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Baltic private equity and venture capital funds are entering a capital-rich phase, with €1.4 billion available for new investments by the end of 2025, according to an analysis prepared by KPMG and published by the Estonian Private Equity and Venture Capital Association (EstVCA).

The report shows that funds across Estonia, Latvia and Lithuania raised €750 million in 2025, marking a 126% increase compared with the previous year and underscoring a strong rebound in fundraising activity. At the same time, investment activity remained steady: €480 million was deployed during the year across 243 deals, with €144 million invested directly into Baltic companies.

Despite the record level of available capital, the analysis highlights a structural imbalance between funds’ investment capacity and the regional deal flow. Of the €1.4 billion in dry powder, roughly €670 million is expected to be invested in the Baltics over the coming years, while the rest is likely to target opportunities beyond the region.

Madis Lehtmets, CEO of the Estonian Private Equity and Venture Capital Association (EstVCA), said that capital follows ambition.

“An investment reserve of €1.4 billion is impressive, but a large share of this capital has an investment mandate that extends far beyond the Baltics. The question is whether our region has enough ambitious companies to attract investors. Today, we need to focus on laying the foundations for a new generation of companies to emerge, because capital follows ambition, not imposed borders,” Lehtmets said.

Sector-wise, investor interest remained concentrated in information and communication technology, followed by energy and environment, as well as life sciences. Venture capital funds largely focused on ICT, financial services and life sciences, while private equity activity was strongest in energy transition-related sectors.

Startup funding across the Baltics reached €580 million in 2025, with Estonia attracting €220 million, Latvia €131 million and Lithuania €229 million. However, local funds accounted for just 12% of this capital, contributing €71 million in total.

Among the largest transactions of the year, Lithuanian cloud infrastructure startup Cast AI raised €95 million, Latvian wind turbine maintenance robotics company Aerones secured €54 million, and Estonian procurement automation startup Pactum raised €47 million.

EstVCA CEO Madis Lehtmets noted that while capital availability is at a historic high, the key challenge for the region lies in building a stronger pipeline of ambitious companies capable of absorbing and scaling this investment.

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