Vilnius — the self-titled ‘G spot of Europe’ — has been on a charm offensive for the last couple of years. It’s issued the most fintech licences in the EU, has earmarked €80m to bolster its already 70.5k strong ICT workforce and was voted the most business friendly city in CEE.
It’s also building out Tech Zity, a €100m, 55k square metre campus that will house 13k tech workers and will be the fifth of its kind for startups in the area. Standing in the old Soviet-era sewing factory this week after moderating at TechFusion, a startup event in the Lithuanian capital, it’s hard to imagine this place will be the biggest startup campus in Europe by 2028.
A number of the founders who’ll eventually flock to Tech Zity will be returnees — techies who’ve built credentials abroad and are coming home to roost. Founders and investors this week have told me they’re attracted to the promise of a work life balance and better economy, even if Lithuania is still waiting for a big Skype-like exit.
“We see a lot of good opportunities today, many second-time founders coming back and building things,” says Andra Bagdonaite, a partner at Firstpick, a Vilnius-based VC fund which invests first cheques in startups from the Baltics. “The ecosystem is just really flourishing, so it’s a good time to be here.”
While most money went into fintech in 2024, Lithuania’s proximity to the war in Ukraine has meant founders are also turning towards defence tech.
“The funding, everything, the environment changed dramatically last year,” says Ernestas Žvaigždinas, cofounder of Broswarm, a mine detection startup which raised almost $1m from Vilnius dual use VC ScaleWolf last year. “We are probably at the optimum time where we are able to develop this technology.”
Yet investment volume is still a sore spot. Lithuanian startups raised just €128m last year, a 73% drop from the country’s breakout year of 2021. This is mainly due to a lack of late-stage investments. Its neighbour Estonia — home to Europe’s most unicorns per capita — also blew this out of the water, with more than twice that amount raised in H1 alone.
“It’s not easy looking for investment,” says Vidmantas Šakalys, CEO of Vital3D, a Vilnius-based biotech aiming to 3D print human kidneys in the next two decades. “Deeptechs have to look for investors outside of Lithuania.”
That hasn’t stopped founders launching successful companies though — and they’ve historically filled the funding gap by building efficiently and going it alone.
“A lot of big startups like NordVPN, Kilo Health, they had to bootstrap, not because they wanted to but because there was no capital in the market,” says Bagdonaite. “The landscape is changing a little bit because we are starting to see these young entrepreneurs who were born in independent Lithuania, Gen Zs, they really have a different mindset and are so brave and so hungry.”
What do you think, readers? Is the Vilnius tech ecosystem a startup factory to watch? What stories from the Baltics should we be telling? Which sectors are you most excited by?
Read the orginal article: https://sifted.eu/articles/dispatch-from-vilnius/
