We started our weekly newsletter in 2020 getting inspired by startup entrepreneurs in Lithuania hitting the next level. Despite the pandemic, these guys and girls have continued to grow companies fast, closed 40+ investment deals, and proved to be most resilient among other industries.
This could be the next big thing - and look no further than Estonia to see how. As Andris Berzins says, "the term I’m increasingly using to describe this region is ‘the next Israel’. (we should start by competing with Israel at covid vaccination pace at least)
Not just defense, offense
If we apply some startup thinking into the government, we know that progress can be achieved by combining focus and intensity This is not easy to hear in the midst of a pandemic, when many industries need support. But - as we all know - crises are large opportunities.
We are not calling for any faith in technology. We find it pragmatic and rational from the public point of view:
- Fast. Technology startups in Lithuania grow at annual rate of 20-30% (in revenue, taxes paid, hiring)
- Local. Launched in Lithuania, they tend to deploy key functions here, which means more talent getting trained, more taxes paid locally - sources of endogenous growth
- R&D. As Lithuania struggles with private R&D investment, technology startups are particularly good at commercializing science and invest a lot into product development and experimentation (and could more if better linkages are created)
- Marketing. Startups make a major contribution to country recognition and global branding
- Long term and sustainable. The vast majority of startups already place themselves in growing or future industries, which in turn is investing in the transformation of the economy
We expect the new political leaders in Vilnius will have defense as a primary mode (save jobs, sustain incomes, and protect the vulnerable). But our technology scene needs another take — going full offense and leverage the emergent digital, sustainable economy. By now startups are our most productive firms, product-driven and born globally - we should be helping them convert this into jobs and revenue.
What to measure?
In many countries, the tech scene performance is mostly judged by capital raised, which in turn brings everyone's attention to the supply of finance. While this is a prerequisite for new startup formation, it is not sufficient and becomes less relevant when you have a viable ecosystem in place. In fact, money attracted is often a result of progress in other areas.
So what to look into, when shaping the next set of policies?
- If tech startups are the highest-leverage careers, is this what most ambitious talents choose to do?
- Does the top talent continue to be "recycled" - moving from operator to investor, one project to another?
- Is it easy to move from "failed" to "new"?
- Is it easy to recruit and attract foreign talent to Lithuania?
- Is the popularity of entrepreneurship growing? What share of university students dream of entrepreneurial career?
- Do financing instruments encourage forming new ventures, are there any gaps?
- Do universities and accelerators have systems and instruments to incentivize early business formation - both for students and scholars?
- Are new founders getting financially penalized by opportunity cost (not choosing a traditional career and going into an early-stage venture)?
- Is there plentiful of "smart" capital, deployed at an early stage together with advice by experienced former operators?
Policy and regulation
- Do the policy leaders prioritize growth and new technologies? Is there direction (in terms of themes, solutions) what this country or world needs in years to come?
- Do they enhance the visibility of the tech scene locally and globally?
- Are we getting serious about developing Baltic / Nordic and other linkages (talent, capital, regulation), instead of trying to replicate all locally?
- Are we using the crisis to double-down on R&D spending, as small advanced economies began in the 1990s? They started that in response to the fast-changing industrial landscape, and we're at the turning point, again.
Ambition has not been a scarce resource in Lithuania. The harder it gets, the more focused we can be. Let's build it up, in 2021, together.
Photo by Vadim Sadovski on Unsplash
Tech Philomaths deliver dedicated reporting on the tech scene in Lithuania. Weekly newsletter. We are building a better informed, more dense network, and want to get more talent into tech.