1
INTRODUCTION
Since we started, one of the key aims of the team at Tech.eu has been to track
all of the funding rounds and exits in Europe, providing the most
comprehensive and accurate records and analysis of the European technology
scene.
We do this by meticulously monitoring hundreds of sources, across multiple
languages and regions.
However, many Baltic rounds were off our radar. They hadn’t been reported on
by the press, even less by the English press. Much of the data came from
founders or investors. This highlights the need for Baltic states to have a more
comprehensive reporting system for deals, so that we can be sure to have
accurate data.
We want to thank organisations from each country’s ecosystem, such as the
Latvian Startup Association and Estonia’s Garage84, whose crowdsourced
spreadsheets helped us to complete our data set. Also, thanks to Infogr.am, a
Latvian startup we found while doing this analysis, which we used to create
many of our charts.
Some of the biggest scale-ups emerging from these countries have moved the
majority of their operations abroad, such as Skype, Latvia’s Bitfury, and
Lithuania’s YPlan, and have been excluded from the analysis. The removal of
these successful scale-ups certainly affected the total funding figures for each
country. We also excluded TransferWise’s huge $280 million round in Q4 2017,
because our analysis only includes data through Q3 2017.
This report focuses on the ecosystems and funding raised by the
Baltic states of Latvia, Lithuania, and Estonia, between 2014 – Q3
2017.
In this report we take an in-depth look at the funding in the Baltics over the
analysed period, highlight some of the most important investors and startups
from each country, and give background on the growing ecosystems of these
European countries, who are at the forefront of building some of the most
startup friendly governments and ecosystems in Europe despite their small
size. These countries have made great progress by investing in ICT
infrastructure and implementing laws that encourage entrepreneurship.
There were less than 10 exits per country in the analysed period, so instead of
doing an analysis, we highlighted a few of the major exits.
We’ve worked to make this report as comprehensive and valuable as possible.
Please refer to the end of this report for methodology and disclaimers. For any
questions or comments regarding the report we invite you to email
reports@tech.eu.
This report was written by:
• Mary Loritz, data analyst at Tech.eu
• Robin Wauters, founding editor of Tech.eu
2
INDEX
Introduction 2 Top rounds in Latvia by year 26-27 Interview with Kadi-Ingrid Lilles 50-51

Index 3 Top investors in Latvia 28 Interview with Ragnaar Sass 52-53

Key takeaways 4 Notable Latvian startups 29-30 Estonian funding analysis 54
Key trends 5 Notable Latvian exits 31 Average and median deal size in 55
Estonia
Baltic funding analysis 6 The Lithuanian startup ecosystem 32-34 Top industries in Estonia 56
Funding by quarter and year 7 Interview with Arvydas Bloyze 35-36 Top rounds by year 57-58
Funding in the Baltics and other European 8 Interview with Ilja Laurs 37-38 Top investors in Estonia 59
countries
Tech investment in the Baltics and Europe per 9-14 Lithuanian funding analysis 39 Notable Estonian startups 60-62
capita
Average and median round size in the Baltics 15 Average and median deal size in Lithuania 40 Notable Estonian exits 63-64

The Latvian startup ecosystem 19 Top industries in Lithuania 41 Conclusions 65

Interview with Jeckaterina Novicka 20 Top rounds in Lithuania by year 42-43 Methodology and disclaimers 66-67
Interview with Olga Barreto Goncalves 22 Top investors in Lithuania 44

Latvian funding analysis 23 Notable startups in Lithuania 45-46

Average and median deal size: Latvia 24 Notable exits in Lithuania 47
Top industries in Latvia 25 The Estonian startup ecosystem 48-49

3
THE BALTICS: KEY TAKEAWAYS, 2014 – Q3 2017

4
KEY TRENDS
Developing strong infrastructures to become startup havens
The Baltics – Latvia, Lithuania, and Estonia, are countries that have seen a
lot of success in the past 10 years. Each country’s government has made
efforts to invest in ICT infrastructure, fast internet, funding for
accelerators, IT education beginning in primary school, and laws to
encourage entrepreneurship. Each country now has its own Startup Visa
programme to attract foreigners to start their business in the Baltics.
No big VCs mean low funding rounds
The Baltics are so small – with populations ranging from 1.3 to 3 million
people – that they can’t support big VCs that would help startups to scale.
That means that most startups with funding from Baltic investors receive
early stage or seed funding from accelerators and angel investors, and the
majority of rounds in the Baltics are worth €200,000 or less. Larger rounds
are usually backed by foreign investors.
Scale-ups tend to move abroad
When startups do scale – raising €5 million or more, usually from a foreign
investor – they tend to move their headquarters abroad to cities like
London, San Francisco, and New York. However, this isn’t necessarily a bad
thing. According to Jeckaterina Novicka from the Latvian Startup
Association, scale-ups change headquarters so they can be near other
major companies as well as VCs to make new contacts and partnerships,
but many keep their back offices and the majority of their staff in their home
countries, and pay taxes in the Baltics. The founders are also able to contribute
back to the local ecosystem by sharing their experiences in other markets.
Low overall investment volume, high funding levels per capita
Though investment volume seems low in the Baltics compared to larger
European countries, when taking into account their small populations, they
have much higher investment volume per capita than their counterparts.
Estonia ranks above Germany, France, and the Netherlands in per capita
funding. Latvia ranks above Spain, and Lithuania ranks above Italy and Eastern
European countries.
The Skype effect
Estonia dominates the region in terms of total funding and number of deals.
The country has raised 3x that of Latvia or Lithuania, with €283 million in the
analysed period. This success can be attributed in part to Estonia’s early
adoption of e-Governance initiatives, which, among other things, allow
Estonians to start a business in just 15 minutes. But the success of Skype was
key in kickstarting the startup ecosystem, encouraging many to follow its path.
Many former employees and founders of Skype have gone on to launch other
startups (they even have their own organisation, “Skype Mafia”), and it has had
an effect on the other Baltic states in inspiring entrepreneurship and
investments in technology.
5
 BALTIC
FUNDING
ANALYSIS
Latvia, Lithuania, and Estonia
2014 – Q3 2017
6
 ANALYSIS
Funding in the Baltics by quarter and year, 2014 – Q3 2017

• For Europe as a whole, tech funding has been steadily increasing

since 2014 – tripling from Q1 2014 to Q3 2017. Yet the Baltic states
of Latvia, Lithuania, and Estonia show no such steady growth trends,
as quarters tend to fluctuate over the analysed period. In most
quarters, between €20 and €50 million has been raised. There is no
clear correlation between number of deals and amount raised,
suggesting that most rounds are small, with occasional exceptions.

• The average amount raised per quarter across all three Baltic states
is €32 million.

• Baltic states had an outstanding year in 2015, raising €189 million.

