In October 2022, UK-headquartered digital bank Revolut announced that it would transfer the management of its corporate customers in the European Economic Area to a Lithuanian trading entity.
From a British perspective, this was a small but significant piece of bad news for post-Brexit Britain. Revolut is often cited as one of London’s leading fintech companies, but Brexit has made it difficult for the company to offer comprehensive services to customers on the continent. . So it probably made a lot of sense for Revolut to move its operations to her EU member state.
But once you board the plane from London to Vilnius, your perspective changes. Lithuania, one of the Baltic states, has its own established fintech sector and is home to 263 of his companies active in this field. It is also the number one EU hub in terms of issued licenses, according to |Invest Lithuania. However, at the same time, they are also keen to attract human resources from overseas. Diana Gildenite, senior project manager in the technology team at Invest Lithuania, sees Brexit as an opportunity to attract fintech companies seeking access to the EU.
And this is the big picture. Lithuania is home to a number of high-profile, technology-driven companies that you’ve probably heard of, but may be hard to put on the map. These include VPN leader Nord Security, digital wellbeing venture his Kilo Health, favorite clothing marketplace Vinted and payments business his TransferGo. Building on these foundations, Lithuanian policymakers aim not only to grow the startup sector, but also to establish Vilnius in the global ecosystem ranking.
So how is it? Can a small country on the eastern edge of the European Union build a technology ecosystem that can produce world-leading startups while attracting the talent needed to sustain an innovation economy in the long term?
It is a work in progress, but we have ambitions, especially in terms of building a facility that will support the growth we expect in the startup community.
From clothing to tech hubs
Let me give just one example. A disused clothing factory dating back to the Soviet era in Vilnius’ industrial district is being transformed into “Europe’s largest technology hub”. As it stands, the building is largely a skeleton, but Tech Zity founder and director Darius Jakaitis hopes the first phase of development will be completed by the end of 2024. In practice, that means opening offices, communal living spaces, cafes and bars. So what role will it play in the growth of this sector? “Existing Lithuanian companies will relocate, but we will also attract new companies and foreign start-ups and talent,” says Gyakaitis. speaks. Indeed, in his view, Lithuania’s technology sector is becoming increasingly international.
Although the €100 million project is still in the building permit process and negotiations with banks have not yet been completed, Zacaitus has developed two other hubs and has a proven track record in this field. The ultimate goal is to provide space for 5,000 tech workers.
That begs the question: how quickly can we grow our technology ecosystem? Sure, you can build state-of-the-art 24/7 technology hubs and science parks, but the country of 2.8 million people is struggling with the startups, scale-ups, and technical talent needed to get people there. Can it be created?
This is a problem faced by almost every technology cluster in Europe. Governments across the continent believe the innovation economy is key to future prosperity, but everyone is competing for capital and talent.
Lithuania’s Minister of Business and Innovation Ausrine Almonaite is confident that the country is on the right path. “In three years, the value of the technology sector has grown 17 times hers,” she says, making us her second ecosystem in Europe in terms of growth. ”
There is a growing appetite for entrepreneurship when it comes to creating startups. “We have 1,000 technology startups. People are taking risks,” Almonite added. “And we have three unicorns.”
access to funds
But, as she acknowledges, access to finance needs to be improved. To achieve this objective, the government has been actively working to increase Lithuania’s profile among international investors. One of the first results of these efforts was her US-based company Plug and Play, which runs accelerators, invests in startups, and helps young companies connect with other investors. This is an initiative by “We have traveled all over the world pitching to investors,” Almonite says. Introducing plug and play. ”
It must be said that at least some of Lithuania’s most famous entrepreneur-led companies have managed to scale up without VC support. During my visit, I spoke with executives from the aforementioned Nord Security, Kilo Health, and gaming company Nordcurrent. All entered the world market on their own.
“We were bootstrapped until last year, and last year we received our first VC loan. That in itself is an amazing story,” says Marijus Briedis, CTO of Nord Security.
This had the advantage of allowing the founders to hang on to their equity, but there was also an element of “there has to be a need”. As Nordcurrent co-founder Victoria Trofimova explains, the idea of venture finance is relatively new. “We started 21 years ago, and there was no VC back then.” So the company financed itself by selling games to publishers in larger markets before becoming an independent publisher. Ta. Since then, Nordcurrent has found success with free-to-play games and now generates $90 million in revenue with the US and Europe as its main markets.
You might think that a lack of venture financing would hinder growth, but that’s not necessarily the case. Inevitably, many Lithuanian companies had to sell to the world market in order to survive. Node current is a good example. “Lithuania has a population of 3 million people. There is no way to be commercially successful by selling only to the Lithuanian market. That is why when we first started, we wanted to create a global product. We had to sell inside,” says Trofimova.
Marijus Briedis agreed that thinking globally is essential, adding that ambition also attracts talent. “It was important to think globally. That’s what attracts the people who want to do it. People who want to see scale, people who want to design the best products possible,” he says.
All of this brings us back to talent and where to find it. “The war for talent. We must always keep this in mind,” says Minister of Economy and Innovation Almonite. “When we meet investors and entrepreneurs, they ask who can work for our company.”
So what can you do? Well, immigration is one answer. In recent years, Lithuania has opened its doors to migrant workers. Some come from neighboring Belarus and Ukraine, while others come from the EU and other countries. At the same time, Lithuania hopes to attract entrepreneurs and other businesses through the old-fashioned means of keeping corporate taxes low.
In the long term, education is being recalibrated and is about more than just teaching coding. “The most important thing is to teach children to work together and solve problems,” says Almonite.
So what does the innovation economy ultimately look like? Fintech will play a key role, but Almonite is keen to stress the need to combine industries such as biotechnology and laser engineering. ing. These are fields with deep roots.
Lithuania is seeking to establish itself as a destination for global capital and talent. How feasible is that? Lithuanian is a difficult language to learn, and even native speakers admit that the country is located on the eastern edge of the European Union.
But there is probably little to scare the international community. I was in the country to attend the Vilnius Startup Fair, and I noticed that all participants at the event tended to speak English, not only during the panel discussions, but also in the informal discussions that took place around the building. That was noteworthy. So anyone visiting from the Bay Area – and there were some – will immediately feel at home.
Lithuania aims to follow in the footsteps of fellow Baltic nation Estonia, which has branded itself as a unicorn nation. Although still in its infancy, the event served as a reminder that emerging economies in Central and Eastern Europe are keen to catch up with larger hub cities such as London, Barcelona, Paris and Berlin.
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