Gintarė Verbickaitė. How can startups become the driving force of Lithuania's economy?

Despite the headwinds across different sectors of the European economy, Lithuania's startup ecosystem has witnessed remarkable growth in recent years. According to Dealroom data, the combined valuation of Lithuanian startups grew seven-fold to €13.7 billion between 2018 and 2023. A close-knit community comprising roughly 1,000 startups, employing over 18,000 people has emerged, and Lithuania is now linked to the successful rise of 9 unicorns. Where do we go from here?

All countries benefit from having a sustainable startup ecosystem, as it can drive innovation, attract investment and create new, high-paying jobs. Israel's success story has shown how high-value-added tech companies can profoundly transform a low-productivity economy. Could Lithuania follow a similar path?

We're building on solid foundations - we've already nurtured several global success stories and rank 35th in the Global Innovation Index. A good example of what our ecosystem can achieve is Vinted, Lithuania's first unicorn, which recently reached an impressive valuation of €5 billion. Furthermore, Lithuanian startups contributed €372 million to the country’s budget last year, a remarkable 23% increase from 2022. These are clear signs that we're on the right track and should set our sights even higher.

Lithuania has the potential to become a leading European tech hub, provided we make a concerted effort to position our high-value-added tech sector as the driving force behind the country's economic growth. Of course, this won't happen on its own. We need to modernise our education system, invest in developing sought-after specialists, and ensure optimal conditions for starting and scaling businesses.

A united community leads to bold ambitions

Driven by our ambitious goal of making Lithuania the best place for tech companies to scale, Unicorns Lithuania feels responsible for facilitating business growth, accelerating necessary changes, and uniting the community. We view all these efforts as interconnected - a robust ecosystem attracts investors, and their funding gives companies more opportunities to grow and expand.

Unicorns Lithuania already unites 120+ tech companies that employ more than half of the sector's workforce. Our community's strength lies in our members' commitment to not only leverage ecosystem opportunities but also actively contribute to its development. It’s a simple formula - more startups means more cumulative experience and faster ecosystem growth.

This leads us to our next goals, which are easy to quantify. By 2030, we aim to grow Lithuania's startup ecosystem to 3,000 companies employing 40,000 people. Our estimations suggest this would enable startups to contribute at least €1 billion in taxes, while helping the IT sector reach 20% of the country's GDP - delivering substantial long-term economic benefits.

Better access to venture capital means more startups

I'm confident that we won't be able to establish Lithuania as a tech leader without a mature venture capital ecosystem. This is particularly crucial given how heavily early-stage startups depend on VC funding.

Easy access to venture capital not only provides companies with the financial stability needed to survive their early stages but also enables them to scale much faster than organic growth would allow. This empowers companies to implement innovative ideas more quickly, hire top talent, and invest in cutting-edge technologies and infrastructure.

One of the key solutions would be to strengthen VC co-investment funds and expand their scope, making it easier for innovative companies to secure the funding they require. This would create better conditions for businesses seeking capital for new ideas, encourage experimentation and innovation, and facilitate faster growth and competitiveness in international markets.

The hunt for talent: tapping into local and global expertise

A high-value-added economy is inseparable from quality education focused on developing future-proof skills and knowledge, including basic financial literacy and entrepreneurship. If Lithuania's education system can ensure excellent STEM and IT competencies, future talent will be better prepared to both join existing startups and launch their own. 

Successful international talent acquisition is also an integral part of a successful ecosystem. From our experience, international specialists enrich our ecosystem with global expertise and unique insights. To attract more highly skilled professionals, we need to reduce the tax burden they face. A 15% income tax rate for five years would provide a tangible incentive for highly skilled specialists to choose Lithuania, addressing the talent shortage and strengthening their long-term contribution to the country's economy.

Another ambitious goal we have is to create the world's most efficient startup visa system. A streamlined and attractive visa regime, coupled with services ensuring quick and smooth business setup for foreign nationals, would not only facilitate talent and startup attraction but also drive ecosystem growth and international competitiveness.

All these goals are realistic and achievable if we continue building a sustainable, growing, and thriving innovation ecosystem. The ambitious growth of Lithuania's startup community already shows we're on the right path to establishing the country as a technology and innovation hub. By attracting highly skilled specialists, we can accelerate this process and turn technological and economic growth from vision into reality.