Estonia’s Innovation Surge: From AI Breakthroughs to $50M Government Investment Fueling Baltic Tech Expansion

ESTONIA

Estonian Pod Maker Silen to Open U.S. Factory After Surging 70% Sales Growth

Silen, a leading Estonian manufacturer of soundproof office pods, will open a factory in the U.S. in 2026 to meet growing demand. The company has seen a 70% sales increase in the U.S. this year, serving major clients like Amazon and Coca-Cola while exporting to 63 countries globally. [Source: BalticVC]

Estonian Government to Invest €50M in SmartCap-Managed Venture Fund
The Estonian government plans to invest €50 million over the next 4-5 years into a venture capital fund managed by the national investment entity SmartCap. The capital infusion aims to bolster the growth of local companies and support private equity funds targeting the traditional economy and innovative sectors. This strategic investment underscores Estonia’s commitment to strengthening its startup ecosystem and expanding companies into international markets. [Source: BalticVC]

Estonian AI Startup Raises $2.5M Seed Round to Expand AI Photography Tools

BetterPic, a Tallinn-based startup specializing in AI-powered image processing and professional-quality portraits, secured $2.5 million in a seed funding round led by MOC Capital and Shilling VC. Founded in 2024, the company offers AI-driven services including BetterPic for portraits and BetterStudio for fashion photoshoots, with over 32 million images created for clients worldwide. The funding will support expansion of B2B subscription products and further development of AI technology to create verified photo models. [Source: BalticVC]

UKRAINE

Dropla Tech Raises $2.78M to Advance Battlefield AI in Danish-Ukrainian Partnership
Danish-Ukrainian startup Dropla Tech has secured $2.78 million in pre-seed funding, backed by a Danish consortium including EIFO and Maj Invest, to accelerate development of AI-powered platforms for Ukraine’s defense sector. The investment will support innovative solutions like autonomous drone AI for mine detection and advanced multi-sensor mapping tools, strengthening both Ukraine’s battlefield resilience and post-conflict recovery efforts. Operating from Copenhagen and Kyiv, Dropla leverages real-world battlefield data and cross-border expertise to drive impactful technological progress. [Source: Tech Ukraine]

EIC Launches $21.7 Million Gateway Fund for Ukrainian Deep-Tech Startups

The European Innovation Council has unveiled a $21.7 million funding program targeting Ukrainian deep-tech startups and SMEs, offering grants of $325,000 to $540,000 plus access to elite business acceleration services. The initiative aims to support growth in sectors like AI, cybersecurity, robotics, and renewable technologies, emphasizing opportunities for women-led firms and projects with Ukrainian founders or executives. Applications are open until November 26, 2025. [Source: Tech Ukraine]

Ukraine’s FirePoint Unveils “Flamingo” Missile with 3,000km Range

FirePoint has officially revealed its “Flamingo” long-range cruise missile, boasting a 3,000-kilometer operational reach and a powerful 1,150-kilogram warhead, demonstrated through combat footage striking deep inside Russia. The missile’s advanced avionics resist electronic warfare, marking a major leap in Ukraine’s strategic strike capability and signaling a new era of power projection. Mass production is underway, highlighting Ukraine’s technological resilience amid conflict. [Source: Tech Ukraine]

Ukraine Launches “Defense City” to Boost Military-Industrial Growth with Tax Breaks

Ukraine’s parliament approved laws creating “Defense City,” a special economic zone modeled after its IT sector initiative, introducing tax exemptions and streamlined regulations for defense companies until 2036. The initiative aims to accelerate domestic defense production, simplify export controls, and attract investment, strengthening Ukraine’s military-industrial base amid ongoing conflict. This marks a major step in transforming and modernizing the country’s defense industry.          [Source: Ukraine Business News]

POLAND

Polish Deeptech Startup Raises $7.1 Million to Expand Laser Systems Globally
Fluence Technology, a Warsaw-based developer of advanced femtosecond lasers, secured over $7.1 million in funding to accelerate international growth and expand applications in semiconductor, medical, and dual-use markets. The capital raise was led by investors including Vinci S.A. and Radix Ventures, supporting the company’s plans to scale cutting-edge laser technology beyond the Polish market. CEO Dr. Michał Nejbauer emphasized the critical need for globalization given the limited domestic commercialization environment. [Source: Vestbee]

RUSSIA

Rainfall Ventures Leads $1M Seed Round in Health-Focused Bakery Lexington Bakes

Rainfall Ventures, a US-based VC fund founded by founders of Russian social media giant VK, has led a $1 million seed funding round in Lexington Bakes, a U.S. bakery specializing in organic and gluten-free desserts. Lexington Bakes focuses on health-conscious products using ingredients like sprouted oats and maple syrup. The funds will support scaling growth, including expanding retail presence and transitioning from self-manufacturing to co-manufacturing. Rainfall Ventures, formerly known as Vaizra Investments, invests across e-commerce, media, food, fintech and SaaS sectors.