Those who are left behind the scenes: A little-known industry creating Lithuania's breakthrough

A little-known industry creating Lithuania's breakthrough

The courage to take risks, quick adaptability and unexpected opportunities - these elements unite both the plot of the legendary film "Risky Business" and the activities of Lithuanian venture capital funds. Like the character of Tom Cruise, Lithuanian funds are not only risk-takers but also improvisers, discovering new paths and changing the rules of the game - all of which lead to true success.

Driven by the investment it receives from foundations, Lithuania's start-up ecosystem has undergone a remarkable transformation over the last decade, from a small market to one of the most dynamic innovation hubs in Central and Eastern Europe. Today, according to the latest Dealroom report, it is worth €16 billion and its growth rate is ahead of the regional average. This breakthrough has been boosted by venture capital investment, which has allowed the boldest ideas to become global businesses. While in Silicon Valley, giants such as Sequoia Capital and Andreessen Horowitz have built their own success stories, in Lithuania, this role has been played by the Lithuanian Venture Capital and Private Equity Association's funds, which have become one of the most important architects of the local ecosystem for over a decade.

A decade of growth: from a small market to a €16 billion ecosystem

In just ten years, Lithuania has grown from a small tech hub to the fastest-growing startup ecosystem in Central and Eastern Europe, recording a 39-fold increase in the value of startups. Today, Lithuania's startup ecosystem is worth an impressive €16 billion, proving its resilience and its ability to attract top-class investors.

Despite the economic uncertainty in global markets, Lithuania's startup ecosystem has remained stable, adaptable and profitable for venture capital investors. With significant foreign investment and one of the highest per capita enterprise value ratios in the CEE region, Lithuania is consolidating its status as a regional leader in technology and innovation.

The impact of venture capital funds on the Lithuanian economy and innovation ecosystem

The successful development of venture capital and private equity funds has been significantly facilitated by the state-established agency, the National Development Bank ILTE. Acting directly or in cooperation with other financial market players, ILTE promotes the sustainable development of the country's economy, increases the resilience of the economy and improves access to finance. One of its first actions was to promote the emergence of venture capital funds, which have contributed significantly to the growth of Lithuania's investment ecosystem.

According to the latest data from the Lithuanian Venture Capital and Private Equity Association, a survey of funds established at that time with the support of ILTE's co-financed DFI programme shows that today they are making a significant contribution to the development of Lithuanian business:

The economic value of these funds in Lithuania is reflected in the significant growth and impact of the investments on the country's businesses. For example, since the start of the investments, the 52 Lithuanian companies that have received support from the Funds have seen their annual revenues increase by a factor of 4.4, reaching €265.7 million in 2024. In addition, the number of employees in these companies has increased by a factor of around 3.3, reaching 1,798 employees in 2024. The Funds' investments have also boosted foreign capital inflows to Lithuania, which have increased 5.4 times to €332 million. This growth not only shows the direct economic impact, but also demonstrates how the Funds are contributing to strengthening the country's economy and creating jobs. Similar funds also generate significant fiscal benefits, as these companies paid €49 million in taxes in 2024.

These achievements not only strengthen the Lithuanian economy but also contribute to the development of the innovation ecosystem. Venture capital investments allow talented entrepreneurs to implement ambitious ideas and create new products and services that transform the market. In addition, growing technology companies help Lithuania to position itself in the international arena, attracting not only financial resources, but also top-level professionals from around the world.

"The activities of these foundations are a cornerstone not only for the country's innovation development, but also for talent development and Lithuania's global recognition as a strong technology country. We see that attracting investment and successful start-ups are becoming an increasingly important driver of our country's economy, which in turn strengthens the entire business environment. The more success stories, the more talent interest, the more foreign investment and even better opportunities for future businesses. Startups are where the latest technologies are introduced, where wages are rising fastest, and where venture capital is becoming one of the main sources of economic wealth and drivers of innovation. This is particularly true not only for traditional sectors, but also for areas such as defence, where financing and deploying innovation is becoming an increasingly important strategic priority," says Greta Mieliauskaitė, Managing Director of the Association.

Investment Trends: Lithuania's Early-Stage Boom

One of the main drivers of the rapid growth has been early-stage venture capital investments. In 2024 alone, Lithuanian start-ups raised €128 million, of which €108 million was in early-stage venture capital funding - one of the strongest performances ever.

While late-stage investments have been declining, mirroring global trends, strong early-stage and Series A funding rounds indicate a strong outlook for future unicorn startups. Several new venture capital funds are expected to enter the Lithuanian market in 2025, further accelerating this development and paving the way for larger exits, IPOs and secondary funding rounds.

Highlights of investments in 2024 (according to the Dealroom report):

• €20 million in Series B funding for Ovoko, an e-commerce start-up that boosts the economy of recycling used car parts.
• €13.6 million Series C funding for Argyle, a fintech innovator offering real-time revenue and employment data solutions.
• A €13 million early-stage investment for Cube3, a cybersecurity start-up specialising in real-time cryptocurrency fraud prevention.

These funding rounds underline Lithuania's strength in financial technology, cybersecurity, e-marketplaces and artificial intelligence - sectors that continue to attract international investors.