The population of Latvia is a tiny 1.8m, but that hasn’t stopped the Baltic country from producing its first unicorn — printing startup Printful — or being named the most startup friendly country in the world.
Successful Baltic neighbours, open startup laws and eager tech talent have all contributed to the momentum of the Latvian startup space. Will it continue?
Nikita Kazakevics, innovation and technology department director at the Investment and Development Agency of Latvia (LIAA), says yes. “We will become an even hotter place for startups to relocate and to be born here locally,” he says.
We will become an even hotter place for startups to relocate
Is he right? What’s luring in international investments and are there any roadblocks stopping a plentiful future? This is the founder’s guide to Latvia.
Latvia’s startup friendliness is largely thanks to its attractive stock option policies, which allow startup employees the right to purchase their company’s stock at a certain price.
As well as the stock options legislation, Latvia offers a startup visa to all non-EU citizens — a temporary residence permit for up to five founders, enabling them to set up shop in Latvia. There are also three “exploration funds” specialising in hardware, software and deeptech.
“You just have to fill the application defining the product, the vision for the future,” says Kazakevics. “Obviously it’s attracting talent, specifically attracting startups from all around the world to relocate to Latvia to come and become members of our communities and incorporate in Latvia and use all the benefits that we can provide.”
The Baltics in a lot of ways are considered the next Israel; it’s a small population but we have people that are technologically advanced
Andris Berzins, managing partner at Change Ventures, the first pan-Baltic seed fund that invests across all three Baltic states, says one of the biggest changes he’s seen over the past three years is “the frequency of interest from big western European and US investors looking for investment opportunities in Latvia”.
3x a week
We tell you what's happening across startup Europe — and why it matters.
Rolands Mesters, chief executive of Latvian fintech Nordigen, says some of the tech community liken the Baltics to Israel, that was named “startup nation” due to founding the most tech companies per capita.
“The Baltics in a lot of ways are considered the next Israel; it’s a small population but we have people that are technologically advanced,” he says. “This is why we have seen a sharp increase in the number of venture funds created in the region and the number of foreign investors that are paying attention to this region.”
More unicorns trotting into the stable
While Latvia has crowned just one unicorn so far, Kazakevics reckons there’s the potential for many more. Soonicorns include translation software startup Lokalise and Printful competitor Printify.
“We have one unicorn named Printful. That’s the only one we have, but we’re looking for many, many more in the future,” says Kazakevics. “I believe one of those could be Lokalise.”
But a lack of large-scale success stories does mean Latvia hasn’t seen a new generation of angel investors and founders… yet.
Now is probably the best time ever for anyone who wants to be part of this success story
“The pool of angels who are experienced and have capital to redeploy is not yet as big as, say, Estonia,” says Berzins. “There’s much that you can do to speed it up. It’s just a matter of people, entrepreneurs, building big companies and scaling them and then reinvesting in the ecosystem.”
Mesters also says this makes Latvia “hungrier than anyone” to hunt down the next tech unicorns.
“Now is probably the best time ever for anyone who wants to be part of this success story,” he says. “In countries like the UK, I’ve got no idea how many unicorns there have been, but being part of a unicorn is no longer special, but in Latvia, you’re literally part of history.”
Fintech is hot, but spacetech, cleantech and robotics are simmering
There are over 160 fintechs headquartered in Latvia, according to Dealroom data. And Mesters says it's the tight-knit community in the capital, Riga, that’s helped the sector boom.
“In half an hour’s time, you can find someone who can tell you how payments work, how loans work, how credit scoring works, how interest rates work and there’s people who have worked on massive pan-European projects,” he says. “They’re literally across the street from you.”
Kazakevics agrees, but says spacetech is also an area to watch since Latvia joined the European Space Agency in 2020.
“What we’re focusing on right now is the development of spacetech,” he says. “We have an extra impulse and motive to attract finance, investments and talent to build the next generation of spacetech products.”
There’s also a plan to boost the number of startups focusing on the climate, due to a plan to clean up the Baltic Sea.
“The Baltic Sea is one of the dirtiest, if not the dirtiest, in the world unfortunately,” says Kazakevics. “That is why we have made it a national mission to solve this problem.”
What we’re focusing on right now is the development of spacetech
Meanwhile, Berzins notes robotics is another area to watch, and that Change Ventures has made “two significant investments” into the sector.
“There’s a very strong robotics industry and part of the origins of that strength comes from a student robotics club at the technical university in Riga,” he says. “Their claim to fame is that they built these sumo robots that would compete with other robots and try to push them out of these squares and they beat the Japanese [team] on a regular basis.”
Relocation, relocation, relocation
If your startup is looking to relocate to Latvia, Kazakevics says the first port of call is to contact Startup Latvia.
He says: “The best practical advice that is related to relocation is getting in contact with us… Every startup has their own needs, their own questions, so get in touch.”
Berzins adds that the smooth digital infrastructure in Latvia makes relocating a business to Latvia a breeze.
The best practical advice that is related to relocation is getting in contact with us
“Everything is digital, easy, online and so that just makes building businesses faster and easier,” he says. “The less of that bureaucratic burden there is, the more time they have to build product, find customers, hire the best employees, which are the things that actually move the business forward.”
Learn More about Startup Latvia by following them on Twitter and Instagram, and subscribe to the newsletter here — and start your journey to Latvia here.