The Lithuanian startup ecosystem is now stronger than ever before, with more than a thousand innovative businesses operating globally, raising investment and attracting talent. But this success is not a given – to ensure continued growth of startups, understanding their needs and challenges is essential. Based on the survey data collected by Startup Lithuania, current trends become evident, highlighting key aspects crucial for Lithuania’s growth as a dynamic innovation hub.

Lithuanian startups are not just young businesses – they are fast-growing, innovative, solution-oriented and aiming for international expansion from day one. This is also reflected in the survey results – 67% of the startups surveyed are already operating abroad, and 45% plan to expand further this year. The US, the UK and Germany remain the priority markets for the startups surveyed, but the Asian region is also gaining more attention, with 9% of the startups surveyed already planning to enter this region.

However, expansion alone does not guarantee long-term success – it is about the value startups create and their technology base. This is why their investment in scientific research and experimental development (R&D) is so important. Half of the startups surveyed are engaged in R&D activities in Lithuania, and, according to the estimates of the Innovation Agency, 210 out of 1328 companies engaged in R&D could be startups in 2023. This shows that the startup ecosystem is producing technological innovations with a long-term economic impact and the potential to attract significant investment.

Barriers to growth

However, it can be difficult to grow without the right support. As many as 32.9% of the startups surveyed identified a lack of financial resources as a major barrier to business development. This is not surprising, since the geopolitical situation is influencing investor behaviour and venture capital funds are currently more cautious in their investments.

The second challenge is the lack of talent. 23.8% of the startups surveyed report that it is difficult for them to find the professionals they need. Without systematic measures, it will become increasingly difficult for startups to compete with other European countries where talent development is a strategic priority.

The third barrier is access to foreign markets. 18.2% of the startups surveyed identify this as a major barrier to growth. Global growth requires connections, experience and strategic support, and this is where government initiatives can have a significant impact.

How Lithuania can ensure the success of its startups

Lithuania has a strong innovation potential, but unlocking it requires a joint effort of the public and private sectors – it is essential to ensure that startups have the resources, connections and support they need to grow.

One of the more important ways how Lithuania can ensure the international success of its startups is by connecting the innovation ecosystem with the strongest global technology centres. For example, InnoHub Lithuania, a Lithuanian innovation hub in Silicon Valley, was established for that purpose as part of the Nordic Innovation House network. This partnership helps connect Lithuanian businesses with US investors, business partners and mentors, and enter one of the most competitive innovation ecosystems in the world.

When it comes to investment, the geopolitical situation and the caution of venture capital funds means that startups have to find new ways to raise capital. State-backed funds that share risks with private investors can facilitate this process, but funding alone is not enough – a higher visibility of the Lithuanian innovation ecosystem on the international stage is also important. Programmes such as the Startup Lithuania Accelerator powered by Plug and Play provide access to investor and mentoring networks, while a travel reimbursement programme allows startups to meet directly with potential investors, thus increasing their chances to raise capital.

The issue of talent is more complex and requires an integrated approach. Lithuania needs to develop a clear and coherent roadmap for talent development – starting with engaging young people in the technology and entrepreneurship ecosystem in schools, continuing with university-business cooperation, and creating attractive conditions for highly skilled professionals from abroad. These are not overnight solutions – they require long-term programmes.

It is important to realise that the success of Lithuanian startups is not solely their own responsibility – the states that have early perceived the significance of startups for economic transformation are now seeing tangible results. However, the opportunities that are created only bear fruit when businesses take advantage of them – today, 83% of the startups surveyed are aware of Startup Lithuania and almost half of them have already used its services, yet this figure could be even better. Startups that use the opportunities in a targeted way have a much better chance of success than those who try to go this path alone.

Karolina Urbonaitė is the Head of the “Startup Lithuania” at Innovation Agency Lithuania.