On Thursday, Lithuania will host the largest startup event in the Baltics – Startup Fair Adapt 2023. It will bring together a large number of startups and more than 250 investors from around the world. Among them are Julian von Eckartsberg, Managing Director for Europe of Burda Principal Investments, the fund that invested in two Lithuanian unicorns – Nord Security and Vinted, and Magnus Hambleton of byFounders, the fund that invested in the startup Watalook. Both of them share their insights into the Lithuanian startup ecosystem and its potential, and reveal why they keep coming back to Lithuania.

Aiming to strengthen ties

One of the key highlights of Startup Fair. Adapt 2023, organised by the Startup Lithuania of the Innovation Agency Lithuania is aimed at building links between investors and startups to facilitate in attracting the necessary investments for startups. According to Mr Hambleton, it is the sustainable relationship with Lithuanian startups that is the main reason why he is coming to our country from Sweden on 7 September: “We want to be present at this event, to show that we are constantly interested in the startup ecosystem in Lithuania and that we are going to continue investing in it. I believe that we will meet more than one startup founder worthy of attention.”

According to the latest Dealroom data, the Lithuanian startup ecosystem is one of the fastest growing in Central Europe, having grown almost 17-fold in value in five years, and is currently valued at EUR 9.5 billion. This, according to Mr Hambleton, makes Lithuania’s startup ecosystem very attractive to foreign investors – although young, it certainly has a very high potential.

“Lithuania is a small country, but it thinks globally. I have never met a Lithuanian founder who thinks that his or her home market is enough. There are a lot of talented and tech-savvy people here with good education. Lithuanians are also very ambitious, pragmatic and result-oriented, and their communication is clear, which is a very good trait in business,” says the investor.

Lack of funding

According to Mr Hambleton, the main challenges that Lithuanian startups face in order to grow and compete internationally are the lack of investment, retaining good professionals and the low cost of services and products.

“Entrepreneurs also need more funding to expand internationally. However, it can be difficult to get enough capital in Lithuania because the local investor ecosystem is not yet as developed as in larger countries. Also, while Lithuania’s higher education institutions produce excellent specialists every year, there are problems in trying to retain them, as they are often attracted by internationally recognised technology centres. Finally, Lithuanian companies tend to underprice their products or services,” Hambleton elaborates.

Development potential and management

It is no secret that finding funding for startups is often one of the most important, but also one of the most difficult, startup challenges. Julian von Eckartsberg, who will be visiting Lithuania from Germany, shares what criteria Burda Principal Investments takes into account before deciding whether a business is worth investing in: “First, we assess the development potential of the startup and whether it has the potential to become a leader in its category on the continent or in the world. We also try to assess the uniqueness of the business idea and its potential to stand out from the competition. Secondly, investors usually have a time horizon for their investments and aim for a successful exit within a few years, so we look for startups that can quickly reach their maximum potential and generate an efficient return on investment.”

According to Mr von Eckartsberg, great attention is also paid to the management team – their competence, their work ethic and their ability to implement the business plan.

“I think this is one of the main reasons why we chose to invest in Nord Security. Tomas and Eimantas are two experienced entrepreneurs who not only have a lot of knowledge and understanding of what investors want, but also share their experience with the whole startup community and help financially. I think this is really very unique – I have not seen any other country where members of the startup community are so well connected to each other,” emphasises Mr von Eckartsberg.

Rapid growth of the Lithuanian startup ecosystem

According to the 2023 Startup Genome ranking, the Lithuanian startup ecosystem has moved up 20 positions compared to last year. Mr von Eckartsberg says that there are several reasons for this rapid growth: first of all, the skilled workforce in technology and engineering, the close cooperation and knowledge sharing among the entire startup community, as well as the geographic advantage. Lithuania’s strategic location in the heart of Europe gives startups easy access to potential customers, partners and investors in other markets, such as Western Europe or the Nordic countries, giving them a competitive advantage.

When asked what advice he would give to entrepreneurs in the country looking to build a successful startup in today’s competitive market, the investor suggests adapting to the needs of consumers in different markets around the world: “If you can’t create a niche product that doesn’t have much competition yet, then you should try to look for ways to differentiate yourself from your existing competitors, and think globally – look for opportunities to expand internationally, adapting your solution to the needs of different countries. This will help to access larger markets, diversify the customer base and reduce the risks associated with operating in one location. Finally, it is important to build relationships with local start-up communities – to use their collective knowledge and support.”

At the Startup Fair. Adapt 2023, which will start this Thursday, special attention will be paid to meetings between startups and investors. There will be a dedicated space and a dedicated app. Investors will be able to indicate which sector and how much they would like to invest, while startups will be able to provide descriptions of their business and the amount of investment they are looking for. This will make it easier for investors and startups to discover each other, meet for a chat in the event’s chat room or online.

The event will also feature a Startup Pitch Battle, where 40 pre-qualified startups will present their ideas to an international panel of experts, potential investors and other audience members. They will compete for a prize pool of almost EUR 400,000 and tickets to various accelerator programmes.

Startup Fair has been organised since 2013 by Startup Lithuania, the startup ecosystem development unit of the Innovation Agency Lithuania. All relevant information about the event: https://www.startupfair.lt/