Investment in venture capital is falling behind in Latvia, according to a recent report.

The Vestbee platform has recently unveiled its VC funding report for the first quarter of 2025, offering insights into the dynamic venture capital landscape of Central and Eastern Europe (CEE).

According to the report, the combined enterprise value of CEE startups reached an impressive €243 billion, marking a 35% increase from €180 billion in 2020. This growth underscores the region's burgeoning potential and its increasing attractiveness to both domestic and international investors.

The quarter, however, presented a mixed picture. Total VC investment in CEE reached €700 million, a 9% year-over-year increase. This figure, though, was significantly inflated by a single landmark transaction - the €170 million Series C round raised by Polish-founded AI voice startup ElevenLabs. When adjusted for this outlier, total funding in Q1 2025 declined to €530 million, revealing a 17% decrease compared to Q1 2024.

The report highlights structural headwinds facing the CEE region in Q1 2025, including declining deal flow, retreating foreign capital, and limited local fund capacity. Despite these challenges, Poland, Estonia, and the Czech Republic reaffirmed their status as the primary hubs for venture activity in CEE. These three countries accounted for nearly 60% of all deals and approximately 70% of total capital raised in Q1 2025.

Poland, Estonia, and the Czech Republic recorded 36, 18, and 17 transactions respectively, making them the most active markets in Q1 2025. Latvia attracted a few million euros in VC funding, which is considerably less than Estonia and Lithuania, according to a graphic in the report. The report does not provide a specific figure for how much VC funding Latvia attracted in Q1 2025.

The data used in the VC funding in CEE report does not include grants, debt funding, and transactions below €50,000 in value. The report suggests that the CEE region is increasingly aligned with global AI trends. However, the alignment with these trends does not seem to have been enough to offset the challenges faced by the region in Q1 2025.

In the first quarter of 2025, the countries in Central and Eastern Europe with the most venture capital transactions are not explicitly detailed in the report. The overall European private equity market saw a significant decline in deal volume, with Central and Eastern Europe not specifically broken out in the reported data.

In conclusion, while the CEE region continues to attract investor attention due to its relative maturity, stronger founder talent pipelines, and growing base of repeat entrepreneurs, the first quarter of 2025 presented a challenging landscape for venture capital investments. The region's alignment with global AI trends, however, offers a promising outlook for future growth.

Investment in venture capital is falling behind in Latvia, according to a recent report.