Baltic Startup Funding Surges on AI, Defense

The Baltic startup ecosystem demonstrated robust growth in 2025, with venture capital investments climbing to 607 million euros, a significant increase from the 505 million euros deployed in 2024. This expansion, detailed in the latest Baltic Startup Funding Report by FIRSTPICK and Practica Capital, highlights a strategic shift towards concentrated, high-impact investments, particularly in the artificial intelligence and defense sectors.

This maturing regional market saw investors prioritize established founders and substantial funding rounds across all stages, from pre-seed to growth. While the total number of deals remained stable, average round sizes expanded. Notable early-stage funding included Sort A Brick securing 1.5 million euros at pre-seed, Latvian AI firm Trace.Space raising 4 million euros in a seed round, and Estonian defense technology company Wayren closing a 7.9 million euro seed round. These figures underscore a growing appetite for promising ventures at their inception.

The report further reveals a pronounced trend in later-stage funding, with Series A rounds, though fewer in number, attracting higher total capital. Lithuania's Cast AI led the charge with a substantial 98 million euro Series A round, spearheaded by G2. Latvia's Aerones secured 53.1 million euros from investors including Activate Capital, while Estonia's agentic AI platform Pactum closed a 47.3 million euro Series A. This concentration of capital in significant rounds signals investor confidence in scalable, globally competitive businesses emerging from the Baltics.

A key driver of this investment surge is the increasing focus on AI, which captured 46% of all venture capital in the region during 2025, significantly outpacing the European average of 35.5% and approaching the US figure of 65.4%. Beyond AI, hardware (21%), cloud (10%), fintech (9%), energy (7%), and defense (5%) also attracted considerable attention. This sector diversification, coupled with the AI dominance, points to a sophisticated and forward-looking investment strategy within the Baltic region.

The report also emphasizes the critical role of experienced leadership. In 2025, a significant majority of funded founders possessed prior entrepreneurial experience or deep domain expertise. Specifically, 50% had previously founded a startup, 78% had relevant industry work experience, and 77% had held leadership roles. This emphasis on seasoned founders, as noted by Practica Capital partner Donatas Keras, allows for "consolidating capital around fewer but larger checks, backing teams with operational excellence."

Furthermore, the growth of community-driven initiatives like 'hacker houses' is fostering a more dynamic and accessible ecosystem. Spaces such as basedspace_ in Vilnius, ruum in Tallinn, and Shipyard in Riga have become incubators for new ideas, with approximately 70 startups emerging from these hubs and eight securing initial investments in 2025. FIRSTPICK partner Andra Bagdonaitė highlighted this trend, stating, "Grassroots communities are making the Baltic ecosystem more dynamic and accessible, setting the stage for even broader participation." With approximately 300 million euros in fresh capital from newly established Baltic-focused funds, the region is well-positioned for continued growth in 2026.