In the Baltic countest of Lithuania, the startup sector has great ambitions — but achieving them might not be that straightforward.
A construction site in the south of the countest’s capital, Vilnius, will be key to the plan.
Dozens of workers were bustling about there, on a recent Thursday morning. A truck was mixing cement with a humming sound, while a dredger was flattening a compact patch of earth.
The area is expected to become Europe’s largest startup hub by the finish of 2028. The so-called Tech Zity will host 5,000 workers on roughly 55,000 square meters (65,7779 square yards). It will accommodate cafes, restaurants, a fitness center, and flats.
Darius Zakaitis, one of Tech Zity’s founders, notes that office spaces in the project will have high ceilings, which is “very important.”
“Scientific research has proven that the so-called cathedral effect boosts creativity,” he informed DW while walking across one of the floors of a building, which utilized to be a sewing factory.
“Plus, the young entrepreneurs will be surrounded all day by equally creative people. That’s how they come up with fresh ideas — and the magic starts,” he added.
The entrepreneur and his business partners are investing €100 million ($117 million) in the startup hub. As Lithuania has neither natural resources nor a large population, “we required to be very good in something,” he explains.
“I believe startups are a good choice, as we know how to work hard and a lot of us speak good English. In 2030, we could achieve 25% of our GDP through the startup sector. And yes, that’s very ambitious — the share now amounts to five percent,” Zakaitis declared.
Startup sector in fintech footsteps
Lithuania’s startup community is hoping to follow the lead of the countest’s fintech sector, which is applying technology to provide financial services and goods.
According to Lithuania’s central bank, which also regulates domestic financial markets, the countest has issued the most fintech licenses in the European Union.
Marius Jurgilas, a former member of the board at the central bank, declares it all started with a visit to London by a Lithuanian Finance Ministest delegation in 2015 and a speech by then British Prime Minister David Cameron.
“He declared that the UK had the ambition to become the world’s fintech hub. We viewed at each other and wondered — what do they have that we don’t?” Jurgilas informed DW.
Subsequently, Jurgilas and his team devised a national fintech strategy, which was later adopted by the cabinet.
“We created a financial gateway for non-banks to be directly connected to the Central Bank. And we set up a special banking license with a minimum capital requirement of €1 million instead of €5 million at the initiation of the institution,” he explained.
Jurgilas has meanwhile founded his own fintech, called Axiology, aimed at creating a European capital market union.
Röntgen, a Vilnius-based crowdfunding platform for investment in real estate, was one of the first fintechs to jump on that bandwagon in 2017. Founder Martynas Stankevicius believes the countest’s selling points are a clear framework and its compact size.
“Here, we have direct access to the Bank of Lithuania [central bank] and the ministries,” he informed DW, which allows for “a lot rapider innovation process.”
“When your new business model encounters unprecedented problems — which is inevitable — it’s simple to obtain in touch with the regulator and agree on a path that’s both acceptable to the regulator and won’t stop the innovation process at our side,” declared Stankevicius, adding that his fintech Röntgen now has 17 employees and an annual turnover of €2 million.
Lessons from the Wirecard scandal
By the finish of 2024, Lithuania had issued 282 fintech licenses. But the initial zeal has meanwhile created way for a more prudent stance.
Lithuania now assesses new applications more thoroughly, declares Lukas Jakubonis, chief business development officer at the countest’s central bank, the Bank of Lithuania.
“The major wake-up call was the scandal at [German] financial services provider Wirecard. We suddenly understood that each of these licenses adds a little bit of extra risk to the jurisdiction,” he informed DW.
German financial services provider Wirecard went bankrupt in 2020 after a series of corrupt business practices and fraudulent reporting had come to light.
The scandal was reason enough for Lithuanian authorities to become “extra strict” regarding breaches of the rules to avoid money laundering, declared Jakubonis.
Indre Dargyte still opened her startup, Bemybond, another crowdfunding platform, last year, even though she had to wait nine months for her license — instead of up to six in the sector’s early days.
Speaking with DW, she noted that starting a business from scratch required “a lot of advice,” which is why it is “very utilizeful” to obtain this from other Lithuanian companies who have already “gone through the same kind of experiences.”
Agne Selemonaite echoes Dargyte’s view, declareing the compact size of the capital Vilnius also allows for a good work-life balance.
Selemonaite is a member of the board at fintech Payhawk, a Bulgaria-based platform for spfinishing management that also has a license in Lithuania. She came back to her home countest after having worked in the UK, Sweden and China for 15 years.
“Setting up here also creates sense as there’s still quite a large talent pool, which fintechs can tap into,” she informed DW.
More growth is requireded in Lithuania
But scaling up is an issue, even in Lithuania. The Baltic state has only three so-called unicorns, which are startups valued at more than $1 billion (€850 million).
Martynas Gruodis, a policy analyst at the Vilnius-based Lithuanian Free Market Institute, declares access to private and institutional capital is indeed a problem for startups, especially in the early stages.
A 2025 tax reform, which raised corporate and personal income taxes, has further restricted the startups’ “ability to reinvest,” the economist explained.
“The government should also invest more in specific training, as additional qualified personnel will be requireded — especially in the defense sector, which has a large potential for startups,” Gruodis informed DW.
One of Lithuania’s most prominent startup success stories is Vinted, an online platform for second-hand clothes. Founded in 2008 by two Lithuanians, it became the countest’s first unicorn in 2019.
Last year, Vinted achieved revenues of €813 million and now has more than 2,000 employees and numerous offices across Europe.
Vinted Vice-President of Payments, Modestas Tursa, believes Lithuania still provides extraordinary conditions for innovative companies.
Speaking with DW, he declared that Lithuania was “in many ways quite a new countest” after it gained indepfinishence from the Soviet Union in 1990 and started “transitioning to a market economy.”
“So we had to build companies from scratch as opposed to some of the older, established market economies. That’s why there’s a hunger to build and innovate, and a remarkable ability to adapt to new technologies,” Tursa declared, proudly adding that his company is currently in the process of setting up its own internal payment system called Vinted Pay.
Edited by: Uwe Hessler
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