Ever Wondered Why Latvia Trails Its Neighbours in Startup Numbers

Latvia may share history, geography and even talent pools with Estonia and Lithuania, yet when it comes to generating startups it continues to lag behind. That gap isn’t just about numbers, it reflects structural and ecosystem‑level factors that shape how and how many ventures emerge.

One major difference lies in funding flows. While Estonia and Lithuania have attracted larger early‑stage rounds and growing investor attention, Latvia’s venture capital ecosystem remains smaller, less active and offers fewer high‑impact deals. This means fewer founders gain the traction or signals needed to scale and draw more investment.

Another factor is ecosystem maturity. Estonia’s digital‑governance infrastructure and Lithuania’s deep‑tech hubs provide natural springboards for startups. In contrast, Latvian ventures often face higher friction around accessing specialised talent, scaling infrastructure, and finding pathways from idea to growth. The smaller number of larger‑scale startup exits also reduces the “pay it forward” effect of founder‑investors spawning the next generation.

Market size and mindset also play a role. In a small domestic market like Latvia, many entrepreneurs are forced to think globally from day one. While this can be an advantage, it also raises the bar for market validation, business model clarity and investor readiness very early on. Without sufficient local success stories, the risk appetite of founders and funders stays conservative.

There are positive signs. Regulatory changes, increased public‑private support and a growing pipeline of tech talent are helping. But the ecosystem still needs to build stronger support for early‑stage founders, more seed fund vehicles, mentorship, growth pathways and international investor connections. If that happens, Latvia has the potential to catch up not by copying its neighbours, but by using its unique position to launch lean, global‑first startups.