Lithuania, a small country in the Baltic region, has been making waves in the European startup ecosystem. Dubbed a "hidden gem," Lithuania has been experiencing a "reverse brain drain" as over 20,000 Lithuanians returned to their country of birth from abroad in 2022. This influx of talent, combined with a collaborative mindset and a hunger for success, has contributed to Lithuania's booming entrepreneurial ecosystem.
Lithuania is home to three high-profile unicorns - online marketplace Vinted, VPN leader NordSecurity, and ad firm BCG - and has reached €13.7bn in enterprise value, following a seven-fold growth between 2018 and 2023. Vilnius, the capital city, accounts for 91% of the total value and has raised 96% of the total funding (€281mn), making Lithuania the second biggest VC investment destination in Central and Eastern Europe, after Estonia.
The country's Vice Minister of Economy and Innovation, Karolis Žemaitis, attributes Lithuania's exponential growth to its startup mentality. "Lithuania is a startup itself compared to big countries... Because we don't have that many resources and we don't have that many people, we need to act on this mentality to be able to compete." This mindset has fostered a risk-taking, make-do-with-less approach, which is reflected in the startup ecosystem's resilience and ability to adapt to global changes.
The government has been cultivating a business-friendly environment, with a recent law amendment liberalizing company share classes. Žemaitis emphasizes the importance of careful governmental interference, allowing businesses to operate freely.
Lithuania's compact size and population have also contributed to its success. The ecosystem is well-connected, with everyone being just a phone call or WhatsApp message away. This interconnectedness, combined with a flat hierarchy system and a digitalized economy, enables Lithuanian companies to do business faster.
The ecosystem is diverse, with strengths in fintech, ICT, laser technology, biotech, and game development. Fintech is a well-established sector, with over 260 companies, including neobanks like Revolut. Cybersecurity is another area of expertise, with NordSecurity being a driving force. Game development is also thriving, with Nordcurrent being a legacy player.
Talent attraction is the biggest challenge facing the ecosystem, with a need for up- or re-skilling the existing workforce. Initiatives like NordSwitch, GameDev Camp, and the National Reskilling/Upskilling Programme aim to address this issue. International talent is also being attracted, with increasing startup salaries, remote working opportunities, taxation benefits, and a high quality of life.
A collaborative mindset and hunger for success are at the core of Lithuania's startup scene. Startups are investing in each other, and the community-based approach is crucial to growth. The ambition to actively shape Lithuania's transformation is driving the ecosystem forward.
In conclusion, Lithuania's startup ecosystem is a hidden gem, with a unique combination of talent, collaborative mindset, and hunger for success. With its ambition to become one of Europe's major startup hubs, Lithuania is definitely a country to watch in the startup scene.
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