This was due to large rounds for TransferWise (€53 million), Vinted
(€25 million) and Adcash (€20 million). Over €100 million was raised
in 2014 and 2016, but only €64 million has been raised in so far in
2017. This excludes TransferWise’s $280 million round in Q4 2017. If
this round had been included, total funding for 2017 would be
brought to over €300 million, making it by far the best year in the
analysed period.

• The number of deals per year stayed steady throughout 2014-2016,

but dropped off in 2017, with only one quarter left to raise 60 rounds
and keep it on par with other years.

7
ANALYSIS
Total funding in different European countries, 2014 – Q3 2017
• Investment volume in Baltic nations is clearly
lower than the majority of its European
counterparts, with Baltic states collecting a
total of €465 million over the analysed
period, compared to €15 billion for the UK,
€10.2 billion for Germany, and €7.4 billion for
France.

• Estonia has the highest overall investment

volume of the Baltic states, raising €283
million in the analysed period, followed by
Latvia with €93 million, and Lithuania with
€89 million.

• Yet, is this a fair comparison? Does this

necessarily correspond to lower activity? The
UK is home to 65 million people, Germany 81
million, and France 67 million. Meanwhile,
Estonia is home to a only 1.3 million people,
Lithuania 3 million, and Latvia 2 million. • Deal sizes tend to be smaller in the • If we take into account the small
Baltics than more populous nations, as populations of Baltic nations, we can see
• Correspondingly, the Baltics also had fewer these countries are too small to attract that their investment activity actually
deals than their counterparts - Estonia with big VCs, and most deals are early stage or exceeds that of many other European
169, Latvia with 146, and Lithuania with just angel rounds. nations.
8
70.
ANALYSIS
Tech investment per capita in Europe and the Baltics, 2014 – Q3 2017

• When taking population into account and looking at tech investment

on a per capita basis, a much different picture appears. Sweden leads
with €480 in funding per capital in the analysed period, followed by
the wealthy nation of Switzerland with €345, and the UK with €230,
though it leads Europe in total investment volume.

• Estonia ranks very high, neck and neck with the UK, raising €217 per
capita, with more activity than wealthier counterparts such as
Finland, Germany, the Netherlands, Denmark, and France. If
TransferWise’s Q4 round were included, Estonia’s per capita would
rise to €399, above Switzerland and the UK.

• Latvia ranks above Spain, Russia, Italy, and Poland, with €50 per
capita, making it competitive with Belgium, which has raised €61 per
capita, and Austria, with €58 per capita. 0
0

• Lithuania’s per capita funding remains low compared to other

European and Baltic countries with €30 per capita, but is above Italy
and other Eastern European countries like Poland, Russia, and the
Czech Republic.

9
ANALYSIS
Tech investment per capita, 2014 – Q3 2017

Country Total funding, Population Funding per Country Total funding, Population Funding per
2014 – Q3 capita 2014 – Q3 capita
2017 2017

France €7.4 billion 67 million €110

Sweden €4.8 billion 10 million €480
Belgium €700 million 11.4 million €61
Switzerland €2.9 billion 8.4 million €345
Austria €500 million 8.7 million €57

United €15 billion 65 million €230 Latvia €93 million 2 million €50
Kingdom
Spain €2.1 billion 46 million €46
Estonia €283 million 1.3 million €217
Lithuania €89 million 3 million €30
Finland €1 billion 5.5 million €182
Italy 500 million 60.5 million €8

Germany €10.2 billion 81.5 million €125 Poland €300 million 38 million €8

Netherlands €2.1 billion 17 million €124 Russia €1.06 billion 144 million €7.4

Denmark €700 million 5.7 million €123 Czech €33 million 10.5 million €3
Republic

10
ANALYSIS
How do Baltic states compare to other countries of a similar size or in Eastern Europe?

• Poland raised the most funding overall,

with €293 million across 70 deals.

• Estonia had the second highest

investment volume, at €283 million,
followed by Turkey, Iceland and
Luxembourg.

• Latvia and Lithuania follow, each

raising around €90 million.

• While there is generally a correlation

between funding and number of deals,
Latvia diverges drastically, with a
higher number of deals compared to
funding, indicating smaller rounds.
• There are few countries with a smaller
population than Baltic nations - Iceland,
Luxembourg, and Malta.
• We can see that Eastern European countries
with higher populations (though perhaps
less GDP per capita) raise less capital,
including Croatia, Romania, Greece,
Hungary, Slovenia, and Bulgaria.

11
 ANALYSIS
Per capita funding: the Baltics compared to smaller and Eastern European countries

• The Baltics do not necessarily raise more per capita than

countries with smaller populations, but rank far above
other Eastern European countries for per capita tech
investment.

• Iceland, with a mere 334,000 people, has the highest per

capita funding for all of Europe, at €538 per person.

• Luxembourg, with a population of 583,000, comes in

second with €257 per capita, and Estonia comes in third,
with €217 per capita.

• Iceland and Luxembourg both raised comparatively large

amounts for such small countries. Both have high GDPs
per capita – Luxembourg with €87,000 and Iceland with
€41,000 – compared to Baltic countries with less than
€25,000 in GDP per capita.

• Malta, with a population of 437,000, ranks below

Lithuania, with €18 raised per capita. Slovenia, with 2
million people – the same as Latvia – raised only €9.5
per person compared to Latvia’s €50.

12
ANALYSIS
Tech investment per capita in small and Eastern European countries, 2014 – Q3 2017

Country Total funding, Population Funding per Country Total funding, Population Funding per
2014 – Q3 capita 2014 – Q3 capita
2017 2017

Slovenia €19 million 2 million €9.5

Iceland €180 million 334,000 €538
Poland €300 million 38 million €8
Luxembourg €150 million 583,000 €257 Czech Republic €33 million 10.5 million €3

Estonia €283 million 1.3 million €217 Greece €30 million 11 million €2.7

Latvia €93 million 2 million €50 Hungary €27 million 10 million €2.7

Romania €54 million 20 million €2.7

Lithuania €89 million 3 million €30

Turkey €180 million 79.5 million €2.2

Malta €8 million 437,000 €18

Croatia €54 million 4 million €13.5 Bulgaria €1.7 million 7 million €.24

13
 ANALYSIS
Tech investment per capita in Europe and the Baltics, 2014 – Q3 2017

• This map shows investment volume per capita in

each country during the analysed period, 2014 – Q3
2017.

• The countries with the most per capita funding are in

red – Iceland and Sweden. Next comes Switzerland in
mauve raising €345 per capita, the UK with €230, and
Estonia with €217 (which would be €399 if the
TransferWise deal from Q4 was included) with other
high ranking countries in purple.

• Countries raising €100 or less appear in blue, with

some Eastern European countries raising less than €1
per capita (Albania, Bulgaria, Belarus, and Slovakia).
Because these countries don’t tend to have strong
ecosystems, it is possible that they don’t have
websites or organisations systematically reporting
deals, and that many go unrecorded.

