Is there any other shmup in vein of raptor or tyrian or jetsnguns that lets you upgrade or buy new stuff in between mission?

Try this one:
https://www.locomalito.com/hydorah.php

"Weapon selection menu, power ups and unlockable new weapons in every mission."

Have you tried Stargunner?

I see there's a Super Hydorah also (not sure if ready)

WinUAE and

Xenon 2 - Mega Blast
X-Out

I follow LocoMalito on Twitter, and even if I have not paid that much atention, from what I read, I think it's still in progress (advancing at quite a pace though) and will not be free, a lá Maldita Castilla Ex (or whatever it was called xD) recently launched


As for recommendations, another vote for Stargunner and totally check Hydorah out (it's free and totally great).
I also have been playing U.N Squadron recently, so if you have MAME, give it a shot.

Been playing stargunner, it's more difficult than the three games I mentioned... Looks like there's very little games like that nowadays...

Well, true, but not surprising considering that shmups is a very niche genre AND those games you mentioned are mostly disliked even amongst the most hardcore shmuppers for their euro-shmuppy mechanics...

For a shop-lite experience I can think of games like Satazius, or Lords of Thunder (weapons can be switched/upgraded btw missions), or Steredenn if a wide variety of weapons is actually what you're looking for in a shop system.

Trouble Witches has mid-stage shops for temporary power ups and stuff. Similar to Forgotten Worlds, Fantasy Zone games...

Well, Astromenace.

But I am sure you'll find something [url=https://en.wikipedia.org/wiki/Category:Vertically_scrolling_shooters]here[/url] too.

Sky Force Anniversary.

Astro Avenger 1 and 2.

Check out 1993 Space Machine.

I would recommend Crimzon Clover - World Ignition. Is not that much similar since you don't buy upgrades or have multiple story paths but damn it, it's amazing :)

Astrotit

Raiden is good. Raiden is always good. Even if it lacks upgrade paths.