Euronews Business examines the factors that have helped make Lithuania one of the fastest growing startup and fintech hubs in Europe, with a range of future unicorns, known as Soonicorns.
ADVERTISEMENTLithuania, a small and dynamic country in the Baltics, is quickly becoming one of the leading fintech hubs in Europe and the world. Home to unicorns such as Vinted and Nord Security, the country offers a range of top-notch facilities to fintech companies, both local and foreign, looking to set up shop there.
With a population of 2.8 million, Lithuania is one of the smallest countries in Europe, especially compared to Western European powers such as Germany, the United Kingdom, France and Spain. .
However, it has quickly established itself as a company that punches well above its weight when it comes to developing and supporting startups, particularly those in fintech, compared to the rest of Europe.
Lithuania leads Baltics in startup growth, boosts fintech
Lithuanian startups grew the fastest in the Baltics last year, according to the Lithuanian Startup Ecosystem 2023 report.
Between 2018 and 2023, the overall value of startups in the country increased 7.1 times. In comparison, in the Baltics this figure was 2.7x for this period, while in Central and Eastern Europe (CEE) it was 3.6x.
Among Central and Eastern European countries, Lithuania also took second place in venture capital funding last year, raising around €292 million.
Gintarė Narakienė, former director of Startup Lithuania, said in the report: “In 2023, the Lithuanian startup ecosystem continued to grow steadily, establishing itself as one of the most promising and dynamic startup clusters in the region. »
Besides unicorns such as Vinted and Nord Security, the country also has a range of future unicorns, known as Soonicorns, such as Argyle, CityBee and PVcase. These generally have a valuation of between €200 million and €1 billion.
Some of its other fast-growing companies, valued at less than €200 million, include Affise, Whatagraph and BitDegree. Bootstrap companies such as Hostinger, Bored Panda, Omnisend, and Kilo Health have also seen impressive growth.
In the capital Vilnius alone, there were more than 170 fintech startups in 2023, with a combined value of around €1.8 billion. These startups also raised venture capital worth around €228 million in the 18 months to February 2024. Some notable fintech startups based in Vilnius were Amlyze, Kevin, TransferGo and HeavyFinance.
These fintech companies span industries such as financial management, payments, mortgages and lending, regulatory technology, cryptocurrency, wealth management, insurance, crowdfunding and much more.
Why is Lithuania attracting so many fintech companies?
There are several reasons why Lithuania is attracting a growing number of fintech companies, as outlined below:
Strong emphasis on employee well-being
One of the main reasons Lithuania attracts so many fintech companies is its high-quality talent, with a wide range of highly qualified and skilled employees.
Lithuania also prioritizes employee satisfaction and well-being, resulting in a healthy and balanced work environment that places a high value on work-life balance and mental health . As such, they are able to deliver better results, also leading to increased employee retention.
The above approach particularly resonates with young workers, who make up the majority of the workforce of fintech companies in Lithuania.
ADVERTISEMENTDuring a recent trip to the country, I met several fintech companies such as Hostinger, TransferGo, Revolut, ConnectPay and many others. What really stood out to me was the high level of employee satisfaction at each of these companies, as well as the passion and commitment of the staff to their work.
This emphasis on employee engagement was also evident in the office design, with bright colors, modern designs and open, collaborative layouts. Unsurprisingly, Lithuania also took the top spot for the happiest country in the world for people under 30, according to the World Happiness Report 2024.
Strong government support and initiatives
Lithuania offers a strong government support system for fintech companies setting up in the country, as well as several initiatives, through organizations such as Startup Lithuania, part of the Lithuanian Innovation Agency , Invest Lithuania, Go Vilnius and Vilnius Techfusion, among others.
This includes connecting different startup founders, organizing accelerator programs and workshops, as well as offering support programs, consultations and much more.
ADVERTISEMENTThese agencies also provide all the information that companies, relocating employees, founders, investors and visitors need to start a business or set up privately in Vilnius. This includes things like how and where to find an apartment or house, where to find good schools, tax and legal issues, relocation services and much more.
Agencies such as Vilnius Techfusion also connect different stakeholders from the fintech, life sciences, IT, lasers and game development sectors.
Ease of doing business
The International Tax Competitiveness Index (ITCI) 2024 places Lithuania in fifth position in terms of tax competitiveness. Additionally, the Business-Friendly City Perception Index, compiled by Emerging Europe, crowned Vilnius the most business-friendly city in Emerging Europe.
This was based on factors such as talent pool, quality of life, business climate, connectivity and infrastructure, branding, smart city development, economic potential and support from local authorities.
ADVERTISEMENTLithuania also ranks fourth in the European Union in terms of average internet speed, according to Invest Lithuania, and is very remote working friendly.
Vilnius is ranked eighth in the world for remote working, with 20 coworking spaces, according to Go Vilnius, while also being third in the world for online security.
All these factors have contributed to the ease of doing business in the country.