• We had little or no data for countries missing from

the map, including Ukraine, Bosnia, Moldova, and
Georgia.

14
ANALYSIS
Average and median round sizes in Europe vs. the Baltics
• The average round size in
Europe grew substantially in Q2
and Q3 2017, doubling the
average round size in previous
quarters. Average round size for
Europe as a whole across the
analysed period is €5.2 million.
• The average round size in the
Baltics varies greatly from
quarter to quarter, and is
uncorrelated with the median
round size, pointing to the
influence of a few large deals.
• Median round size in Europe shows a •
steady growth pattern, going from
€550,000 in Q1 2014 to a high of €1.6
million in Q2 2017, so overall deal
size is rising.
Median round size for the Baltics
shows no growth pattern, with
median deal size per quarter about
20% of the median deal size for
Europe as a whole. The majority of
rounds are worth less than
€200,000 in most quarters.
15
 ANALYSIS
Average and median round size in the Baltics by year

• Estonia’s average deal size hovers around €1 million,

while Latvia has a much smaller average deal size at
€500,000 in 2014, 2015, and 2016, though it soared to
€2.9 million in 2017 due to few rounds and the €21
million deal for Creamfinance.

• Estonia has a higher median round size than other Baltic

states, with an average median round size of €314,000.

• Lithuania has an average median round size of

€188,000, higher than Latvia. However Lithuania has far
fewer deals overall – only 70 in the analysed period,
versus 146 for Latvia.

16
A CLOSER LOOK AT COUNTRY-
SPECIFIC FUNDING AND EXIT
ACTIVITY

17
Latvia

18
The Latvian startup ecosystem
Latvia is the only country in the analysis
that shows a year over year growth
pattern in investment volume – though it
has still raised less overall than its
neighbors.
However, this can be understood as it has
a smaller population than Lithuania, and
doesn’t have the legacy of Skype or e-
Governance in Estonia, which
strengthened its ecosystem early on.
We’ve also taken Latvia’s most successful
startup, BitFury, out of the analysis,
because it moved the majority of its
operations to Poland. The startup raised
€81 million in the analysed period. Had the
startup kept their operations in Latvia, the
country’s total funding in the analysed
period would be €174 million instead of
€93 million.
The country is making progress, however.
The government, through its state
development financing institution, Altum,
launched Labs of Latvia, which tracks
startup news in English and Latvian.
Altum provides state funds for
acceleration (€15 million), seed and
growth stage startups (€60 million), and
for social entrepreneurship (€12 million).
The Latvian Startup Association has been
moving quickly, working with the
government to pass a new startup law
that reduces taxes on employees salaries
for startups in Latvia, and is being
amended to apply to more startups. The
startup law allows for a flat tax on
employee salaries, co-financing of highly
qualified labor, and waives personal and
corporate income tax.
19
 Interview with
Jekaterina Novicka
Chairwoman of the
Latvian Startup Association
Can you provide a brief background of the Latvian startup
ecosystem, and how it has changed in recent years?
The ecosystem has changed a lot in the past five to six years. Five years ago,
you might have heard the word startup in the media once a month, if that,
and now you hear the word startup every day. There has certainly been a
growth in the number of startups in Latvia, even if they haven’t received big
amount of funding yet.
The government has begun to acknowledge the importance of startups to
the economy, and provide more support. For example, the government
launched the portal Labs of Latvia three years ago, a website that provides
news and aggregates all the important information about the Latvian startup
ecosystem.
The Latvian Startup Association was formed in the beginning of 2016 to bring
together different players in the Latvian ecosystem including startup
founders and employees, coworking spaces, incubators, accelerators,
individual and corporate supporters, and investors. The association has been
working with the Latvian government to pass the new startup law and
Startup Visa.
We also became a member of Startup Nations and the European Startup
Network and have established a cooperation with international corporations
such as Accenture, as we want to increase recognition of Latvia as a tech-
oriented country.
Over the past few years we have seen more startup events, and host some of
the largest conferences in the Baltics, like the Digital Freedom Festival and
TechChill. We are seeing growing interest from corporations and banks, both
Latvian and international, who want to get involved in the ecosystem, by
coming to events, supporting them, or creating partnerships with some of our
startups.
Can you tell us about Latvia’s new startup law and how it has
affected the ecosystem?
We worked with the Latvian government to pass the new startup law in 2016.
The main advantage it provides to startups is a significant reduction in taxes for
employee salaries. Unfortunately, the law has not yet had the impact we would
like, because it currently only applies to startups that have received VC funding
- not startups backed by accelerators, business angels, or startups with no
funding. However we are working with the government to make changes to the
law by the end of this year to make it more inclusive, and these changes should
go into effect in the beginning of 2018. We hope these changes will make the
law accessible to many more startups, and attract people from other countries
to launch their startups in Latvia, or even for more mature startups to relocate
and maintain a back-office here. 20
Interview with Jekaterina Novicka cont’d
Why haven’t we seen a strong trend of increasing deals and
investment if the Latvian ecosystem is growing?
The number of startups has grown, but they haven’t necessarily received big
funding. There haven’t been many available funds the past couple of years,
because funding provided from the EU to invest in Latvian startups,
administered by government-backed funds Imprimatur Capital, ZGI Capital
and FlyCap, ran out in 2016 and Latvia has only few private VCs. So that has
affected investment in Latvian startups, as these were the most active funds
in the country.
However, Latvia expects to receive €60 million in EU funding next year, to be
distributed by different funds and 3 accelerators that are already in the
launch process. New private smart money VCs like Change Ventures or Buran
Venture Capital have also recently launched in Latvia. So we expect there to
be an influx of funding very soon.
Some of the more successful startups that are receiving large
rounds and scaling-up, such as BitFury, have moved their
headquarters to other countries. Why do these startups change
their headquarters once they start growing?
Well, this is something that affects all Baltic states, I think. Scale-ups
change headquarters when they grow because they want to be closer to
grow as well as have access to major VC funds. The clear trend we see
thatthose scale-ups still keep their back-offices in Latvia where majority of
staff is located and therefore there is an effect of contributing back to the
society by these people and sharing experience to the local startup
community. Also, our Ministry of Economics is happy as large amounts of the
taxes paid by these scaleups is still paid in Latvia.
Despite lower investment in Latvia than in other European
countries, because the country is so small it has more investment
in startups per capita than Spain, Italy, and other Eastern
European countries.
So, for such a small country, Latvia is doing quite well. What do
you think accounts for its success?
That’s a good point, we are a very small country. In Latvia I would say almost
all business people speak three languages, Latvian, English and Russian,
often even more. Latvia has a great airport that makes it accessible
internationally, the internet is the 10th fastest in the world, and startup costs
and the cost of living are low compared to other European countries.
And because Latvia is such a small market, from day one startups here realize
that they need to be designed to reach an international market. I also like to
think that our success is accelerated by the supportive and very active
startup community we have locally.
21
 Interview with Olga Barreto
Goncalves, Chief Startup
Instigator at Investment and
Development Agency of Latvia
How has Latvia's ecosystem changed in recent years?
There has been a big shift in mentality: in Soviet times, there was little
room for innovation, creativity and entrepreneurship. The economy was
planned, supply shaped demand, and young people were interested in
stable well-paid jobs.
Once the Soviet Union collapsed and the crazy chaotic 1990’s had passed, a
painful but necessary transition took place towards embracing innovation.
This has been an interesting journey and we are only at the beginning of it!
What do you think is important for others to know about the
Latvian ecosystem?
The ecosystem has been developing and growing rapidly. In the ecosystem
at the moment everyone is doing something by themselves, but we are
gradually moving towards more open and frequent communication. It is
clear that all sectors – public, private, academia need to work together.
Government support is unprecedently high, with a range of support
programmes are being offered to startups. The Latvian startup market is
far from saturation point: the money-to-startup ratio (money = startup
financing) is much higher than in other countries (e.g. in Silicon Valley it is
extremely low, a lot more startups compete for the same $1 than here in
Latvia).
This means that a lot of change needs to happen to the “startup” part of
that ratio – we need to increase the number of startups. This is one of the
dilemmas our government is trying to solve: how do we increase the
number of startups, while keeping the quality high?
To address this, the government has launched a series of interventions
which range from helping would-be entrepreneurs who do not even have
an idea yet but who would like to try something of their own, to solid
startups who already have a well defined product and would like to
conquer new markets – and everything in between. It is a good ecosystem
for launching and testing/piloting your product. We hope that foreigners
will also appreciate that and more and more startup founders will come
here.
If you have any questions for the LIAA, you can send them an email at
startup@liaa.gov.lv.
22
 ANALYSIS: LATVIA
Investment volume and number of deals by quarter and year

