Latvia’s EU Funding Puzzle Shows Why Boosting Innovation Investment Is Critical

Latvia has long been a member of the European Union, yet when it comes to capturing its fair share of competitive EU funding, the country continues to lag behind its Baltic neighbours. A recent analysis highlights a persistent funding puzzle in which structural and ecosystem challenges are limiting Latvia’s ability to benefit from major programmes like Horizon Europe and other direct EU research and innovation funds.

One of the core issues is that Latvia’s innovation ecosystem still struggles to match the financing intensity and R&D scale seen in Estonia and Lithuania. Although Latvian talent and digital infrastructure remain strong, both public and private investment in research and development are comparatively low, reducing the number and competitiveness of project proposals that can secure large EU grants. This means that Latvian organisations are less likely to receive funding for advanced labs, prototype development, deep tech initiatives and other high‑growth innovation activities that drive economic productivity and create high‑value jobs.

Another related factor is the limited innovation capacity revealed in broader EU innovation data. Latvia is classified as an Emerging Innovator, while its neighbours have secured stronger innovation indices, reflecting more rapid progress in areas such as R&D investment and ecosystem growth. While Latvia has made some progress, its growth has been slower than the EU average and significantly behind Estonia’s rapid gains. This gap influences not just the number of funded projects, but also the overall ability of Latvian institutions and startups to compete in direct EU programmes that require co‑financing and robust project teams.

Latvia’s comparatively weak venture capital market and limited co‑financing capacity also play into this funding challenge. Many EU programmes require matching funds from local sources, yet Latvian SMEs, universities and research institutes frequently struggle to raise these resources. Venture capital availability has seen significant declines in recent years, and direct support from the government remains low compared to other EU states, making it harder for founders and academics to prepare competitive submissions for EU calls.

The implications of this funding gap are significant. Without increased investment in innovation and a deeper R&D base, Latvia risks missing out on opportunities that fuel cutting‑edge research, startup scaling and long‑term economic competitiveness. Addressing this will require strategic action, including raising national R&D spending, easing co‑financing requirements for applicants, expanding access to professional bid‑writing and grant support, and building more robust private capital markets that can partner with EU funding to accelerate growth.

Source: https://www.venturefaculty.io/news/billions-at-work-latvias-eu-funding-puzzle-p0duf