The European Investment Bank (EIB), in cooperation with the Investment and Development Agency of Latvia (LIAA) and the international professional services company PricewaterhouseCoopers (PwC), has presented initial conclusions on the financing ecosystem for Latvian start-ups and scale-ups, while also introducing the new platform “Future Finance Programme Latvia”, created to help companies navigate financing, investment and innovation support opportunities.
The study was developed at the initiative of LIAA in cooperation with the European Investment Bank’s “EIB Advisory” initiative, which helps European Union Member States strengthen investment, innovation and business development ecosystems.
Viktors Valainis, Minister of Economics: “This study confirms that Latvia has everything needed to become one of the leading innovation and technology centres in the Baltic region – we have talented people, a strong scientific base, a growing start-up sector and an increasing number of companies capable of competing globally. At the same time, the data also clearly show the areas in which we still need to become stronger, especially with regard to the availability of growth financing and companies’ ability to develop in Latvia into world-class companies.
The state’s task is not to choose the next success stories, but to create an environment in which such stories can emerge increasingly often. Therefore, we will continue working on improving the business environment, the availability of investment, the commercialisation of innovation, and closer cooperation between science, entrepreneurs and investors. Our goal is to ensure that ideas created in Latvia are not only born in Latvia, but also grow, strengthen and become international market leaders directly from Latvia. Because in the long term, a country’s prosperity is determined not by the number of ideas, but by the ability to turn them into world-class companies.”
Latvia has strong potential in technology and science-based technologies.
The initial EIB Advisory findings characterise Latvia as a country with strong technological potential, high-quality scientific and technical competence, as well as a rapidly growing start-up ecosystem. More than 500 start-ups are currently operating in Latvia, while approximately 26% of the entire ecosystem is already made up of science-based technology (deep tech) companies, which is one of the highest indicators in the region. The study particularly highlights Latvia’s potential in the fields of financial technology (fintech), artificial intelligence, science-based technologies and dual-use technologies.
Paulina Brzezicka, Head of the EIB Group Office in Latvia: “Latvia has all the advantages needed to build a strong innovation ecosystem — talented people, high technological competence and an increasingly visible place on Europe’s innovation map. At the same time, the study shows that many companies still find it difficult to overcome the stage between technology development and rapid market growth. To make full use of Latvia’s potential, it is important to ensure financial instruments that correspond to companies’ stage of development and to promote more active participation in European innovation programmes. The EIB’s role is to help countries strengthen innovation ecosystems and develop sustainable solutions for business growth. In cooperation with LIAA, we help identify development opportunities and reduce barriers to access to financing, so that more Latvian companies can grow and reach an international scale.”
Key development challenges in the start-up ecosystem
At the same time, the study identifies several challenges that limit the growth potential of Latvian companies in international markets. Among the most significant are limited access to growth capital, insufficient venture capital intensity and a fragmented innovation support system.
The study pays particular attention to the so-called “Valley of Death” – the stage between the creation of research results and the product’s entry into the market, when a company has already developed a technology prototype but still needs resources for testing, pilot projects, validation and preparing the product for commercialisation. The EIB Advisory findings indicate that it is precisely at this stage of development that Latvia still lacks specialised financing instruments, especially for science-based technology companies.
The study also concludes that Latvia has one of the highest relocation rates of scale-up companies in Central and Eastern Europe – approximately 70% of such companies choose to relocate their operations abroad. At the same time, the findings emphasise that the problem is not a lack of talent or ideas, but rather the availability of capital, instruments for international competitiveness and ecosystem coordination.
LIAA: Latvia must think on a Baltic and European scale
Ieva Jāgere, Director of LIAA: “This study is very significant for Latvia, because we finally have data based on international expertise on what works well in the start-up and science-based technology ecosystem and in which directions new solutions are needed.”
Strong technology companies with global potential are already emerging in Latvia, and we are also seeing increasingly clear international interest in our innovation ecosystem. This is demonstrated both by the science-based technology conference “Deep Tech Atelier”, which this year took place in Riga for the eighth consecutive year and brought together more than 2,300 participants from 69 countries, and by companies such as “Supliful”, a participant in LIAA’s business incubation programme, which is developing an international e-commerce platform from Latvia and has just become the largest taxpayer in Zemgale in its category.
At the same time, these data show very clearly that the next stage of development requires financial instruments better suited to companies’ needs and closer cooperation between policymakers, support institutions, investors and the sector itself. Competition for talent, investment and technology companies is currently taking place on a Baltic, European and global scale, which is why Latvia must also think much more ambitiously about how to retain and develop high value-added companies here in the long term.”
International expertise and data-based analysis
As part of the study, EIB Advisory and PwC consulted 48 ecosystem representatives – start-ups, investors, universities, business accelerators, public institutions and industry organisations.
The analysis also used data from the international innovation and investment data platform “Dealroom”, the European Innovation Council’s “EIC Data Hub” database, the Organisation for Economic Co-operation and Development (OECD), and the investment analytics platform “CB Insights”.
As one of the key directions for strengthening Latvia’s start-up ecosystem, EIB Advisory highlights the need to develop a unified and easily understandable navigation system for financing and support instruments for entrepreneurs, to strengthen Baltic and Nordic cooperation, and to promote more active attraction of European Union funding.
A new platform has been created for navigating financing opportunities
Alongside the study, the “Future Finance Programme Latvia” platform has also been created, bringing together in one place information on financing opportunities, investors, innovation programmes and support organisations in Latvia.
The aim of the platform is to help companies navigate the available support instruments much more easily, especially in the early development and growth stages, as well as to promote closer cooperation between start-ups, investors, research organisations and the public sector. The platform provides information on European Union programmes, investment opportunities, innovation support instruments and participants in Latvia’s start-up ecosystem.
The platform is available at:
https://advisory.eib.org/future-finance-programme/index