• For four-fifths of the quarters in the analysed period,

investment volume stayed below €10 million in Latvia,
and less than €5 million was raised in over half of the
quarters on record. Periodic high volume quarters
were due to one or two large deals in those quarters.

• Latvia had its best quarter in Q1 2017, due to a large

round for the fintech startup Creamfinance (€21
million).

• Q3 2015 was another high quarter, with a large round

for Eco Baltia (€10 million), a waste management and
recycling startup serving over 45,000 clients.

• Q3 2016 had the most rounds, 32, despite raising only

€8 million. All other quarters had 13 deals or less.

• Despite raising less than Estonia, Latvia is the only

Baltic state that shows a consistent upward trend in
investment volume year over year since 2014. Already
in 2017 Latvia’s investment volume has doubled since
2014, though only 11 deals have been recorded this
quarter versus 50 in 2016, pointing to the significant
effect of Creamfinance’s round.
23
 ANALYSIS: LATVIA
Average and median round size by quarter in the Baltics and Latvia, 2014 – Q3 2017
• The average round size in Latvia
was below €100 million in 11 out
of 15 quarters. Q4 2016 – Q3
2017 have seen an increase in
average deal size, there were
fewer deals in these quarter
than in most – between 3 and 6
– and some large rounds
including €7.7 million for Twino
in Q4 2016, €21 million for
Creamfinance in Q1 2017, and
€7 million for Atlas Dynamics in
Q3 2017.

• The average round size in Latvia

is around €500,000 in most
quarters, with a few recent
outliers, while for the Baltics, the
majority of quarters were above
€1 million.
• The median round size for the Baltics stayed
below €300,000 for all quarters, except for a Q1
2015, which saw a median of €433,000.
• While Latvia had medians of below €200,000 in
most quarters, there were outliers in which the
median deal size was €375,000, €500,000, or
€1.4 million. All things considered, median
round size in Latvia and the Baltics as a whole is
more or less comparable.
24
 ANALYSIS: LATVIA
Top industries, 2014 – Q3 2017

• Latvia’s top vertical was fintech,

raising €43 million across 18 deals
for Twino, Swipe, Mintos, Monea,
Funderful and Creamfinance.

• Robotics comes next, raising €12.5

million across 7 deals, for AirBoard,
AirDog, and Atlas Dynamics.

• Analytics startups such as

Zoomcharts, Snowison, Reach.ly,
Infogr.am and Clusterpoint raised a
total of €7.5 million across 17 deals
in the analysed period.

25
ANALYSIS: LATVIA Top rounds in Latvia, 2017
Top rounds in Latvia

• Latvia’s largest round was for the fintech startup

Creamfinance, which raised €21 million Series B from
South African Capitec Bank in Q1 2017.

• 2017 also saw a large round for Atlas Dynamics, which

creates drones and operating systems that can be
used in a variety of industries, such as security,
agriculture, inspections, and emergency response.

• The top round for 2016 was for the fintech TWINO, an
investment marketplace that provides consumer
loans. The company operates in 7 countries and has Top rounds in Latvia, 2016
issued over €280 million in loans since it launched.

• Mintos, another fintech that offers peer-to-peer

lending, raised €2 million from Skillion Ventures in Q1
2016.

• AirDog, a producer of drones that are intended to

follow their owners and create videos of action sports,
raised €3 million from FlyCap and Altum in Q2 2016.

26
ANALYSIS: LATVIA Top rounds in Latvia, 2015
Top rounds in Latvia

• Latvia’s top round for 2015 was for Eco Baltia, a

cleantech startup that provides waste management
and recycling services. The company raised €10 million
in Q3.

• Clusterpoint, a software startup that develops special

databases that can be used by business and
governments alike, raised €3 million across 2 different
rounds in Q1 and Q3 2015. Investors included BaltCap
and Imprimatur Capital. The company is now
developing network forensics cybersecurity solutions.
Top rounds in Latvia, 2014
• The top round for 2014 was for Creamfinance, raising
€5.6 million in Q4 from Flint Capital.

• Infogr.am, a platform for easily creating infographics

and data visualizations such as maps, charts, and
graphs, raised €2 million from Point Nine Capital and
Connect Ventures in Q1 2014. In May 2017, the
Latvian startup was acquired by the US-based
interactive presentation platform Prezi.

27
 Top investors, 2014 – Q3 2017

• Latvia’s two top investors were Imprimatur Capital

and FlyCap. These investors, along with ZGI Capital,
received money from the government and the EU for
their investments, and these funds have dried up
since 2016, accounting for the small number of deals
in 2017, though there is supposed to be an influx of
EU funding coming in 2018.

• Imprimatur Capital is a London-based fund that backs

science and technology startups. Out of the 69 deals
Imprimatur Capital has backed in the analysed
period, 46 were in 2014 and 2015, and 64 were
between 2014 – 2016. The fund apparently has had
little left to invest in 2017.

