In the Baltic country of Lithuania, the startup sector has big ambitions – but achieving them may not be so easy.
A construction site south of the country’s capital Vilnius will be key to the plan.
On a recent Thursday morning, dozens of employees were bustling about there. A truck was mixing cement with a humming noise, while a dredger was leveling a small patch of soil.
The region is expected to become Europe’s largest startup hub by the end of 2028. The so-called Tech City will host 5,000 workers on approximately 55,000 square meters (65,7779 square yards). It will have cafes, restaurants, a fitness center and flats.
Darius Zackitis, one of Tech Ziti’s founders, says the 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 told DW while walking across a floor of a building that used to be a sewing factory.
“Plus, Young entrepreneurs will be surrounded by equally creative people all day long. “That’s how they come up with new ideas – and the magic begins,” he said.
The entrepreneur and his business partners are investing €100 million ($117 million) in the startup hub. Since Lithuania has neither natural resources nor a large population, “we needed to be very good at something,” he explains.
“I think startups are a good option, because we know how to work hard and many of us speak good English. In 2030, we can achieve 25% of our GDP through the startup sector. And yes, that is very ambitious – this share is now five percent,” Zaikaitis said.
Startup sector following the footsteps of fintech
Lithuania’s startup community is hoping to follow the lead of the country’s fintech sector, which is using technology to provide financial services and goods.
According to Lithuania’s central bank, which also regulates domestic financial markets, the country has issued the most fintech licenses in the EU.
Marius Jurgilas, a former member of the board of the central bank, says that it all started in 2015 with the visit of the Lithuanian Finance Ministry delegation to London and the speech of the then British Prime Minister David Cameron.
“They announced that the UK had an ambition to become the fintech hub of the world. We looked at each other and thought – what do they have that we don’t?” Jurgilas told DW.
Subsequently, Jurgilas and his team prepared a National Fintech Strategy, which was later adopted by the Cabinet.
“We created a financial gateway to connect non-banks directly to the Central Bank. And we established a special banking license with a minimum capital requirement of €1 million instead of €5 million at the beginning of the institution,” he explained.
Jurgilas has now founded his own fintech, called Axiology, which aims to create a European capital markets union.
Rontgen, a Vilnius-based crowdfunding platform for real estate investments, was one of the first fintechs to jump on that bandwagon in 2017. Founder Martinas Stankevicius believes the country’s selling points are a clear outline and its small size.
“Here, we have direct access to the Bank of Lithuania [central bank] And the ministry,” he told DW, which allows for a “very fast innovation process.”
“When your new business model encounters unprecedented problems – which is inevitable – it is easier to approach the regulator and agree on a path that is acceptable to the regulator and will not stop the innovation process on our side,” Stankevicius said, adding that his fintech Röntgen now has 17 employees and an annual turnover of €2 million.
Lessons from the Wirecard scam
By the end of 2024, Lithuania had issued 282 fintech licenses. But the initial enthusiasm has now given way to a more prudent approach.
Lithuania now assesses new applications more thoroughly, says Lukas Jakubonis, chief business development officer at the Bank of Lithuania, the country’s central bank.
“The major wake up call scam was [German] Financial services provider Wirecard. “We suddenly understood that each of these licenses adds a little extra risk to the jurisdiction,” he told DW.
German financial services provider Wirecard went bankrupt in 2020 after a series of corrupt business practices and fraudulent reporting were revealed.
Jakubonis said that the scandal was reason enough for Lithuanian authorities to be “extra strict” regarding violations of rules to prevent money laundering.
André Dargaite still opened his startup, BeMyBond, another crowdfunding platform, last year, even though he had to wait nine months for his license – instead of the six months he had to wait in the early days of the sector.
Speaking to DW, he said that starting a business from scratch requires “a lot of advice,” which is why it’s “very useful” to get it from other Lithuanian companies that have already “gone through similar experiences.”
Agne Selemonite echoed Dargitte’s view, saying that the small size of the capital Vilnius also allows for a good work-life balance.
Selmonite is a member of the board of fintech Payhawk, a Bulgaria-based platform for expense management that also has a license in Lithuania. After working in the UK, Sweden and China for 15 years, she returned to her country.
“It also makes sense to set up here because there is still a huge talent pool here that fintechs can take advantage of,” he told DW.
More development is needed in Lithuania
But scaling is an issue, even in Lithuania. The Baltic state has only three so-called unicorns, which are startups worth more than $1 billion (€850 million).
Martinas Gruodis, a policy analyst at the Vilnius-based Lithuanian Free Market Institute, says access to private and institutional capital is actually a problem for startups, especially in the early stages.
The economist noted that the 2025 tax reform, which raised corporate and individual income taxes, has further limited startups’ “ability to reinvest.”
“The government should also invest more in specialized training, as additional qualified personnel will be needed – especially in the defense sector, which has huge potential for startups,” Gruodis told DW.
One of Lithuania’s most prominent startup success stories is Vinted, an online platform for second-hand clothing. Founded by two Lithuanians in 2008, it became the country’s first unicorn in 2019.
Last year, Vinted achieved revenues of €813 million and now has over 2,000 employees and multiple offices across Europe.
Vinted Vice President of Payments, Modestas Tursa, believes that Lithuania still offers exceptional conditions for innovative companies.
Speaking to DW, he said Lithuania was “in many ways a completely new country” after gaining independence from the Soviet Union in 1990 and beginning “the transition to a market economy.”
Tursa said, “So we had to create companies from scratch, unlike some of the older, established market economies. That’s why there is an appetite for creation and innovation, and a remarkable ability to adopt new technologies.” He proudly said that his company is currently in the process of setting up its own internal payment system called Vinted Pay.
Edited by: Uwe Hessler