Lithuanian startup ecosystem has matured over 2019 – the number of companies is nearing 1,000, they have attracted more than €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 favourable [taxation] was adopted, and the concept of a startup was legitimised by law,” said Marius Skuodis, the Vice-Minister of Economy and Innovation, is quoted in a press release by Startup Lithuania.
There are currently 933 innovative businesses according to the state-run Startup Lithuania. Fintech makes up the largest share with 12.4 percent, followed by business management systems developers (6.5 percent), health and beauty industry startups (6.4 percent), and game developers (5.2 percent).
The head of Startup Lithuania, Roberta Rudokienė, 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 Rudokienė.
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 increased on average by 31 percent every year.
In 2015-18, the number of employees grew by 18 percent, and the average salary in startups in October 2019 was 2,200 euros before tax.
According to Enterprise Lithuania, in 2012-16, 46 percent of startups operated profitably, which dropped to 41 percent in 2017-18.
Meanwhile, the tax-share of startups in Lithuanian economy is growing.
“During the first three quarters of 2019 alone, 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 Norkūnas, the founder of unicorns.lt.
“In 2018, the start-up companies paid nearly 70 million euros in taxes, which represented 0.44 percent of the total [state] budget,” he added.