• FlyCap is a Latvian-based fund which invests a

maximum of €1.5 million per startup, with first
investments ranging from €50,000 – €200,000. It has
invested in RCG Lighthouse, PolyLabs, Mailigen,
TapCore, and AirDog. All of FlyCap’s 16 deals in the
analysed period were between 2014 – 2016.

28
Notable Latvian startups
Sellfy is an e-commerce marketplace for self-publishers of digital
content, allowing them to open their own online shop through the
platform to sell their digital products. E-books, music, video, photos,
other digital products can be sold by the content’s creators. Sellers
can easily customise their online storefront to be consistent with
their brands. Sellfy provides a range of services to these digital sellers
including product hosting, payments, product delivery, and allows
users to easily integrate their products into other sites such as
Facebook, YouTube, or their own website. The platform also offers
marketing features, such as SEO optimisation, discount codes, and
email marketing, and tracks the online shop’s analytics. The startup
takes a mere 5% cut from each purchase made through the platform.
Sellfy was founded in 2011 in Riga by Maris Dagis and Kristaps Alks.
The startup raised an undisclosed seed round in 2011 from
StartupHighway, followed by another undisclosed round in 2012 by
angel investors Sten Tamkivi and Toivo Annus.
LightSpace Technologies has been developing its volumetric
real time 3D display technology since 1996. The company has
created technology for 3D image guided surgery to help
surgeons conduct precise and minimally invasive procedures. It
has also applied its technology to create solutions for 3D
luggage screening, and can be used for many more applications.
It has recently produced a 3D visualization toolbox for MATLAB.
LightSpace Technologies raised €800,000 from Imprimatur
Capital and HansaMatrix in Q2 2017, and a small round in 2014
of €150,000. The company just opened its first office in Silicon
Valley in 2017 to market its technology in the US market.
29
Notable Latvian startups
BranchTrack has created a platform to train employees through
digital simulations. The platform is especially tailored to
customer service and sales, but can be used in any sector to
improve learning and outcomes for employees. Using
BranchTrack, companies can create digital simulations of
situations in which employees may find themselves, allowing
them to role-play with different responses. Companies can add
characters, materials, videos, and voiceovers to the platform to
customise the training.
The startup has also gamified its service, so learners can
accumulate points by completing simulations, compete with
coworkers on mobile devices, and engage in competitive digital
roleplays. The company raised a €250,000 seed round in Q1
2016 from Imprimatur Capital and an angel investor.
BranchTrack has already partnered with 1,500 clients, including
major companies such as Johnson & Johnson, Mary Kay, and
Slack.
Nordigen is a B2B fintech and data analytics startup. The company
uses machine learning and AI to analyse customer transaction data in
order to more accurately evaluate credit scores. Banks typically reject
30-90% of all loan applications, however Nordigen claims that the
riskiness of rejected applicants is often overrated.
“A lot of resources are spent to acquire information necessary for
making a credit decision – loan applicant’s salary, liabilities, late
payments, household expenses, etc. Luckily, all this information is
already available to you in client bank transactions, including
payment behaviour, payday loans, gambling and 200 more
categories,” according to the company.
Nordigen allows banks to reduce the number of rejected loan
applications by providing better data, thereby increasing revenue for
banks, and providing more loans to those who need them.
The startup, founded in 2008, works with more than 20 banks and
alternative lenders in 5 countries. 30
Notable Latvian exits
Infogram is an online platform to create data visualizations and
graphics. Users can create charts, infographics, maps, and entire
reports.
Infogram was founded in 2012 in Riga by Oldis Leiterts, Raimonds
Kaze, and Alise Semjonova. It initially raised a €250,000 seed round
in 2012, and raised €2 million in Q1 2014 from Point Nine Capital
and Connect Ventures.
In May 2017, Prezi, a San Francisco-based platform that allows users
to create interactive, cloud-based presentations, acquired Infogram
for an undisclosed amount.
Founded in 2015, Setupad, a Latvian adtech and marketing startup,
helps companies and publishers better target their advertising, and
helps publishers gain incremental revenues ranging from 50% to
70%. Setupad provides a yield management service and allows
publishers to get back to their job of content creation.
Setupad was acquired by the Swedish Signia Group in May 2017.
The Signia Group is a digital media company whose customers
include major media conglomerates and niche publishers. It helps
content creators, publishers, and brands to increase their customer
engagement. Signia provides services and tools for workflow
management, business intelligence, reporting, ad delivery and
monetization.
31
Lithuania

