Euronews Business looks at the factors that have contributed to Lithuania becoming one of the fastest-growing startup and fintech hubs in Europe, with a range of soon to be unicorns, known as soonicorns.
ADVERTISEMENTLithuania, a small but vibrant country in the Baltics, is quickly emerging as one of the top fintech hubs in Europe, as well as the world. Home to unicorns such as Vinted and Nord Security, the country offers a range of first-class facilities for fintech companies, both local and foreign, which want to set up base there.
With a population of 2.8 million people, Lithuania is one of the smaller countries in Europe, especially compared to Western European powers such as Germany, the UK, France and Spain.
However, it has quickly established itself as one which punches well above its weight, when it comes to growing and supporting startups, especially fintech ones, compared to the rest of Europe.
Lithuania leads Baltics in startup growth, boosting fintech
Lithuanian startups were the fastest-growing in the Baltics last year, according to the Lithuanian Startup Ecosystem 2023 report.
Between 2018 and 2023, the overall enterprise value of the country’s startups soared 7.1x. In comparison, in the Baltics, this figure was 2.7x for this period, whereas in Central and Eastern Europe (CEE), it was 3.6x.
Among Central and Eastern European countries, Lithuania also bagged the second spot for venture capital funding last year, raising about €292m in funding.
Gintarė Narakienė, the former head of Startup Lithuania, said in the report: “In 2023, Lithuania’s startup ecosystem continued to grow steadily, establishing itself as one of the most promising and dynamic startup hubs in the region.”
Apart from unicorns such as Vinted and Nord Security, the country also has a range of soon-to-be-unicorns, known as soonicorns, such as Argyle, CityBee and PVcase. These usually have a valuation of between €200m to €1bn.
Some of its other fast-growing companies, valued at less than €200m include Affise, Whatagraph and BitDegree. Bootstrapped 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 about €1.8bn. These startups also raised venture capital worth approximately €228m in the 18 months to February 2024. Some notable Vilnius-based fintech startups were Amlyze, Kevin, TransferGo and HeavyFinance.
These fintech companies range across industries such as financial management, payments, mortgages and lending, regulatory technology, cryptocurrency, wealth management, insurance, crowdfunding and more.
Why does Lithuania attract so many fintech companies?
There are several reasons why Lithuania has been attracting a rising number of fintech companies, as outlined below:
High emphasis on employee well-being
One of the main reasons Lithuania attracts so many fintech companies is because of its high quality talent, with a diverse range of highly qualified and skilled employees.
Lithuania also prioritises employee satisfaction and well-being, which has given rise to a healthy, well-rounded work environment which places great 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 resonates especially well with younger workers, who make up the bulk of fintech companies’ workforces in Lithuania.
ADVERTISEMENTOn a recent trip to the country, I met several fintech companies such as Hostinger, TransferGo, Revolut, ConnectPay and more. One thing which really stood out to me was the high level of employee satisfaction at each and every one of these companies, as well as how passionate and engaged staff were about their work.
This emphasis on employee engagement was also apparent in the design of offices, with bright colours, modern designs and open, collaborative layouts. Perhaps unsurprisingly, Lithuania also won the top spot for the happiest country in the world for people under 30, according to the 2024 World Happiness Report.
Strong government support and initiatives
Lithuania offers a strong government support system to fintech companies setting up in the country, as well as several initiatives, through organisations such as Startup Lithuania, part of Innovation Agency Lithuania, Invest Lithuania, Go Vilnius and Vilnius Techfusion, amongst several others.
This includes connecting different startup founders, holding acceleration programs and workshops, as well as offering support schemes, consultations and much more.
ADVERTISEMENTThese agencies also provide all the information businesses, relocating employees, founders, investors and visitors need to set up a company or move privately to Vilnius. This includes things like how and where to find an apartment or house, where to find good schools, tax and legal matters, relocation services and much more.
Agencies such as Vilnius Techfusion also connect different parties in the fintech, life sciences, information technology, lasers and game development sectors.
Ease of doing business
The 2024 International Tax Competitiveness Index (ITCI) puts Lithuania in fifth position for tax competitiveness. Not only that, but the Business-Friendly City Perception Index, by Emerging Europe, has 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, brand, smart city development, economic potential and local authority support.
ADVERTISEMENTLithuania also comes in fourth in the European Union for average internet speed rate, according to Invest Lithuania, and is highly remote-work friendly.
Vilnius is ranked eighth in the world for remote work, with 20 co-working spaces, according to Go Vilnius, while also being the third globally for online security.
These have all been factors contributing to the ease of doing business in the country.
