Latvian startup ecosystem: battle for the 400,000 EUR (LAT/ENG)

Being a rather compact bubble at the moment, Latvian startup ecosystem has a big ambition to grow and a matching capacity to do that. Since 2010, which marks the very origins of the ecosystem, our startups have raised a total of 615 million euro. More than half of that was raised in the last two (!) years alone.

See fresh data in Latvian Startup Report 2022.

The birth of the 1st unicorn (Printful), and a range of high-level investments we’ve recently witnessed (Printify, Lokalise, Aerones, Whimsical, Juro) as well as their economic contribution measured in job creation, tax payments, to name just two – all suggest we are on the right track of building an innovative economy. And this is the time when we need to accelerate our effort, instead of sitting back and relaxing. We need to get that snowball rolling.

This acceleration was exactly the rationale behind the Strategy for Startup Ecosystem Development 2022-2025, finalized and signed by the key government and startup ecosystem players, including Latvian Startup Association Startin.LV. The Strategy defined two main goals to achieve by 2025:

• \+ 300 million euro investments
• \+ 1,500 new jobs

Find the Strategy and the underlying Memorandum here. 

To achieve the said goals, a comprehensive list of activities was put together, and 1,200,000 euro were requested from the State Budget for 2023-2025, that being 400,000 euro per each year.

Let’s be clear: to propel Latvian startup ecosystem to new heights, we need much more than that. We need consistent programmatic investments into nurturing the right talent, giving startups proper tools to grow and scale up, helping them compete for foreign VCs’ attention, and so on and so forth. In an ideal world (hello to Estonia and Lithuania who seem to be living in there), all these activities combined would easily put us in a ballpark of at least 2-3 million euro annually.

But let’s get back to the real world: during the elaborations of the State Budget 2023 in the Parliament, the requested amount of 1,200,000 euro for three years was reduced to just 200,000 euro for 2023. While we immediately responded to this with a letter to the Parliament urging them not to do that (read about the letter here), a fair question is: 200,000 euro – is it a lot or is it a little? One familiar with the return-on-investment (ROI) concept might be best equipped to answer that:

• That’s 200,000 euro which are supposed to propel us to the mentioned 300 million euro investments and 1,500 new jobs;
• That’s 200,000 euro for an ecosystem which raised 247 million euro investments in 2021 and 92 million euro in 2022;
• That’s 200,000 euro for the ecosystem which in 2021 paid 44 million euro to the State Budget in form of taxes and other duties.

Another question we hear: what the money is needed for and who will receive it? The money request was placed by Latvian Startup Association (Startin.LV), TechHub Riga, TechChill, Latvian Venture Capital and Private Equity Association (LVCA), Latvian Business Angel Network (LatBAN), and the Science and Innovation Center of the Riga Technical University. Except for the last member, the other five are non-government non-profit organizations with a legal status of either “society” (in Latvian, “biedrība”) or “foundation” (in Latvian, “nodibinājums”).

400,000 euro in 2023 is requested to partially cover the following activities:

• 200,000 euro support to organize major startup events, to name just two: TechChill (international event bringing together a total of 2500 attendees, including 180 investors and 150 international speakers), Startup Day & Startup BBQ (local forum aimed to identify internal ecosystem problems, share updates and reflect on the success of local founders and their startups);
• 125,000 euro to educating Latvian startups about business management, scaling-up, brand-building, negotiations with investors, and other topics crucial for growing a successful global startup, as well as educating business angel investors about the nature of the startup investments;
• 30,000 euro to provide networking opportunities for startups with investors and corporate partners;
• 40,000 euro to sustain the Latvian startup database, which includes technical maintenance, data gathering and data analysis;
• 30,000 euro to represent Latvia at international startup conferences and side-events, whereas there is a chance to promote the image of our country and attract attention of investors and media;
• 90,000 euro to cover the management and administration costs associated with the above points.

Once again, the requested 400,000 euro is less than what the Latvian startup ecosystem needs in order to grow in an optimal and desired way. And we stand by every requested euro, seeing it as an investment into the startup ecosystem which will pay off generously. Ready to deliver – as we always do.