32
The Lithuanian startup ecosystem
Lithuania has been busy transforming
itself into a business friendly country in
the past decade. The country may not
have seen a steady rise in investment
volume over the past three years, but the
number of startups has grown from
around 80 five years ago to over 300
today.
Between 2006 - 2013, Lithuania spent
€411 million to develop R&D
infrastructure and science valleys, and is
investing another €679 million between
2014 – 2020 to further develop R&D
capacity.
The country has been ranked the 16th
most business friendly country in the
world for 2018 by the World Bank.
According to Lithuania’s Centre of
Registers, it only takes three days to start
a new business. The country ranks 1st in
the CEE for collaboration between
universities and industry for R&D, and
Vilnius was also listed as one of the top Investment volume Number of deals
ten “smart cities” by CNN.
The country has some of the lowest taxes
in Europe. Meanwhile, the cost of living is
quite low, with Vilnius ranked among the
5 least expensive cities in Europe.
Infrastructure, low taxes, the ease of
starting a business, and low costs are not
the only reasons to startup in Lithuania.
The country boasts a highly-skilled
Top startups
workforce, where nearly 100% of young
professionals speak English, and many
speak additional languages. Students
begin to learn computer science and
robotics in primary school. What’s more,
labor costs here are 4x less than the
European average.
33
The Lithuanian startup ecosystem
Because of the ease of obtaining a
banking license, which only takes 3
months in Lithuania, about 12 Israeli
fintech startups have recently moved
operations there. And the UK-based
fintech Revolut, a money transfer
app, has just established a presence
in Lithuania in order to apply for a
European banking license.
The country’s low tax rate and low
costs have also attracted several
Russian startups to relocate in the
country and establish a presence in
the EU.
Lithuania introduced several reforms
in 2016 and 2017 to make the country
more business friendly, including
strengthening minority investor
protections by increasing corporate
transparency, and introducing an
electronic system for filing and paying
value added tax, corporate income
tax and social security contributions.
The country’s Startup Visa
programme was also implemented in
2016. It is designed for startup
founders who want to establish their
business in Lithuania or attract
foreign talent. It allows entrepreneurs
to quickly gain temporary residency
status based on their business plan,
bypassing other requirements like
capital or employment.
Lithuania’s startup ecosystem hosts
over 100 tech and startup events
every year, providing forums for
networking, building partnerships,
and exchanging ideas.
New facilities provide space for
startups to work and for hosting
events. The Vilnius Tech Park opened
in 2016 and includes offices for
established startups, a large
coworking space, 31 meeting rooms,
3 event spaces, and a conference
room that seats 250 people.
34
 Interview with
Arvydas Bloze
CEO at Startup.lt, and
investment manager at
early stage VC fund
Practica Capital
How has the Lithuanian startup ecosystem changed in recent years?
The ecosystem is clearly maturing, there are over 320 active startups in
Lithuania, employing about 1,500 people. It’s truly impressive, considering that
five years ago “startup” was just a concept. Today Lithuania is enjoying its first
startup success stories, like the Oberlo and TrackDuck exits, startups raising
Series A,B,C, and heavyweight bootstrapped startups like Bored Panda and
Pixelmator.
The country is pioneering in fintech regulation in the EU and front running in ICO
fundraising. There is fairly visible success in the Lithuanian diaspora (startups
that have gone abroad): AimBrain, Genus AI, and Medigo to name a few. We
have close to one million Lithuanians living abroad, including solid professional
networks in London, Stockholm, Berlin, New York and Silicon Valley.
The Lithuanian government is firmly taking the baton from the
European Investment Fund, if you will, in using EU structural and
local funds in instruments to facilitate entrepreneurship. Such
measures include €120 million in public funds for accelerators, co-
investment, VC and PE funds that have launched or will be launched
in 2017-18, investing from pre-seed to growth stages. These funds
will in turn attract at least 40% of private money, creating a
multiplier effect. I have no doubt that Lithuania will become a point
of gravity in the regional tech scene.
In 2017, the government also took a major interest in startup policy
and investment conditions. We had a lot of changes in legislation to
facilitate VC and PE infrastructure, with the government working
closely with Lithuanian private and venture capital associations.
Currently the government is working on a startup package to further
facilitate the ease of kickstarting from Lithuania. When the Startup
Visa programme was launched, it picked up interest from
Belarussian, Ukrainian, Russian, Turkish and US teams. The
Lithuanian Startup association was also formed in 2017, to give
voice to startups’ interests in policy making.
35
Interview with Arvydas Bloze cont’d…
What are some of the challenges you see in
Lithuania’s startup ecosystem?
The talent pool. Lithuania is a small, export-driven
economy, dominated by traditional sectors. Firstly,
and very naturally, it implies a limited
understanding on how global market works in new
economic sectors, where the real inefficiencies are,
how exactly to resegment the market, etc.
Secondly, we have a young ecosystem and a first
time founder generation that yet has to acquire
experience. Gladly, we are on a fast-track in doing
so.
Thirdly, our talent pool is limited as competition is
on a global market. The talent pool for startups is
affected by braindrain to Western countries and
service centres of big corporations (Barclays,
Booking.com, etc) opening in Lithuania. I believe it
is short-term problem, as on a long-term basis we
will see (and actually are already observing) people
come back to Lithuania with experience or
acquiring it working in a big corporation locally.
Overall, we want to stress execution, and turning
ideas into business requires true grit from local
founders.
Funding levels haven’t increased in the past
two years, why do you think this is? “We have a young
ecosystem and a first
The bigger numbers are Series A or B rounds,
facilitated by foreign investors. The number of pre- time founder
seed and seed rounds is pretty stable year over generation that yet has
year and is provided by local capital. In 2016 we
raised €5 million, as there was a gap in A and B
to acquire experience.
rounds for several reasons. While in 2017 we have Gladly, we are on a
€10 million raised and counting, and an exceptional fast-track in doing so.”
€100 million if ICOs are taken into account.
Local VC capital has to bring startups to a level
where broader focus funds can pick them up. This
means we have to seed, bridge, participate in
Series A, and be patient. Very importantly, there
are a whole bunch of startups in Lithuania that did
not receive any funding but have had success –
such as Bored Panda, Pixelmator, Omnisend,
Tesonet, Nordcurrent, to name a few.
 Interview with Ilja
Laurs, Founder of
GetJar and Founder
“I think the ecosystem is going to grow
and CEO of 10x in terms of people and number of
Nextury Ventures startups in the next 10 years.”

You have a lot of experience early on in the Lithuanian startup
ecosystem, having launched GetJar in 2002. What was it like
then and what is it like now?
In 2002 there was no ecosystem whatsoever. You either had a profitable
business or you didn’t exist. In a way, this mentality helped us learn how
to be strong. We have a strong community now, and multiple success
stories. We now collaborate with fairly well known international VCs,
such as Accel Ventures, and have several local VCs and government
initiatives to support startups.
I think the ecosystem is going to grow 10x in terms of people and
number of startups in the next 10 years.
Why do you expect it to grow so much?
Lithuania is a hungry country, because we have so little. There is a lot of
incentive to work., and a really good attitude towards work here. People
are also strongly educated.
How so?
The government started implementing IT education in schools in the
early 2000s, and so everyone knows how to code, install Windows, and
use photoshop.
What also helped was a strong a black market for software in Lithuania
from 1995 to 2010, so every kid had access to any software they could
want for a couple of dollars.
37
Interview with Ilja Laurs, cont’d
If you had complete control, and could do
anything to improve or change the Lithuanian
startup ecosystem, what would you do?
I have a lot of ideas – and I’m involved with many
initiatives to make changes.
Firstly, we need to change our education system.
Intellectual property created by students now
belongs to the university. This needs to be changed.
Millions of hours are spent creating ideas and
programmes, which just turn into research papers,
and universities own the patents - the students don’t
have access to them. We need to make changes so
that students can have access to their own
intellectual property.
Universities have a lot of resources. They can more
easily acquire a lot of EU funding, because they’re
non-profit, to do research – this means bonuses,
more jobs, creating more labs – but it doesn’t actually
create anything except research papers.
We also must choose our priorities as an ecosystem,
and focus on specific verticals, especially in fintech, or
some other vertical, and focus on those – that is
critical.
“We need to make changes
so that students can have
And in general, we need an institution devoted to access to their own
innovation.
intellectual property.”
Also, our angel funding ecosystem is not functional.
The UK has a great example for how tax incentives
can encourage angel funding. Copying the UK model
would be a big kick for the Lithuanian startup
ecosystem. “Skype had a big effect on
Why have the Baltic states been so much Lithuania. Skype’s success has
more successful in creating startups than really changed people’s
other Eastern European countries? mentality, and made people
I think Skype had a big effect on Lithuania. Skype’s
think, ‘I can do this’.”
success has really changed people’s mentality, and
made people think, “I can do this”.
38
 ANALYSIS: LITHUANIA
Investment volume and number of deals by quarter and year

• The highest record for investment volume was Q4

2015, when €36.8 million was raised across just 7
deals. In this quarter there was a large round for
the second-hand fashion marketplace Vinted
(€24.5 million), and for the neurodiagnostic
medical device company Vittamed (€9.3 million).

• Lithuania’s next best quarter was Q1 2014, when

it raised €24.8 million thanks to a another large
round for Vinted (€23 million). Both of Vinted’s
rounds were backed by NYC-based Insight
Venture Partners.

