Lithuanian startup ecosystem has matured over 2019 – the number of companies is nearing 1,000, they have attracted more than EUR 166.5 million in investments, and Vinted is to become Lithuania’s first startup unicorn.
“Many positive changes occurred, including the establishment of two new accelerator funds, more favorable taxation was adopted, and the concept of a startup was legitimized by law,” said Marius Skuodis, the Vice-Minister of Economy and Innovation.
There are currently 933 innovative businesses according to the state-run Startup Lithuania. Fintech makes up the largest share with 12.4%, followed by business management systems developers (6.5%), health and beauty industry startups (6.4%), and game developers (5.2%).
The head of Startup Lithuania, Roberta Rudokiene, said that “compared to 2018, the total investment in Lithuanian startups decreased slightly in 2019 to 183 million euros”.
However, “53 Lithuanian startups attracted investments, and this is nearly 3 times more than in 2018,” according to Rudokiene.
Lithuania ranks fourth in investment among Eastern European countries, according to Startup Lithuania.
Based on analysis by “Dealroom.co”, foreign and local investors have already invested more than 503 million euros in Lithuanian startups since 2013.
Yet, even though the turnover is growing, profitability is declining.
Analysis of the startup ecosystem carried out by the state-run Enterprise Lithuania shows that over the last three years, the turnover of startups has increased on average by 31% every year.
In 2015-2018 the number of employees grew by 18%, and the average salary in startups in October was 2,200 euros before tax.
According to Enterprise Lithuania, in 2012-2016, 46% of startups operated profitably, which dropped to 41% in 2017-2018.
Meanwhile, the tax-share of startups in Lithuanian economy is growing.
“During the first three quarters of 2019, 597 startups with a legal status paid 63 million euros to the Lithuanian budget. This sector is growing much faster than our economy,” according to Eimantas Norkunas, the founder of unicorns.lt.
“In 2018 the start-up companies paid nearly 70 million euros in taxes, which represented 0.44% of the total state budget,” he added. (LRT/Business World Magazine)