In 2022, a significant influx of over 20,000 Lithuanians chose to return to their homeland from overseas. These individuals, driven by the attractive quality of life and a burgeoning entrepreneurial landscape, are fueling a phenomenon investors refer to as a ‘reverse brain drain.’ A notable impact of this trend is the visible infusion of talent and creativity into Lithuania’s startup sector.
While exploring Lisbon, the term ‘a hidden gem’ was used to describe Lithuania’s startup ecosystem – a sentiment confirmed by a subsequent trip to Vilnius. Post-independence from the Soviet Union in 1990, Lithuania has been heavily investing in its native tech startups, propelling forward an inspiring national transformation.
Lithuania has become a breeding ground for success stories, with three renowned unicorns – Vinted, NordSecurity, and BCG – contributing to its status as the fastest-growing ecosystem in the Baltics and the Central and Eastern Europe (CEE) region. Its enterprise value skyrocketed to €13.7bn after a seven-fold growth from 2018 to 2023.
The capital, Vilnius, is a significant hub, accounting for 91% of the ecosystem’s total value, with startups there raising 96% of all funding (€281mn). This achievement has positioned Lithuania as the second-largest recipient of VC investment in the CEE after Estonia.
“Lithuania is a startup itself.”
Further cementing its tech prominence, Vilnius is on the verge of unveiling Europe’s largest tech campus later this year.
To understand the underpinnings of its exponential growth, discussions with various ecosystem stakeholders were essential.
- A Startup-Friendly Mentality: Karolis Žemaitis, Lithuania’s Vice Minister of Economy and Innovation, likens the country to a ‘startup’ compared to larger nations. With limited resources and population, Lithuania embodies a risk-taking, resourceful, and adaptive mindset. This attitude has fortified the resilience of its startup ecosystem, a trait vital since Soviet times and throughout its political and economic reinvention.
- Compact Size: Lithuania’s small size is an asset, promoting a well-connected community where collaboration thrives. The tight-knit fabric of the society allows swift business dealings and a global growth outlook from day one.
- Sector Diversity: The Lithuanian ecosystem is diverse, excelling in fintech, ICT, game development, laser technology, and biotech. Notable is the success of companies like NordSecurity, Nordcurrent, and Kilo Health, each exemplifying the can-do spirit that drives the ecosystem.
- Talent Attraction: While talent remains the biggest challenge, efforts are underway to expand the talent pool through reskilling initiatives, educational reforms, and attracting international talent with competitive salaries and high quality of life.
- Collaborative Mindset: A spirit of community and mutual support is at the core of Lithuania’s success. Startups invest in each other, and there’s a shared hunger for success that fuels the collective ambition to shape Lithuania’s future.
These insights reveal that Lithuania’s real strength lies in its people, who are eager to contribute to the nation’s ascent as a leading European startup hub.