• Less than €2 million was raised in two-thirds of

the quarters in the analysed period, indicating
that the majority of deals are smaller seed or
angel investments.

• 2016 and 2017 have seen significantly less

investment volume than 2014 and 2015. The
highest quarter being Q3 2017 with € 8.4 million,
the majority of which was raised by Trafi.

39
 ANALYSIS: LITHUANIA
Average and median round sizes, 2014 – Q3 2017

• In Lithuania the average round size

was between €100,000 – 400,000 in
two-thirds of the quarters, with a
few outliers. The average round in
Q1 2014 was almost €5 million,
influenced heavily by the €23
million round for Vinted. Q2 2017
had an average of more than €5
million per round thanks to another
round for Vinted, and two other
large rounds for Vittamed and Trafi.

• The average round size in Lithuania is

generally much lower than it is for the
Baltics as a whole, which has an
average of €1 million or more in most
quarters.

• The median round size stayed below

€360,000 for all quarters except for
Q2 2016 and Q3 2017, which only had
1 or 2 deals. Most quarters had a
median deal size of €200,000 or less,
and is on par with the median quarter
for the Baltics as a whole. 40
ANALYSIS: LITHUANIA
Top industries, 2014 – Q3 2017

• Fashion was the vertical that

raised the most funding, €48
million across just three deals –
two for Vinted and one €200,000
round for Robert Kalinkin.

• Transportation is second, with

two large rounds for Trafi.

• Medical startups raised €11

million, with a €9 million round
for Vittamed.

• Fintech came next with 7 deals,

and several rounds over €1
million for TransferGo and
WoraPay.

• There were 7 rounds for food

totaling €2 million, including
FoodOut, Hello Hungry and
PlateCulture.

41
 ANALYSIS: LITHUANIA
Top rounds in Lithuania, 2017
Top rounds in Lithuania
• The top deal by far for Lithuania in 2017 was for Trafi, a
mobility app that connects different transportation options
throughout a city, so users can better navigate their routes.
Trafi raised €6 million in Q2 2017 in a Series B round from
Octopus Ventures and the European Bank for Reconstruction
and Development.

• The top round for 2016 was for TransferGo, which raised €3.1
milion from Vostok Emerging Finance (VEF). Next was Rubedo
Sistemos, a robotics company, which raised €500,000.

• The next highest round in Lithuania was for Interactio, which Top rounds in Lithuania, 2016
provides real time audio broadcasting solutions, and raised
€330,000. TutoTOONS, which creates mobile games for kids to
foster imagination and creativity, raised €200,000.

• PlateCulture, a marketplace for homemade meals, raised

€350,000.

• Top rounds were much smaller in Lithuania in 2017 and 2016

than in 2015 and 2014, with only two rounds of more than 1
million. No scale-ups such as Vinted or Integrated Optics raised
major rounds of €20 million or more as they did in previous
years.
42
 ANALYSIS: LITHUANIA
Top rounds in Lithuania, 2015
Top rounds in Lithuania

• Lithuania’s top deals in 2015 and 2014 were for

Vinted, a second-hand fashion marketplace. This
scale-up raised €24.5 million from Accel Partners
and Insight Venture Partners in Q4 2015 in a
Series C round, and €23 million in Q1 2014 in a
Series B round from the same investors.

• Vittamed, a neurodiagnostic medical company

that develops ultrasound-based devices, raised
€9 million Series A from Xeraya Capital in 2015.
Top rounds in Lithuania, 2014
• WoraPay, a fintech that allows retail customers
to order and pay through their mobiles, thereby
avoiding queues, raised €2 million in 2014.

• Integrated Optics, which develops lasers and

sensors for spectroscopy and LiDAR technologies
used for the manufacturing of highly integrated
optical and electro-optical devices, raised €1.2
million in 2014.

43
ANALYSIS: LITHUANIA
Top investors in Lithuania, 2014 – Q3 2017

• Lithuania’s top investor is Practica Capital, which has backed

23 deals in the country since 2014. The fund invests in early-
stage startups, providing €3,000 to €2 million in capital per
deal, though most of its investments are worth €200,000 or
less. Startups backed by the fund include Trafi, TrackDuck,
Interactio, Hello Hungry, Robert Kalinkin, Xylo, and TableAir.

• Lithuania-based Nextury Ventures was started by Ilja Laurs,

the founder of one of country’s earliest startups, GetJar.
Nextury has backed 4 startups in the analysed period: Baltic
Arrow, Ekspertas.lt, Toyze, and Feedpresso. The VC was
founded in 2013 and invests in early-stage startups.

• BaltCap is a private equity and venture capital investor in the

Baltic states of Estonia, Latvia and Lithuania focusing
investment on the growth of SMEs.

• Insight Venture Partners is the only non-European investor

that made the top five. Based in New York since 1995, it has • Paris-based Kima Ventures is an active early-stage investor, making 2-3
raised nine funds and invested in over 300 companies. Its investments per week. It has invested in over 400 companies in the
investments are typically much larger than those of Baltic past five years.
investors. In Lithuania, it has two rounds for Vinted.

