When it comes to startups, this tiny country of 3 million is starting to make a real name for itself. Find out why in this post
News flash: Lithuania is more than just the country of beautiful forests, medieval architecture, and borscht. For a country of less than 3 million people, Lithuania is punching well above its weight when it comes to startups.
Did you know that the Ookla Net Index 2014 ranks Lithuania 7th in the world for the speed of Internet? Meanwhile, CNN lists Vilnius as one of its top 10 smart cities, Bloomberg’s 2015 Innovation Index marks Lithuania as the 8th best country in education, and the ease of doing business in Lithuania is ranked 11th in the world by Doing Business 2015 report. And according to StartupHighway’s recent report about Lithuania’s startup ecosystem, that’s just the tip of the iceberg.
Fun and games
According to the report, because Lithuania offers the lowest corporate profit tax rate among its neighbors Latvia, Estonia, Poland, UK, and Germany, the tiny country is observing a new trend: Many startups are relocating from nearby Russia. This includes startup star Game Insight, a mobile game publisher that recently moved from Moscow to Vilnius, followed by 15 other gaming companies including Planner 5D, DevtoDev, Kula-Tech and 4Talk.
Lithuania has about 1.5 million people in its labor force. This includes 26,000 IT professionals working at 2,380 hi-tech companies. According to a European Commission report, half of all Lithuanians have higher education and are fluent in at least two foreign languages. But Lithuania has a very low cost of living, with labor costing a quarter of the EU average.
The year 2014 saw 46 million euros invested in Lithuanian startups. There are 405 individuals employed in startups compared to 2013, when startups attracted 34 million euros in investments and employed 200 people.
According to the report, Lithuania’s three most promising startups are Vinted, YPlan, and Trafi. All three have attracted significant venture capital funding. Other rising startups include MoboFree, WoraPay, CGTtrader, Planner 5D and TrackDuck.
Lithuania has two private venture capital funds, Nextury Ventures and Ltk Capital, as well as two startup accelerators, Startup.lt run by Practica Capital and StartupHighway.
Where do all the startups meet?
There are more than 100 annual events, meetups, hackathons and workshops in Lithuania. Among those gathering the most participants yearly are LOGIN, StartupWeekend Lithuania and SV2B.
And where would a startup hub be without co-working spaces? Currently there are open spaces at Hub Vilnius, StartupHighway X, Namas Hub, Sunrise Valley, and Talent Garden Kaunas.
How Lithuania compares to its neighbors
When comparing Lithuania to its most similar neighbors in size and development, Estonia and Latvia, Lithuania is on somewhat equal footing. While Lithuania fares poorly in the 2014 Global Innovation Index, scoring just #39 overall whereas Estonia ranks #24 and Latvia lists at #34, it scores a bit better in Bloomberg’s 2015 Innovation Index: It does not place Estonia even within the top 50 countries while listing Lithuania at #43 and Latvia barely ahead at #41. Realistically, Lithuania got a leg up in the Bloomberg Index because its index is more influenced by education and research, which Lithuania excels at. On the other hand, the Global Innovation Index scores countries more according to their economic and business outputs, and Estonia has a stronger business and startup scene.
In short, Lithuania’s strengths lie in its educational system and ease of doing business. If it wants to get ahead of its Russian-speaking neighbors, it’ll have to produce a larger number of successful companies – but as this report shows, it’s well on its way.
Find out more about the Lithuanian startup scene in this comprehensive report by StartupHighway.
Laura Rosbrow contributed reporting.
Featured Image Credit: astudio / Shutterstock