The most recent Baltic Startup Funding Report by FIRSTPICK and Change Ventures looks at the first half of 2023 and uncovers a continuing slowdown in capital deployed. This unique data was collected by tracking venture funding news and reaching out to founders to provide confidential investment terms. The data shows that the number of investment rounds is on the rise again — according to the funds, it signals that investors are cautiously returning to actively backing startups.
No action in series A and growth rounds
H2 2022 marked a steep drop in capital invested, and in H1 2023, the total capital invested more than halved once again. The series A startups have raised €38.5M, and growth startups €75.5M. The situation was different for pre-seed stage startups that managed to increase the capital raised from €16.5M in H2 2022 to €22.7M in H1 2023.
Image: Total capital raised by stage
Image: Total number of funding rounds
The reason for the decrease in total funding lies in the inactivity of Series A and the growth series landscape, which came to a standstill. Yet the total number of funding rounds has rebounded to the level of H2 2020 after a sharp drop in H2 2022.
“Difficulties in raising capital in more mature stages were expected after several years of excess in the market. Both the data and the mood that we sense in the ecosystem show a careful and well-thought-out investor comeback,” says Andris K. Berzins, partner at Change Ventures.
Highly-valued get the funding
A trend corresponding with the prevalent guarded sentiment is visible on the startup valuation and revenue charts, with seed startups attracting investments at the highest valuations and revenue metrics throughout the observed period (since 2019).
A cautious investor attitude is also reflected in the round sizes as the seed round disparities have increased, showing more delayed seed rounds and pre-seed round size ranges shrinking as a result of the less investor enthusiasm to deploy capital at the pre-seed stage.
“Late seed rounds are currently dominating the market, which indicates that investors prefer seeing strong seed-stage traction. At the same time, it’s evident that the teams with great metrics can be looking at larger investments at this stage,” said Marijus Andrijauskas, partner at FIRSTPICK.
Anyone interested in a more detailed analysis of the investment scene in the Baltics can easily access the report by visiting the Change Ventures or FIRSTPICK websites. The next update of the report is planned to be released in Q1 2024.