Opportunities for start-ups in the Latvian capital market
- A start-up is a capital company with high growth potential, whose core operation involves the introduction of a scalable business model and the design, manufacture or development of innovative products.
According to the "Strategy for the Development of the Start-up Ecosystem 2022–2025", 512 companies defined in the local and international databases as start-ups and up to 7 years old or founded between 2015 and 2021 have been identified in Latvia.
Currently, no start-ups have entered the Latvian capital market; however, the capital market offers opportunities for start-up development that could replace other available forms of support and ensure faster development of the companies concerned.
In the case of Latvia, there is a wide range of state support available for start-ups – support tools offered by the Law on Aid for the Activities of Start-up Companies, start-up visas, research and development support programmes, acceleration funds, seed and pre-seed funds, as well as other essential and development-enhancing forms of support. In addition, an initiative is planned in the context of the Initial Public Offering Fund, i.e. the establishment of a Latvian and Lithuanian Cross-Border Cooperation Fund aimed at providing access to funding for innovative companies by investing in companies for their further listing on the Baltic capital market (it is planned to initially raise state budget funds of 20 million euro from Latvia and Lithuania, as well as involve the private sector in the later stages to expand the Fund's investments).
In other parts of the world, start-ups are making extensive use of the opportunities offered by the capital markets to grow their businesses. While the Latvian capital market cannot currently offer the same opportunities, start-ups could gain significant added value there. In the case of Latvia, the most suitable option for start-ups would be a bond instrument, which would already allow them to gain additional investments, visibility and experience necessary for a future share issue on the First North market or on the regulated market.
Other benefits of capital market participation for start-ups include access to capital, raising investments, credibility, building visibility, attracting a highly skilled workforce and many more. Find out more in the article Opportunities and benefits for companies entering the Latvian capital market.
Support mechanism for potential issuers
If you would like to assess your options for participating in the Latvian capital market, you are invited to apply for the support mechanism "Securities Sandbox".
This is a unique form of support where the potential issuer receives an initial assessment and recommendations on what needs to be improved in order to enter the Latvian capital market, prepared by the leading Latvian capital market experts, free of charge. The support mechanism may be used by private companies as well as public and local government capital companies. Both companies intending to issue shares and those that intend to raise funding by issuing bonds may apply for advice. This mechanism has been successfully used by several Riga local government capital companies.
More information on the support mechanism is available on Latvijas Banka's website.
