in size

Pre-seed valuations rising, seed falling. Extreme cases receding.

Pre-seed valuations have continued their inexorable rise of the past three years. However, the reality is nuanced since the number of startups closing pre-seed rounds fell by almost a half in 2H 2022 vs 1H 2021 and the amount raised has shrunk as accelerator investments and round extensions form a significant part of the funding landscape. The best teams raising at top quartile achieve valuations almost twice that of the bottom quartile, but these boundaries have now held steady for almost a year. That said, even top quartile valuations are still roughly half that of USA valuations (based on Q4 Angelist data), reflecting the continued undervaluation of the best Baltic teams.

Pre-seed round valuations continue to rise

Median seed valuations peaked in 2H 2021 at €10M, pulling back to just over €8M a year later. The peak of the highest valued startups was in 1H 2022 as the top quartile passed €16M, approaching the USA’s median value of $20M, but dropped back rapidly to just over €10M in 2H 2022. The number of seed rounds has not dropped as rapidly as pre-seed and, while the quality bar has risen and the excess has blown out of the market, we see a relatively steady backing of high potential teams.

Seed valuations pull back

Over the past years, Baltic startups have raised rounds with less and less revenue traction. However, revenue generation is sometimes a key driver to attain higher valuations, especially in pre-seed.

The lower quartile for pre-seed rounds remained at €0 for the second year in a row highlighting the fact that a significant group of pre-seed stage startups can raise pre-revenue rounds. The median has been slowly decreasing since 2019 and reached €1,250 in 2022. The same trend can be observed with the upper quartile - it has been decreasing over the years and has reached an all-time low of €6,600. Increased competition to invest at pre-seed (with the Baltic angel boom) and potentially more experienced teams that have the credibility to raise with less traction is pushing investors to back startups with lower monthly revenues - at the same time at higher and higher valuations.

Pre-seed rounds

The same trend can be observed for seed-stage startups. Since 2020 the lower quartile, median and upper quartile have been decreasing. In 2022 the median and upper quartile reached an all-time low: €12,500 and €39,000 respectively. While valuations decreased during 2022, the revenue traction for closing a round has decreased much faster.

Seed rounds

The relationship between the valuation and monthly revenue

For the first time in this report we also looked at the correlation between valuation and revenue traction, since the prior charts show the spread of monthly revenues at the time of funding across all the startups that raised rounds, but that is not necessarily correlated with valuation.

For pre-seed startups this correlation has increased since 2020 from uncorrelated to around 0.6, indicating a moderately positive relationship during the past two years. Clearly for pre-seed, the ability to prove revenue traction does have some impact on valuation now.

On the contrary, the correlation coefficient between monthly revenue and valuation for seed-stage startups suggests that there is no significant relationship between the two variables. It seems that by the time seed rounds are raised, monthly revenues are not a strong driver of valuation, which means other factors have more significance. We can speculate that these factors might be team, whether a sector is “hot” and how much competition the founders can generate for the investment round.

Round structure & mechanics are stable

Change Ventures has also gathered details of the legal investment form and funding round mechanics for many of the region’s pre-seed and seed rounds closed during the past 4 years.

After a dozen years of maturing, the Baltic funding market round structure and mechanics are settling into familiar patterns that founders and investors follow. About 60% of pre-seed rounds and over 70% of seed rounds are closed via equity investments, the remainder via convertible notes. Over the years more investors are comfortable to invest directly in Baltic equity entities, especially driven by the fact that the Baltic states have the most advanced e-signature and digital governance infrastructures in the world. This is also reflected in the data that shows 60-80% of pre-seed and seed rounds closed in the Baltic jurisdictions.

Uncapped convertible notes are hardly seen in the region, even during the heady market of 2021. Valuation caps on pre-seed round convertible notes have, however, risen sharply from €1.2M in 2019 to over €3.5M in 2022, reflecting the general rise in pre-seed valuations. Mean discount percentages on those notes have hovered in the 15-20% range, with median discount consistently at 20%.

Percent of rounds closed via equity investment (vs. convertible notes)

Number of pre-seed rounds by convertible cap

Valuation caps are stable but the mean discount rate has bounced back to the pre-pandemic level of 20%

Number of rounds by jurisdiction (Pre-seed & seed)

Number of pre-seed rounds by convertible cap

Capped notes continue dominating the market in H2 2021

H1 2019 to H2 2021 (36 months)

Number of pre-seed rounds by convertible cap

H2 2021

Number of pre-seed rounds by convertible cap

While a small proportion of notes were uncapped until the H1 2020, during H2 2020 and H1 2021 all of the deals Change Ventures reported had caps.

