In 2022, the value of the Lithuanian technology start-up ecosystem will grow the fastest among all Central and Eastern European countries, but this year its growth will probably slow down a bit, and the biggest problem will remain the lack of talent, say market experts. However, according to them, this ecosystem is expected to grow two to three times by 2025.
Vladas Lašas, chairman of the Lithuanian business angel network LitBAN board, says that startups last year showed not only impressive resilience, but also, in his words, fantastic growth.
"It seems to me that we still do not fully understand how important this seemingly relatively small area of our economy is for the future of Lithuania. But it grows exponentially - not by a few percent, but by several times," V. Laš told BNS.
According to the portal dealroom.com, the value of Lithuanian technology companies increased 16,6 times in five years - from 0,6 to 10 billion. EUR, and the total value of all Lithuanian companies listed on Nasdaq Baltic is approximately EUR 9 billion. euros.
Record growth, sustainable development
According to Inga Langaitė, head of the startup association "Unicorns Lithuania", there are now slightly more than 700 active startups in Lithuania, but their total number may exceed 1 thousand.
"Lithuanian startups are growing steadily. During the three quarters of 2022, actively operating Lithuanian startups have already added at least 205 million to the national budget. euros - more than in the entire year 2021 (200 million euros)", I. Langaitė said to BNS.
According to her, the number of company employees increased by 18 percent during the year. and up to 16,4 thousand, their average salary is 14 percent. up to 3,2 thousand euros (before taxes) - almost twice the national average salary.
According to the manager of Unicorns Lithuania, most of the country's most successful startups operate in five areas: internet software and services, financial technologies (fintech), e. trade, artificial intelligence and health.
Lithuanian startups attracted at least 2022 million in three quarters of 218. EUR investments, and the largest investment - 100 million. JAV cyber security company "Nord Security" received - it reached 1,6 million dollars. USD estimate, officially becoming the second "unicorn" of the country.
The second largest investment of the year so far was attracted by the payment platform "kevin" (61,6 million euros).
"I would allocate 14 million EUR investment in the Lithuanian start-up "Ovoko", developing electronic trade in auto parts. For the past two years, Ovoko has grown approximately three times each year," said the head of Unicorns Lithuania.
According to her, the Lithuanian start-up Litilit, which develops innovative femtosecond laser technology, raised 3,5 million. euros Taiwan investment by venture capital fund "Taiwania Capital": "This is Taiwan's first investment from the 200 million presented earlier last year. USD package focused on Central and Eastern Europe".
I. Langaitė emphasizes that some of the big Lithuanian start-ups work profitably and grow not from investors, but from customer satisfaction. This leads to a different approach to finance or business development.
"The recession will affect them minimally, and in the long run it might even be beneficial, for example, to attract talent." However, the economic contraction will definitely affect startups that live off investments. Not only will talent become more accessible, but we will not avoid the redistribution of resources, simple savings, and reduction of other costs," explained the head of the association.
According to V. Laš, the head of the association of entrepreneurs who patronize start-ups, records could hardly be expected at the beginning of 2022, but the investments of business angels grew by over 40% during the year. and reached 14,5 million euros (in 2020 – 2,4 million, in 2021 – 10,4 million euros).
According to him, the number of members of the Lithuanian business angel network LitBAN also increased to 300.
"Although these numbers do not seem large, the patronage, advice and mentorship of experienced business people - business angels - is an essential part of a successful startup ecosystem. "Smart money, which comes together with the experience of a business angel, is very important for the successful start of startup founders," V. Lašas told BNS.
"LitBAN, which was founded almost five years ago, has become an important catalyst for the growth of startups, and in 2022, LitBAN Business Angel School trained almost 70 business angels to invest in startups," he added.
This year - more cautious investments, slower growth
According to the manager of Unicorns Lithuania, more carefully planned investments, slower growth and recruitment await startups this year.
"Some of the world's startups, which until now used the American business model and were dependent on investments, will have to learn to turn to European or even Lithuanian conservatism. The winners will be those who are able to respond flexibly to changes, plan responsibly and manage costs intelligently", said I. Langaitė.
"In order for the startup ecosystem to grow, to interact smoothly with each other, there must be several aspects - talents, internal culture, legal framework, incubators or accelerators and investors," she added.
V. Lašas, the head of the Association of Entrepreneurs Patronizing Startups, emphasizes that one of the areas in which fundamental changes are needed is education.
"Using educational technologies (EdTech) we can achieve a rapid breakthrough in this field. The initiative of EdTech (EdTechLithuania.com) startups in 2023 can be a catalyst for fundamental changes in Lithuanian education. This requires more attention, trust and support - and not only from the Government, but also from society," explained V. Lašas.
According to him, Lithuanian EdTech startups are already highly regarded throughout the Nordic and Baltic region, foreign venture capital funds are investing in them, and they are already expanding into foreign markets.
"For example, the EdTech startup "Vedliai" (TeachersLeadTech) already helps more than half of all primary school teachers in Lithuania to interest children in technology. These 4 thousand teachers enthusiastically use this methodology and support", said the chairman of the board of LitBAN.
"I'm excited to see EdTech startups that are founded by teachers: I've already invested in a startup that's co-founded by a math teacher," he added.
According to I. Langaitė, as the ecosystem of Lithuanian startups expands, the biggest pain point remains the lack of talent - currently more than 600 IT specialists are being sought.
"The market is in demand not only for employees with technical skills - programmers, testers, data analysts, data engineers, but also sales, marketing, human resources or communication specialists, financiers, project managers," she told BNS.
According to the head of the association of start-ups, the strategic goal is to have an ecosystem three times larger by 2025, where operating start-ups would become an important engine of growth of the Lithuanian economy - 2 thousand. operating start-ups, 30 thousand working specialists, 375 million euros of taxes paid.
"We definitely have the potential for that. Unicorns are disrupting conventional markets, changing habits and creating new value propositions. Therefore, in the long term, companies operating in the high added value sector, capable of creating innovative technological products and with extremely high growth potential, will certainly not decrease, and together with the economic upswing, I believe we will also hear about new Lithuanian "unicorns", because the reserve bench is really quite large", - said I. Langaitė, manager of "Unicorns Lithuania".
Author Remigijus Bielinskas
