According to Dealroom, although 2023 was still characterised by economic uncertainty and a tense geopolitical situation, the Lithuanian startup ecosystem with its three unicorns has remained on a steady growth curve and is one of the leading startup ecosystems in Central and Eastern Europe. Last year, Lithuanian startups raised solid investment, maintained the dynamics of their sectors and demonstrated adaptability to market needs.

Dealroom’s latest review shows that the value of the Lithuanian startup ecosystem has sprinted relative to other European regions, growing more than 7-fold from EUR 1.9 billion to EUR 13.7 billion between 2018 and 2023, and now accounts for a third (31 per cent) of the total value of the Baltic Region. In terms of venture capital investment raised in 2023, the Lithuanian startup ecosystem has moved up by as many as four positions.

“Lithuania is currently second in Central and Eastern Europe in terms of venture capital investment. We should all be proud of this considerable achievement. I would like to say to our startup community that the ministry supports their initiatives. We will continue to work together to foster an ecosystem where innovative businesses can thrive,” says Aušrinė Armonaitė, Minister of the Economy and Innovation.

Investors focus on green and AI technologies

According to Dealroom, in 2023, startups founded and established in Lithuania raised investment of EUR 292.3 million. This is around 30 per cent less than in 2022, when the startup ecosystem raised EUR 414.3 million, but above the pre-pandemic level. According to Dealroom analysts, venture capital investment in Europe has been declining by an average of 38 per cent.

In the record year of 2021, the investment coffers of the Lithuanian startup ecosystem were significantly adjusted by the impressive EUR 250 million deal of Vinted, while the 2022 result was influenced by the birth of two more unicorns, Nord Security and Baltic Classifieds Group.

“In terms of investment raised in 2023, the Lithuanian startup ecosystem showed its dynamics, with software, cybersecurity and energy technology developers being the main flag-bearers of last year. While the UK, Sweden and Germany were the top countries in terms of the total volume of venture capital investment in climate-friendly technologies last year, Iceland, Lithuania and Bulgaria recorded the fastest growth in venture capital for these technologies,” says Gintarė Narakienė, Head of the Startup Lithuania Division of the Innovation Agency.

This was largely due to the EUR 89 million investment raised last year by PVcase, Lithuania’s global solar design software developer and Lithuanian Startup of the Year. Nord Security and Cast AI also grew their investment portfolios, by attracting the investments of EUR 89 million and EUR 51.6 million respectively. Dealroom predicts that not only PVcase and Cast AI, but also Lithuanian startups such as Argyle, CityBee, TransferGo, Kevin., Venice Swap and ZenithChain may become unicorns in future.

“The success of the Lithuanian startup ecosystem is determined by several factors: stable, technologically advanced and demand-driven operations leading to international recognition, talent, and a collaborative entrepreneurial mindset supported by Lithuanian authorities, associations and the academic community. The ability to operate in the global market and raise investment from various foreign investors demonstrates the capability of the Lithuanian startup ecosystem to operate globally and to consolidate its position as a competitive leader in the European regions,” notes Ms Narakienė.

Startups from the capital city raise the biggest investment

Vilnius is the hub of the Lithuanian startup ecosystem, with 890 startups, including prominent Lithuanian Fintech, ICT and GameDev companies. Last year, the capital city raised EUR 281 million in investment and it is home to all three Lithuanian unicorns. In 2023 alone, the value of the capital city ecosystem has increased from EUR 2.5 billion in 2019 to EUR 12.4 billion in 2023. In terms of the ratio of the value of unicorns to the country’s gross domestic product (GDP), Lithuania is ranked first in the Global Innovation Index, on a par with the startup ecosystems of Estonia, Israel and the US.

“As the startup and tech ecosystem grows exponentially, so does the need for talent. The efforts of Vilnius to attract talent have been recognised as the best communication strategy for economic development. New talent attraction, the growing number of unicorns and active work with the Vilnius TechFusion ecosystem, which brings together ICT, Fintech, GameDev, life sciences and laser technology companies, encourages innovation and helps to shape the image of Vilnius as a tech city,” says Dovilė Aleksandravičienė, Head of Vilnius Business and Tourism Development Agency Go Vilnius.

According to her, the opening of the Cyber City technology space is high on the list of significant changes in the startup ecosystem of Vilnius and Lithuania in 2023. Tesonet, the business accelerator and founder of Cyber City, has already relocated startups such as Nord Security, Surfshark, Oxylabs, CyberCare, Hostinger, and others to the former Sparta factory site, now including co-working spaces, offices, shops, and leisure areas. Another important project in the ecosystem has also made significant progress – Tech Zity, which is transforming the old Vilnius Lelija sewing factory into an advanced technology space, is aiming to become the largest Tech Campus in the EU.

To further accelerate the growth of Lithuanian businesses in high-tech sectors such as laser technologies, ICT and life sciences, Lithuania has established InnoHub Lithuania in Silicon Valley. It will serve as a platform to connect Lithuanian technology leaders with US companies.

Recruiting more than 18 000 talents

According to Unicorns Lithuania, an association of Lithuanian startups, the startups that have been actively operating in the country employ over 18 000 talents today. Over 5 years, the number of talents employed by startups has grown more than 3 times (to 18 000) and the amount of taxes paid has increased more than 5 times (EUR 92.6 million in Q3 2023).

The Dealroom review was initiated by Startup Lithuania, a division of the Innovation Agency, Practica Capital, Triniti Jurex, and Go Vilnius. The full 2023 review is available here.