Latvia is the smallest of the three Baltic states but has built a quietly productive startup ecosystem. With approximately €0.1 billion in venture capital in 2024, Latvia's ecosystem is early-stage but benefits from extremely low operating costs, strong engineering talent, and strategic EU membership. The country has produced notable companies including Printful (on-demand printing, valued at $1B+), Lokalise (translation management), and CastPrint (3D-printed orthopedic casts).
LIAA (Investment and Development Agency of Latvia) is the primary government body supporting startups, providing grants, export support, and the startup visa programme. Altum, Latvia's state development finance institution, offers startup loans, guarantees, and mezzanine financing. The Latvian government introduced a startup-specific support programme allowing qualifying startups to pay a fixed monthly social tax instead of standard payroll contributions, dramatically reducing the cost of hiring.
Latvia's IT sector is growing rapidly, with Riga emerging as a capable nearshoring destination. The country's strategic location between Nordic and CIS markets, combined with widespread Russian and English language skills, creates unique market access opportunities. The University of Latvia and Riga Technical University provide a steady stream of engineering graduates.
Startup Ecosystem
Riga dominates Latvia's startup ecosystem, hosting virtually all VC activity and the majority of tech companies. The city's key hubs include the National Library's startup incubator, TechHub Riga, and the Riga Techno-polis. Riga has particular strengths in SaaS, e-commerce platforms, and creative technology. The startup community is tight-knit and collaborative, with events like TechChill (the largest startup conference in the Baltics) bringing together founders, investors, and corporates. Latvia's ecosystem is closely connected to the broader Baltic network, with many founders and investors active across Estonia, Latvia, and Lithuania.
National Funding in Latvia
LIAA (Investment and Development Agency of Latvia)
Latvia's primary business development agency. Provides startup support grants, innovation vouchers (up to €25K), internationalisation support, and administers the Latvian startup visa.
Visit website →Altum
Latvia's state development finance institution providing startup loans (up to €150K), mezzanine financing for growth, guarantees (up to 80% of bank loans), and microcredit for early-stage companies.
Visit website →Latvian Startup Law (Fixed Social Tax)
Qualifying startups can pay a fixed monthly social tax of €337.58 per employee instead of standard payroll contributions (~35%), making the first 3 years of hiring dramatically cheaper.
Expansion.lv / Magnetic Latvia
Government initiative to attract international talent and investment to Latvia. Provides relocation support, networking, and connections to the local startup ecosystem.
Visit website →Tax Incentives for Startups
Estonian-Style CIT (0% on Retained Profits)
Since 2018, Latvia adopted an Estonian-style corporate tax system: 0% tax on reinvested profits, 20% tax only upon distribution. This is identical to Estonia's model and equally attractive for growth-stage companies.
Fixed Startup Social Tax
Under the Latvian Startup Law, qualifying startups (innovative, under 5 years old, funded) can pay a fixed €337.58/month per employee instead of standard social contributions. This can reduce effective payroll costs by 50% or more for highly-paid tech employees.
Patent Box (5%)
Income from qualifying patents and equivalent IP is taxed at an effective rate of 5% instead of 20%. Available to companies that developed the IP through R&D activities in Latvia.
Top Startup Cities in Latvia
Riga
Latvia's dominant startup hub and home to virtually the entire ecosystem. Host of TechChill conference, with strengths in SaaS, e-commerce, and creative tech. Key hubs include TechHub Riga and the Latvian startup campus.
EU Co-Financing in Latvia
Latvia utilises EU structural funds for innovation through the Operational Programme for Growth and Employment. LIAA recognises the Seal of Excellence for co-financing. Altum leverages EIF guarantees and financial instruments to amplify its startup lending capacity. Latvia's EU structural fund allocation (~€4.2B for 2021-2027) includes dedicated innovation and digitalisation priorities.
EU Funding Available in Latvia
VC Funds Active in Latvia
Atomico
🇬🇧London, UK
Balderton Capital
🇬🇧London, UK
Lakestar
🇨🇭Zürich, Switzerland
EQT Ventures
🇸🇪Stockholm, Sweden
Northzone
🇸🇪Stockholm, Sweden
Speedinvest
🇦🇹Vienna, Austria
Dawn Capital
🇬🇧London, UK
Credo Ventures
🇨🇿Prague, Czechia
Radix Ventures
🇵🇱Warsaw, Poland
Contrarian Ventures
🇱🇹Vilnius, Lithuania
Expeditions Fund
🇵🇱Warsaw, Poland
Frequently Asked Questions
Qualifying startups (innovative, under 5 years old, receiving VC or grant funding of €30K+) pay €337.58/month per employee instead of standard social contributions. For an employee earning €4,000/month, this saves the company approximately €1,000-€1,200/month. The benefit lasts up to 3 years and can be applied to up to 50% of employees.
They are almost identical. Both countries tax corporate profits at 0% when retained and ~20% upon distribution. Latvia adopted this system in 2018, inspired by Estonia's success. The main difference is Latvia also offers a Patent Box (5% on IP income) and a fixed startup social tax, which Estonia does not have.
Practically, yes. Riga has 95%+ of Latvia's startup activity, all VCs, and the startup infrastructure. However, Riga is extremely affordable — office space costs 50-70% less than Tallinn or Vilnius — and the city is compact and liveable. Some startups choose Latvia specifically because Riga offers the lowest costs in the Baltic region.
The SIA (sabiedriba ar ierobezotu atbildibu) is Latvia's private limited company, requiring €2,800 minimum share capital. Incorporation takes 1-3 business days. The SIA is the standard entity for startups and qualifies for the startup law benefits.
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