The Land of 1000 Startups: How Lithuania Serves as a Launchpad For Future Unicorns
Ambitious goals are what drive innovation and progress. That’s true for many things in Lithuania – from its ascent as a world-class biotechnology hub to the country becoming a top-of-mind location for film producers. Lithuania’s vibrant startup ecosystem is another prime example of how dreams turn to goals and goals to results and impact. The impact is felt not just in Lithuania, but also around the world.
How did the Lithuanian startup scene emerge?
A couple of years ago, the country’s Ministry of Economy and Innovation set a goal to raise the number of startups based in Lithuania from several hundred to more than 1000. The goal that might have looked even a bit too ambitious at the time was reached in 2020, thanks to concentrated efforts of supporting young entrepreneurs with access to funds and accelerator programs.
Surely, reaching this magical number would not have been possible without the steps taken by the very first startups born on Lithuanian soil. According to Roberta Rudokienė, Head of Startup Lithuania, the startup ecosystem development unit at Enterprise Lithuania, the first companies of this kind appeared in the early 2000s.
“Mobile phone app store GetJar was established in 2004 and attracted its first impressive investment of $6 million in 2007. Exacaster, a big data predictive analytics technology company, has been successfully operating for 21 years. And our first and so far the only official unicorn Vinted was established in 2008,” Ms. Rudokienė reminisces.
The subsequent decade saw startups, most of which had been bootstrapped before that, attract first tranches of funding. In 2013, secondhand clothing marketplace Vinted, which today is valued in the billions, raised its first investment of €4.7 million from Accel Partners. The decade also saw the first “exit” in the startup ecosystem when Sungy Mobile acquired GetJar in 2013.
How is the Lithuanian doing now?
According to a recent report published by Dealroom, the combined enterprise value of Lithuanian startups has now reached €7.1 billion, up 17x since 2016. And when it comes to VC investment, Lithuania ranks 5th in the CEE, with close to €1 billion raised since 2015.
“Today, the scene is definitely more mature, as we have more strong late-stage startups raising their capital successfully, and there is a high probability we will witness the birth of some unicorns even. I think we will have a stronger foreign startup scene here because we are very proactive in various relocation initiatives now and it will be fruitful. Finally, I do believe a few sub-ecosystems in high tech (such as life sciences, AI, machine learning etc.) will evolve in Lithuania as well because we do have an early-stage pipeline for that,” says Gerda Sakalauskaitė, the Managing Director of the Lithuanian Venture Capital and Private Equity Association (LT VCA).
And there’s definitely money to back up the claims of maturity. In the first three quarters of 2021, Lithuania-based startups have attracted €420 million in funding. Among startups with the largest rounds were Vinted (€250 million), TransferGo (€43.2 million), Interactio (€24.4 million), and PVCase (€20 million).
“The number of investments in startups and average investment size has been increasing sharply. Lithuania and other two Baltic countries are getting more and more attention from prestigious venture capital funds, and business angel networks are also expanding,” says Darius Verseckas, the former Technology Editor of the leading Lithuanian business media outlet Verslo žinios, and co-founder of HeavyFinance, a fintech company.
“There are also many other signs indicating the rising maturity of the ecosystem. Governmental support together with a friendly regulatory environment both attracted many foreign fintech startups and enabled locals to create global innovations in the financial sector. Actually, all players of the ecosystem gained significantly more knowledge, and it made Lithuania one of the most attractive startup ecosystems in Europe.”
The increased maturity of the talent pool is also noted by Jean-Baptiste Daguené, a partner at 70V fund, who moved to Lithuania 8 years ago.
“We finally have people that are able to make it happen with multiple startups. We also have startups coming from abroad to not only set up a tech hub in Lithuania but also a sales and marketing hub. This change happened in the past 3 years,” Jean-Baptiste Daguené says. “We do not have many large Lithuanian global corporates with 1000s of employees serving customers worldwide, but we’re building them right now, and most of them are in tech, which is super exciting!”
