Latvian Fintech Landscape 2024

As in previous years, Venture Faculty, in collaboration with Dealroom, is updating Latvia’s fintech landscape, which continues to drive forward in the global wave of innovation. This movement is fueled by rapid technological advancements and a commitment to redefining financial services. As fintech evolves worldwide, shaped by breakthroughs in AI and other emerging technologies, Latvian companies are also contributing to this transformation. Just as global fintech giants are expanding their product offerings and challenging traditional financial institutions, Latvian fintechs are making significant strides both locally and internationally. They are pushing the boundaries of innovation, creating new opportunities, and intensifying competition within the financial sector, further solidifying Latvia’s position in the global fintech revolution.

Current Landscape & New Entrants

This year, 135 fintech companies have been included in the landscape, including both local and foreign companies with a presence in Latvia. Payments and Data/IT solutions continue to dominate the fintech landscape, making up 22.96% and 21.48% of the market, respectively.

Crypto and Blockchain have emerged as the third-largest segment, representing 13.33% of the market, while Crowdfunding now represents 4.44%, and P2P lending follows closely with 8.15%. Fintech lenders hold a significant share, accounting for 12.59% of the industry. 

Smaller segments include Brokers (3.70%), Banking (2.96%), and AML/KYC solutions, which make up 2.22% of the market. The remaining 8.15% falls under various other categories, highlighting the diversity within Latvia’s fintech ecosystem.

New companies established in Latvia

Although the overall numbers have not drastically changed, with 19 companies leaving the market and 15 new ones entering, the landscape remains dynamic. This year, we have seen one newly established company, NewSchool, a lending-as-a-service (LaaS) company, and two more in the second half of 2023: Vairo, an alternative pension fund manager, and Upwood, a forest investment platform. While some companies have become inactive, new entrants and foreign firms are capitalizing on Latvia’s favorable environment for fintech growth, reflecting the sector’s evolving potential. In the coming years, it is expected that more companies will establish themselves in Latvia, spurred by the new favorable regulatory environment.

Opportunities & Regulations

This year has been a significant one for the crypto industry, particularly with the EU's introduction of the long awaited Markets in Crypto Assets (MiCA) regulation. These rules are designed to enhance safety and transparency in the crypto market, fostering greater trust and accessibility. Latvia has implemented MiCA and is one of the frontrunner countries, creating a favorable environment for fintech companies operating in the crypto space, demonstrating its commitment to becoming a leader in this evolving industry.

In addition, the Bank of Latvia has taken an important step by granting fintech companies access to its payment systems starting from next year. This move facilitates easier connections with consumers across Europe, making Latvia an attractive destination for both domestic and international startups. By opening these channels, Latvia is positioning itself as a key hub for growth in the fintech sectors.

These initiatives, supported by strong local organizations like the Fintech Latvia Association, the Latvian Blockchain Association, alongside key Latvian institutions like the Bank of Latvia, the Ministry of Economics, and the Latvian Investment and Development Agency, are significantly advancing the fintech sector in Latvia. These efforts are effectively positioning Latvian companies for success on both the local and international stages.

Achievements & Funding

This year has also seen the rise of promising early-stage companies. Riga-based fintech inGain secured €650,000 to develop a no-code SaaS loan management system, aiming to simplify financial operations for both startups and established companies. Similarly, Jeff App raised €2 million to further its mission of advancing financial inclusion in emerging markets. 

Furthermore, INDEXO has launched its own neo-bank, targeting local consumers and the lending market. With their recently acquired banking license and the power of fintech advancements, they plan to revolutionize the Latvian financial industry.

The Bank of Latvia’s issuance of a new electronic money institution license to TigSiPay (more) and xpate (more) reinforces the country’s position as a fintech hub, while the launch of Upwood, a platform focused on forest tokenization, exemplifies Latvia’s innovative approach to merging fintech with environmental sustainability.

Strategic partnerships are playing a crucial role in shaping the fintech landscape in 2024. For instance, Fondeadora’s collaboration with MeaWallet in Mexico to drive digital payment adoption underscores the global reach of fintech collaborations. Meanwhile, Lithuania's Walletto has introduced customized Mastercard prepaid business cards for Bonusukarte.lv, further diversifying the financial products available in the market.

Latvia’s well-established fintech companies have shown significant development over the past year. The P2P and crowdfunding sector has been particularly active, with companies expanding their offerings and entering new markets. For instance, Mintos, a leading P2P investment platform, recently raised €3.1 million in just 14 days through a crowdfunding campaign. This success demonstrates the platform's growing user base and its ambition to become a one-stop-shop for diversified investment strategies, including real estate investments, company bonds, ETFs, and deposit options.

In the lending sector, firms have successfully raised significant funds in the capital markets. Eleving Group issued €50 million worth of bonds, secured an additional €10 million from ACP Credit to expand its business in Romania and announced the biggest IPO of the year in the region. DelfinGroup also share offer that attracted €9 million from over 1,000 unique investors. Furthermore, the acquisition of Avafin (formerly Creamfinance) by South African bank investors highlights the sector's maturation and continued development.

Conclusion

As 2024 progresses, the Latvian fintech industry continues to break new ground, extending its influence beyond its borders by offering more diversified, accessible, and innovative financial services. The developments observed this year, both from a company perspective and in terms of regulatory advancements, are just the beginning. These changes hold the potential to make an impact in the financial landscape on a global scale. For those involved in the fintech industry or considering entry, now is a crucial time to engage with these trends and explore the opportunities they present.