Estonian, Latvian and Lithuanian private and venture capital funds raised a record €778 million as investments last year, increasing the amount of raised capital by 16 per cent compared with the previous year, it appears from an analysis carried out by the KPMG Baltics Deals team and the venture capital associations of the three Baltic countries.
By the end of 2023, the amount of dry powder still to be invested by Baltic private equity and venture capital funds was close to €1.6 billion. The amount invested into Baltic companies in 2023 was €239 million, while 297 deals involved Baltic companies last year.
Kadri Lindpere, managing director of the Estonian Private Equity and Venture Capital Association, said there were more than 100 private and venture capital funds currently operating in the Baltic states, which are currently expanding their teams and strengthening their competence.
“The market is strong and the last two years were very active in terms of attracting investments, which is why the capitalisation of the funds is very good today. As a new trend, we are happy to see that more and more funds are expanding their global reach by investing in new countries,” Lindpere said.
Kaari Kink, chair of the management board of the Estonian Private Equity and Venture Capital Association, said the Baltic private and venture capital market had proven its resilience despite the geopolitical and economic challenges.
Attracting foreign investments more actively than before
“Despite the difficult times, the amount of managed capital today is record-breaking. Support for the public sector has also decreased, which shows the ability of fund managers to attract private capital. This is particularly noticeable in the case of capital raised by venture capital funds, where the share of the public sector in the Baltics is 10 per cent, while the European average is 37 per cent,” Kink said, adding that the statistics are affected by the launch of a couple of larger funds on the market and therefore may not reflect the state of the entire fund market.
The analysis points out that Baltic funds have expanded their international reach last year, attracting foreign investments more actively than before and attracting capital from Europe as well as Asian and North American markets. Estonian, Latvian and Lithuanian private and venture capital funds have made a total of 147 investments in foreign markets last year with a total value of €95 million. The new countries where investments were made were Croatia, Ghana, Indonesia, Australia, Iran, Kenya, Nigeria and Tanzania.
In 2023, a total of €53 million was invested in Estonian companies and 100 transactions were concluded. Investment activity in the Estonian market was driven by venture capital funds, which invested 56 per cent of the total amount invested. In Estonia, as in previous years, investors were most interested in the local IT and electronics sector.
New funds Plural Fund II, NordicNinja Fund II and 2C Ventures Fund I started their operations in Estonia in 2023. In addition, the national fund Smartcap, which started direct investments last year to encourage the growth of green technology companies in Estonia, has expanded its operations.
The Baltic Private Equity and Venture Capital Market Overview 2023 was drawn up by the KPMG Baltics Deals team and the Baltic VCAs with the help of various experts. In total, 42 fund managers and over 100 funds from all three Baltic countries were involved in the preparation of the overview.
