Lithuanian Startups Propose Solutions to Businesses Demanding State Aid

September 13, 2022
Lithuanian Startups Propose Solutions to Businesses Demanding State Aid

Konferencijos „EBIT“ organizatorių nuotr.

Taking a critical view of some of the country’s major companies petitioning the Government for electricity and gas subsidies, and €1 billion in soft loans to purchase their own energy sources, Lithuanian startups are proposing a number of alternatives.

Unicorns Lithuania, which represents some of Lithuania’s biggest startups, is encouraging companies asking for assistance to take responsibility and consider long-term solutions, leaving public finances to education, for instance, raising teachers’ wages. 

Companies labelled “corporate cry-babies” for embarrassing behaviour 

“Today we are witness to a phenomenon we might call a Corporate Cry-baby Convention. Famous entrepreneurs who raked in big profits during favourable times are suddenly pressuring the Government about the unexpected downturn. Startups view public resource management and allocation differently. I’m simply ashamed for some of my peers,” explains Rytis Laurinavičius, co-founder and CEO of the marketing automation platform Omnisend. 

He compares the current situation to the Three Little Pigs – while some companies emerge and grow, others, although large and profitable, beg for help in the face of a sudden gust of wind. 

“For me, it’s no longer second-hand, but fist-hand shame, because the public places me in the same category. Startups neither defend the Government, nor engage in politics, yet it’s quite enraging to see others’ statements and the image they create. Businesses, the public, and the Government all share responsibility for overcoming this crisis,” Rytis Laurinavičius says.

Startups view public resource management and allocation differently.

Teachers’ wages get the spotlight, as lending proposals come on the table 

According to Tadas Burgaila, CEO of the health-tech company Kilo Health, the behaviour of entrepreneurs is so aggravating because they went from boasting about quadrupling their group’s net profit, reaching €80 million, to asking for state aid the very next week. 

“Imagine the five of us playing poker, a game both strategic and reliant on luck – very much like business. 10 years of good cards have led us to amass a ton of chips, whether by being conservative or by going all in with investment. However, as luck begins to run out and the stockpile of chips starts disappearing, you ask the dealer if anything’s the matter and demand more chips. That’s how I see the situation in the country today,” says Tadas Burgaila. 

He emphasises that while large, profitable Lithuanian companies often inspire young startup leaders, this also reveals a generational divide in attitudes towards business. 

“To everyone in need of energy subsidies, I say – come borrow from us, we’re profitable. Seriously. If you can show me that a million euros in credit will create lots of value for the country, then fine. But let’s talk first, because I can see plenty of better uses for that billion you’re asking from the state. Businesses today are reluctant to take a stand on something they don’t benefit from directly, such as raising teachers’ wages,“ notes Tadas Burgaila.

Businesses today are reluctant to take a stand on something they don’t benefit from directly.

A stable business shouldn’t ask for things, but give them to others 

Toma Dilė, COO of the solar farm modelling tool PVcase, agrees that state aid is highly beneficial to young companies, but says that once they become stable, they need to start giving back to the state. 

“Stable companies are defined by their values and focus on long-term solutions. But what social responsibility can we speak of when, in the face of an emergency, all those values are thrust aside in favour of a sole imperative – saving one’s own skin? This ignores the interests of not only the company and its employees, but also of the country and the world at large. Moving towards renewable energy and socially responsible business is the only possible long-term solution. Businesses should cooperate with the Government in helping key public sector employees – from fire-fighters and medical professionals to teachers,” she said.

Stable companies are defined by their values and focus on long-term solutions.

Promoting responsibility-taking, and proposing solutions

“We’re not saying that large or traditional companies are evil. It is, however, important to be responsible and to showcase your ability to innovate, especially in difficult times. Business means risk. And you have to control it because sometimes, the worst-case scenario comes to pass. The state isn’t obligated to be rescuing companies that are either uncompetitive or otherwise hurting from excessive risk-taking. Should we be investing in further raising inflation or in long-term solutions to our problems? We must forget the idea that, when things go wrong, the state has to come to save us. Lithuania is no longer a country of cheap resources and labour – we need to create high added value and compete even as the cost base continues to increase,” says Mantas Mikuckas, 

Chairman of the Board at Unicorns Lithuania. According to the entrepreneur and investor, rescuing large, profitable businesses is a disservice that only makes them less competitive and further drives up public debt. The state can, however, extend a helping hand by encouraging green transition. 

“Every crisis brings possibilities. The present one offers an opportunity to focus on transitioning to cheap renewable energy – sufficient for ourselves and for selling to our neighbours. That’s what the dialogue with the Government should look like – how do we achieve this before others do? On this matter, companies must demand state responsibility because it requires infrastructure. Businesses can build solar and wind farms on their own, but what happens if the grid can’t handle the extra load? There’s a limit in place even now, which is absurd. Why aren’t we doing this? How can we outcompete our neighbours? Businesses can only solve the energy crisis together with the Government,” adds Mantas Mikuckas.


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