The Baltic nations of Estonia, Lithuania and Latvia were some of the hardest hit during the global financial crisis. The region suffered from both economic and political crises that shattered their once booming economy. Faced with few prospects and high rates of unemployment, the Baltic people have taken matters into their own hands and have created one of the most active areas in Europe for startups and entrepreneurs.
The Global Entrepreneurship Monitor (GEM) is a not-for-profit academic research consortium that produces an annual evaluation of entrepreneurial activity across the world. Their latest report found that the countries of Lithuania, Estonia and Latvia topped the first three positions for the highest TEA (Total Early Stage Entrepreneurial Activity) throughout Europe.
During 2005-2007 when the economy was relatively healthy, people were much less inclined to leave well-paid jobs and enter into the often-uncertain world of entrepreneurship. With a self-reliance born out of necessity, the Baltic States have become home to a small, but exciting community of ambitious entrepreneurs and startups.
% of adult population with entrepreneurial intentions : GEM Report
Estonia is well known for its payment, security and finance technologies with notable successes from Fortumo and Transferwise. A new government agency called Work in Estonia – launched on 28 April by Enterprise Estonia – is an ambitious welcoming program designed to simplify the process of employing overseas technology experts.
Entrepreneurs in Estonia are also known to produce a disproportionate number of businesses that are internationally focused right from the very start. Largely thanks to the countries relatively small size, entrepreneurs with ambitious growth plans will often have to consider overseas markets early on.
While capital investment as a percentage of GDP is very high, the country is still a long way from Silicon Valley. However venture capitalists are starting to take notice and the Estonian Business Angels Network is just one of a number of groups aiming to grow the quantity and quality of local seed stage investments in the country
Other funding options include:
- Ajujhat is an entrepreneurship competition run by Brian Hunt. The winners receives a €50,000 prize, various mentoring options and media coverage for your new idea.
- ENTRUM is a youth entrepreneurship contest that covers the whole of Estonia and has inspired thousands of young people to start their own success story.
Latvia may not have as many startups as Estonia, but the small ecosystem is growing quicklyand the country has seen a few success stories, most notably Infogr.am that put the country on the world’s startup map.
Over the last 18 months the country has seen a number of positive changes in governmental support, largely drivenby the dedicated government entity -The Investment and Development Agency of Latvia. Set up to support small business and ensure the growth of aspiring projects, initiatives include several grants that cover up to 50% of startups related costs for IP protection
According to the Global Entrepreneurship Monitor, 61% of Latvians think that entrepreneurship is a good career choice, providing a high social status and earning respect among the local community.
Eager to help drive the country from the financial problems of the past, the media have also played their part with their positive portrayal of successful entrepreneurs with coverage for entrepreneurship in Latvia surpassing all other European countries.
When compared to the rest of Europe, Latvians are highly ambitious when it comes to business growth with 30% expecting to create 20 or more jobs over the next 5 years.
- 48% of the Latvian population believes that they have the necessary skills to start and run a new venture.
- 3% of the Latvian adult population is already involved in early-stage entrepreneurial activity. The highest share among the 28 European countries, ahead of Estonia (13.1%) and Lithuania (12.4%).
Lithuania is fourth in the world when it comes toInternet upload/download speeds and a natural home for IT and tech related businesses. For a small country with only 3 million inhabitants, Lithuania is punching well above its weight when it comes to startups.
- Lithuania as the 8th best country in education
- Ranked 11th in the world by for the “Ease of Doing Business”
- Vilnius is one of the top 10 smart cities in the world (CNN Report)
With the lowest corporate profit tax rate among its Eastern European neighbours, Lithuania is attracting startups from nearby Russia who are looking to relocate and capitalise on lower taxes, the low cost of living and the countries highly educated workforce (half of all Lithuanians have higher education and speak at least two languages).
Of course it would be difficult for entrepreneurs to develop businesses from scratch without any guidance. The startup accelerator StartupHighway has helpeda number of ambitious teams to achieve their goals by providing much needed resources and advice. The success of StartupHighwayhas seen its operations expand to the rest of the Baltic States where it has become the largest business accelerator in east and middle Europe.
Throughout the Baltics, hard economic times haveultimately made the population better businesspeople. Young, ambitious and confident in their own abilities, they have created their own opportunities proving that the startup culture isn’t solely reserved for the heavyweights of San Francisco, London and Berlin.
This post was written by Euro Start Entreprises. Helping businesses and ambitious entrepreneurs with company formation and incorporation in Latvia, Estonia, Lithuania, Europe and the US.