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About the author of this op-ed
Gerda Sakalauskaitė started her career at Lithuania’s Ministry of Finance, representing her country in international institutions such as the IMF.
Following that, she worked as an innovation expert at Invest Lithuania, tasked with promoting Lithuania’s investment opportunities worldwide.
Gerda then became managing director of the Lithuanian Private Equity and Venture Capital Association (LT VCA), coordinating the industry’s cooperation and growth.
Stay down till you come up
In a sector known for its loudness, Lithuania stands out as a quiet exception. Between 2017 and 2022, Lithuania’s startup ecosystem multiplied its value by 17, weighing close to $10B as 2023 commenced. Momentum was fomented by a couple of early successes, including second-hand clothes marketplace Vinted, cyber-security startup Nord Security and solar-panel software maker PVCase. Yet, its media presence remained relatively reserved, until recently.
Lithuania’s ecosystem has historically experienced a lack of international visibility, overshadowed by its wildly successful Estonian neighbor. The Estonians led an ambitious and fruitful foreign attractiveness effort, branding themselves as the land of e-government and innovation. These efforts cemented Estonia’s reputation in the tech space, sparking a vibrant startup ecosystem that birthed companies such as Skype, Bolt and Wise.
For many reasons, including cultural traits, Lithuania took a more introspective approach to ecosystem development. Lithuanians aren’t big promoters of themselves but rather head-down workers. The Lithuanian economy consists of other strong, non-software sectors such as manufacturing and value-added industries such as biotechnology and lasers, making a full national pivot to tech less visible.
As the ecosystem matured and realized it needed foreign attention to achieve its ambitions, that introvert mentality slowly evolved. The ecosystem has now crafted a coherent, cohesive narrative it can export and launched initiatives required to do so. These initiatives are bearing fruit, the ecosystem being substantially more visible today than it was a couple of years ago.
In 2023, Lithuanian startups raised around $300M, down from a record $400M+ high in 2021. Lithuania’s efforts to kickstart and rapidly scale a startup ecosystem from scratch yields some lessons for other small, young countries. Remember: Lithuania houses under 3 million inhabitants, less than Madrid, and regained its independence just 33 years ago.
A political imperative
Early on, the Lithuanian government recognized that basing its economy solely on manufacturing would be strenuous. There was only so much it could physically produce and export. The one scalable export it had (along with lasers) was the digital, global products smart Lithuanians could create. This realization led to government investment in IT infrastructure, laying the foundations for a startup-ready pool of talent.