The post-pandemic economic slowdown is affecting Lithuania’s startup scene. Investors are not as profligate as before and some startups are starting to look for ways to cut costs.
The technology start-up KiloHealth recently announced that it was laying off more than 100 employees. According to Ilona Bernotaitė, the HR manager for the start-up, the turning point in the slowdown in revenue growth came two years ago.
“There was revenue growth in 2023, but it was definitely much slower and amounted to a few percent, not a few thousand as we had a few years ago,” Bernotaitė told LRT TV.
According to Inga Langaitė, head of the startup association Unicorns Lithuania, 2022 was a shock year that changed the behaviour of investors. Even though the situation has already started to normalise, investing in the sector remains more cautious.
“Sometimes there is a ‘reckoning’: too many people are hired, maybe not the right specialists for today, and then there is a correction. [...] The whole point is simply to cut costs, to optimise processes so that you can really grow,” she says.
According to the business daily Verslo Žinios, investment in start-ups around the world broke records in 2021, attracting nearly 500 billion euros, while last year’s tally was only a third of that.
Investors are also more cautious about Lithuanian start-ups because of the geopolitical situation. According to Unicorns Lithuania, the total sum of investments in Lithuania last year was 274 million euros, almost 7 percent down from 2022.
Vilius Tamkvaitis, senior economic and policy analyst at the Investors Forum, notes that the growth rate of start-ups is going down, and it will not be easy to attract new investors in the coming several years.
“We are seeing a retreat of the startup tide and declining investor interest in startups,” he says.
Rytis Laurinavičius, CEO of e-commerce marketing automation platform developer Omnisend, says startups are always a volatile sector but their value continues to grow.
“I think the main goal for Lithuanian start-ups is to continue to create high-value-added products and sell them globally. And to have as much of our GDP as possible come from these high-value-added products and services. I have absolutely no doubt that over the coming 10–20 years that proportion will grow steadily and become the dominant part of Lithuania’s GDP,” he enthuses.
According to Unicorns Lithuania, the number of start-ups in Lithuania is currently close to 1,000. Last year, they paid 372 million euros in taxes, which is 23 percent more than the year before.
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