Valuation caps are stable but the mean discount rate has bounced back to the pre-pandemic level of 20%

Valuation caps keep rising along with the equity round valuations, and the mean discount rate is steady at the pre-pandemic level of 20%.

Majority of HQs in the Baltics in pre-seed, seed and increasingly in A rounds

Number of rounds by jurisdiction in %

Number of rounds by jurisdiction in %

An increasing number of startups are raising capital through their entities registered and headquartered in the Baltics.

It is important to note, that during the past half a year, we witnessed a record number of companies remaining headquartered in the region after the Series A, which seems to be a steadily growing trade in the Baltic region.

Round mechanics

Change Ventures has also gathered details of the legal investment form and round mechanics for many of the region’s pre-seed and seed rounds.

Most convertible notes have caps

Pre-seed via notes, seed via equity

Data aggregated over 18 month period to end 1H 2020 Data.
  • At pre-seed, convertible notes are dominant, while by seed stage, equity rounds take over as the main form of investment.
  • Most pre-seed convertible notes have caps, the value of which has doubled in the past 18 months to about €2M.
  • The discount rate is fairly steady at 16-21% over this same period.
  • The majority of startups are raising capital from Baltic-registered headquarter companies.

Discount on pre-seed convertible notes

Majority of HQs still in the Baltics

Most convertible notes have caps

Pre-seed via notes, seed via equity

Data aggregated over 18 month period to end 1H 2020 Data.

Majority of HQs still in the Baltics

Discount on pre-seed convertible notes

Estonia as the outlier

In the Baltic States we continue to see a bi-furcated market where the Estonian ecosystem is more mature than those in Latvia and Lithuania. The rise in top quartile seed round sizes and valuations is primarily driven by larger Estonian seed rounds which jumped in size during H1 2020, while the median round size in Latvia and Lithuania rose only slowly. The corresponding Estonian seed round valuations are also generally higher than in Lithuania and Latvia, reflecting the more mature angel ecosystem and availability of capital. A similar, if less pronounced, trend can be seen at the pre-seed stage.

Estonian seed rounds are much larger than the rest of the region

Change Ventures will be continuing to gather confidential data about the funding rounds taking place in the Baltic States, releasing a report every half year. We appreciate founders' trust placed in us to keep valuation and other data confidential.

Estonia still solid leader in number of funding rounds across the Baltics

Estonia’s leadership of early stage investing a few years ago has translated into a solid lead at later stages as the first scale-ups have generated multiple generations of new startup teams that raise large funding rounds. Skype has already spawned four generations of founders, with Veriff now spawning startup teams as it has scaled following the unicorn round in 2021. While Estonia has double or less the number of pre-seed and seed rounds versus their neighbours, they dwarf the region in terms of Series A and growth rounds. However, during the coming years we should see Latvia and Lithuania catching up as their pre-seed and seed rounds start to approach Estonian levels.

While many would expect Estonian valuations to be priced higher, due to more competition from investors, it seems this is not the case, and Baltic valuations are relatively consistent across the region, at least for pre-seed and seed rounds for which we have data.

Pre-seed and seed rounds by country

Number of pre-seed rounds by convertible cap

Series A and growth rounds, by country

Median pre-seed valuation by country w/o accelerators

Number of pre-seed rounds by convertible cap

Median seed valuation by country

Change Ventures will be continuing to gather confidential data about the funding rounds taking place in the Baltic States, releasing a report every half year or year. We appreciate founders’ trust placed in us to keep valuation and other data confidential.

Change Ventures Baltic Startup Funding data set (H1 2019 - H2 2022):

  • For the prior H2 2021 funding report, click here.

  • 758 funding rounds registered

  • “Baltic startup” is defined as a company with a highly scalable product-oriented business model (or the potential to become one) that has at least one Baltic founder (or firmly established immigrant) and active operations in one of the Baltic States.

  • Valuation data based on confidential information shared with Change Ventures by founders for 381 pre-seed and seed funding rounds, or 58% of all the rounds at that stage during the 4 year period.

Massive thanks for the hard work in pulling together the data for the first report goes to Linda Vildava, our awesome summer intern in 2020, and Gabrielė Poteliūnaitė, our former Senior Associate, for updates. Without them this report would not exist.

Baltic founders, want this report to get better next time? Then please share your detailed round data with us at We promise to keep it confidential.