Finally, the maturity of the local startup ecosystem is witnessed by the ways the community is self-organising. In addition to numerous gatherings and events, Lithuania’s startup sector now has its own association – Unicorns LT, which seeks to accelerate the ecosystem’s growth even further. Established in the spring of 2021 by Vinted, Hostinger, Bored Panda, Omnisend, Kilo.Health, Tesonet and Tech Zity. The association already unites several dozen companies. And as you might expect, it has a number of clear and measurable goals. Namely, these are: 1) having 30 000 people working in the sector; 2) growing the amount of tax paid by Lithuanian startups by 3x; 3) having more than 2000 startups operating in Lithuania.
What makes the Lithuanian startup ecosystem stand out?
According to Ryan Gilbert, the founder of Launchpad Capital – a Silicon Valley-based VC fund that invests in early-stage startups – Lithuania’s startup scene is set to succeed globally:
“I first came to Lithuania in 2019, and immediately knew I’d come back. I believe foreign investors and Lithuanian entrepreneurs can achieve great things together there’s a lot of talent here, and an excellent infrastructure to launch products for the global market.”
“Entrepreneurs that I meet here do not build their products for Lithuania, but for the world,” Gilbert continues. “They have outstanding communication skills and a strong desire to collaborate, but also manage to find work-life balance that their North-American peers can envy.”
In addition to a healthier work-life balance, there are a couple of more areas where the Lithuanian startup ecosystem is ahead of the pack. For instance, the startup scenes abroad sometimes get a bad rap for being “boys’ clubs”, with little representation of women. Well, this is definitely not the case in Lithuania, where gender equality is held in high regard.
“Compared to other European countries, the situation with the gender balance in Lithuania is really good. Startup Heatmap research on women entrepreneurs in Europe published in 2020 found that only 15.5% of all founders or co-founders are women. At the same time, according to a representative survey of Lithuanian startups conducted by Startup Lithuania at the end of 2020, 38% of startups have at least one female founder!” Roberta Rudokienė, Head of Startup Lithuania, comments.
Among the successful Lithuanian startups with at least one female founder, there is 3D model marketplace CGTrader, remote simultaneous interpretation platform Interactio, mindfulness app Mindletic, management system for insect farms Cogastro, mobile walking app #Walk15, and many more.
More than 12.000 people are already working in startups in Lithuania, and there are hundreds more open positions for both IT and non-IT professionals. The scene is getting increasingly more diverse and inclusive, not only in terms of international talent but also – people from non-startup backgrounds.
“More professionals in their 50s are joining startups, changing the perception of a “hipsterish culture”, where everyone is sitting bean bags drinking lattes with almond milk and using fancy keywords. Variety of people joining startups really helped build better processes and products for rapid growth,” says Darius Verseckas, former Technology editor for Verslo žinios.
When asked about what makes the Lithuanian scene different, Gerda Sakalauskaitė, Managing Director of LT VCA, emphasizes the great opportunities to scale:
“We tend to take some time to develop ideas or we are even hesitant on trying out ‘crazy’ things sometimes, but if we catch that ‘market opportunity’ we have tremendous skill and acumen for scaling it fast.”
What are some Lithuanian startups to follow?
Ondato – Named the Rising Star at the Lithuanian Startup Awards in 2021, Ondato is a fast-growing AML/KYC technology company that provides services to financial institutions.
TransferGo – Lithuanian Startup of the Year 2021, TransferGo is one of the biggest remittance companies in Europe, especially popular with expats sending money internationally.
Turing College – The first Lithuanian graduates of the prestigious Y Combinator program, Turing College are helping prospective data scientists get a job-ready education.
Trafi – One of the first Lithuanian startups to go global, Trafi is developing mobility-as-a-service solutions used across the world – from Germany to Brazil.
Interactio – One of the fastest-growing Lithuanian startups, Interactio provides remote simultaneous interpreting services.
Do you want to explore the Lithuanian startup scene in more detail? Then head over to https://www.startuplithuania.com/startup/ and learn more about the companies shaping it.