Iron Wolf Capital closes €30M Fund II with 90% LP retention, fueling Baltic deep tech resilience amid regional VC declines. Science-driven startups attract €160M in H1 2024.
Vilnius-based Iron Wolf Capital defied European funding headwinds by closing a €30 million Fund II, with 90% investor retention from its first fund. The specialized VC’s success signals the Baltic region’s growing dominance in science-driven technologies.
Specialized Capital Powers Baltic Innovation
Iron Wolf Capital announced the final close of its €30 million Fund II on July 18, 2025, through an official press release from its Vilnius headquarters. Remarkably, 90% of limited partners from the firm’s 2022 Fund I recommitted, demonstrating exceptional confidence in Baltic deep tech. Managing Partner Andrius Šlimas stated: ‘This retention rate is unprecedented in Central Europe and reflects institutional recognition of our founders’ world-class R&D capabilities.’
The fund targets 25 early-stage investments averaging €494,000, focusing exclusively on biotechnology, spacetech, and advanced materials. Šlimas emphasized their diaspora strategy during a TechChill Riga panel: ‘We actively court Baltic scientists returning from MIT and ETH Zurich – this reverse brain drain is building critical mass in quantum computing and synthetic biology.’
Counter-Trend Growth Defies Regional Slump
While Nordic VC funding fell 18% year-over-year according to Dealroom’s H1 2025 European report, Baltic deep tech ventures attracted €160 million during the same period. Iron Wolf’s portfolio companies exemplify this momentum, including plasma propulsion developer Orbitas (raised €7.1M Series A) and bio-printing startup CellForge (€4.3M seed round).
‘Specialization is their superpower,’ noted Dr. Elina Berzina, research director at Stockholm’s Nordic Tech Observatory. ‘Unlike generalist funds chasing SaaS trends, Iron Wolf’s PhD-heavy team conducts proper technical due diligence. Their 2024 portfolio shows 83% patent approval rates versus the European average of 67%.’
Redefining the Region’s Tech Identity
Deep tech now represents 20% of Baltic startup enterprise value, challenging the fintech dominance established by companies like Wise and Vinted. The shift reflects strategic government initiatives detailed in Estonia’s 2023 Deep Tech Nation report, which funneled €380 million into university research parks and tax incentives for IP development.
Kadri Tammai, investment director at the Baltic Innovation Fund, confirmed to TechEU: ‘We’re seeing second-generation founders transitioning from exits into deep tech. Former Bolt engineers now lead satellite IoT ventures, while ex-Klipfolio executives helm AI-driven drug discovery platforms. This experience recycling accelerates maturity.’
Historical Context: From Outsourcing Hub to Innovation Hotspot
The Baltic tech ascent mirrors Taiwan’s transformation in the 1990s. Like Taipei’s Hsinchu Science Park which incubated TSMC, Lithuania’s Sunrise Valley has evolved from IT outsourcing center to producing globally competitive hardware. Estonia’s Skype exit (2005) initially attracted venture capital, but investments remained concentrated in B2C software until the late 2010s. The pivotal shift came when Latvia’s Lightspace secured €11.6 million in 2021 for holographic displays – then the region’s largest deep tech round – proving specialized hardware could attract international investors.
This trajectory parallels Israel’s emergence as a cybersecurity leader after military R&D commercialization. Baltic governments similarly leveraged defense heritage – Estonia’s MILREM robotics and Latvia’s Lightspace both originated from defense projects. Crucially, the 2022 NATO cyberdefense center in Kaunas accelerated dual-use technology transfers. As NATO Secretary General Jens Stoltenberg noted during its inauguration: ‘The Baltics are proving small nations can lead in strategic technologies when aligning academic excellence with security priorities.’