44
Notable Lithuanian startups
Vinted is a fashion tech startup launched in 2008 in Vilnius. It’s basically an
online thrift shop - a marketplace and app where users can sell, buy, and
swap secondhand clothing and accessories. It lets people get rid of
clothing they used to love, or that just doesn’t fit anymore, and find good
homes with people who will love the clothing just as much. The startup is
one of the most successful in Lithuania, having raised over €50 million. It
raised €20 million Series B in 2014 from Insight Venture Partners, and €23
million Series C from Burda Principal Investments.
“Vinted’s business model is perfectly scalable and will work in practically
any country,” said Martin Weiss, Burda Media’s managing director. “We
think Vinted can benefit from Burda’s focus on digital media and the
international media market.”
The company says that 11 million girls and young women use the site
every day, and spend about 45 minutes shopping and chatting with sellers.
Vinted says it has made over $150 million in sales since it launched.
Trafi claims to be the “world’s most accurate public transport app”. It
uses machine learning, crowdsourced data, and self-learning
algorithms to help users plan their journeys and navigate through a
city. The app combines information on all public transportation options
- buses, trains, and trams - and has recently partnered with Uber to
include ridesharing options. The app also locates your closest
transportation hub, and provides schedules and arrival times.
Trafi raised $7 million from Octopus Investments and the European
Bank for Reconstruction and Development in 2017, following a $6.5
million Series A round in 2015, also backed by Octopus Ventures.
Unfortunately, the app is only available in a few countries – Brazil,
Estonia, Latvia, Lithuania, Turkey, Taiwan, and Indonesia.
According to the company, it already has 250,000 users, and hopefully
that number will grow as they expand to other countries with their
new funding rounds.
45
Notable Lithuanian startups
TransferGo is a global money transfer company launched by
Justinas Lasevičius, Daumantas Dvilinskas, Arnas Lukoševičius
and Edvinas Šeršniovas in 2012. The company provides low-
cost international money transfers, especially targeting
migrant workers sending money to their family, but also for
other types of transactions, such as businesses paying
international suppliers.
The company bypasses bank fees using a digital account-to-
account business model, so money transfers do not have to
leave the country as funds are paid in and out locally. It charges
a low, fixed fee for transferring money and a 0.6% to 1.5% fee
for the currency conversion per transaction. TransferGo now
operates in 45 countries, handles over 1 million transactions
per year and has transferred over 559 million to date. Since it
removes the costs of international transfers,
Bored Panda is one of the most popular Lithuanian startups –
though it has raised no funding. It’s a webzine full of creative
articles, art, and photography. Its submission platform helps
artists and writers turn their stories into viral content. It offers
content related to art, photography, design, animals, travel,
illustrations, DIYs, food art, architecture, parenting, and more.
The platform was launched in 2009 by Tom Banišauskas, who
was at the time a business management student at Vilnius
University .
According to the startup, it has about 38 million readers, and a
recent report by NewsWhip states that Bored Panda is one of
the most popular sites on Facebook, ranking above CNN, the
BBC, and the New York Times.
The company has an office in Vilnius Technology Park Vilnius
Tech Park and employs 36 people, according to Wikipedia.
46
Notable Lithuanian exits
Oberlo is a marketplace that allows
entrepreneurs to search for products to sell
online. It allows online stores to easily run
their business through dropshipping.
Oberlo connects merchants with suppliers,
who send products directly to customers.
Oberlo merchants have sold over 85 million
products to customers around the world
since it launched in September 2015.
In May 2017, the Oberlo was acquired by
Canadian Shopify for $15 million, shortly after
raising an undisclosed seed round.
In January 2015, Lithuanian app development
consultancy Lemon Labs was acquired by
Wahanda, a UK-based online health and beauty
marketplace, as part of their strategy to go
mobile.
“We have been working with the Lemon Labs
team for the past six months in building our
consumer and business apps, and the results
speak for themselves,” said Lopo Champalimaud,
CEO and founder of Wahanda, as reported by
Scratch Magazine. “Last week we broke through
the 150,000 downloads mark, and that number is
growing 20% month on month.”
Wahanda itself was acquired soon after in June
2015 by Recruit Co., an advertising, publication,
and human resources company based in Tokyo.
TrackDuck simplifies collaboration on
web development projects, by allowing
users to easily give both visual and
content feedback on live websites.
TrackDuck can be integrated with other
project management platforms. To give
feedback on a website, a user can simply
select an for improvement and leave a
comment, which immediately goes to
other management tools or web
developers.
In May 2017, TrackDuck was acquired by
InVision, a collaborative product design
platform based in New York. The terms of
the deal were undisclosed.
47
Estonia

48
The Estonian startup ecosystem
Estonia has been called the “most advanced digital
society in the world”.
As early as 1997, Estonia established e-Governance,
allowing citizens to access many public services
online, saving time and paperwork. In 2000, the
country declared access to the internet a basic
human right. In 2001 it created the Digital Identity
Card, which all citizens use to access everything
from transportation to their medical records. In
2005, the government started allowing citizens to
vote online, the first country in the world to do so.
In 2014 Estonia launched e-Residency, letting
anyone in the world apply to be an Estonian e-
resident. The programmeme does not grant the
right to live and work in Estonia, but allows e-
residents to establish a business there from abroad
and access certain e-services. However the new
Startup Visa programmeme, implemented in early
2017, allows startup founders and employees to
relocate to Estonia physically.
According to Startup Estonia, it takes only 15
minutes to set up a business in Estonia, and just 3
minutes to do the taxes.
Moreover, the corporate tax in Estonia is 0%,
though dividends are taxed at 20%.
Estonia has been ranked #1 by the OECD for Tax
Competitiveness, #1 from the World Economic
Forum for Entrepreneurship, #1 for Barclays 2018
Digital Development Index, and #12 in the World
Bank’s Global Ease of Doing Business ranking.
This background of a high-tech, digital society with Top startups
low tax rates has made Estonia the Silicon Valley of
Eastern Europe. Though funding levels trail behind
many Western European countries, this is due to
Estonia’s very small population of only 1.3 million
people. When looking at investment volume on a
per capita basis, Estonia ranks above the UK,
Germany, and France.
In the next slides, Tech.eu interviews Kadi-Ingrid
Lilles from Startup Estonia and Ragnar Saas, co-
founder of Pipedrive, to share their thoughts on the
Estonian startup ecosystem.
49
 Interview with Kadi-Ingrid Lilles, Head
of Communications at
enhanced the startup ecosystem?
Startup Estonia
How has the Estonian startup ecosystem
changed in recent years?
I would say that the ecosystem has definitely
become more mature and this can also be seen
with the growing number of startups scaling to
international markets, raising larger rounds and
employing more people by the year. This is
illustrated by the data collected by the startup
community itself over here. Startup Estonia is also
keeping an eye on these growth numbers and puts
the data out every six months. We've also started
to see even more startup founders giving back to
the ecosystem, such as creating startup hubs
(Lift99 with Pipedrive's co-founder Ragnar Sass
as the founder), startup accelerator funds (Mobi
Solutions with Fortumo co-founders as founders),
educational non-profits for promoting tech (Eesti
2.0 with GrabCAD's founder as one of the
initiators) etc.
How have initiatives like e-Residency
The Startup Visa programme, begun in January
2017, has helped in internationalising the
local startup community with over 280 foreign
startups applying for the Startup Visa so far. Of
these, 70 have already gotten their visas or
temporary residency permits. Additionally, 125
non-EU nationals have been able to relocate to an
Estonian startup. All of this already has and will
continue to positively impact the local startup
ecosystem.
What challenges does the Estonian startup
ecosystem face?
I would say the challenges that startup
ecosystems around the world face are pretty
similar - challenges with capital and talent. When
it comes to Estonia's case, it's just too small of a
market to host a larger VC fund and thus Estonian
startups looking for funding beyond Series A have
to raise it internationally, but to be fair, we see it
as more of a benefit than a shortcoming as these
funds will in most cases be used to scale
internationally, and the benefits from foreign
investment have become invaluable. They bring
more connections to the startup, and often a
foreign investor will take interest in other Estonian
startups, too, after investing in one. The
challenges with the talent have now started to be
addressed with the Startup Visa programme as
well as several tax exemption plans available from
the government.
What does the future hold for the Estonian
tech startup scene?
Hopefully the next Skype-like success story in
terms of the impact and influence on the
ecosystem, that it would be a source
of entrepreneurial talent to the ecosystem thanks
to which we'll see even more startups springing up
in the next couple of years. Then of course
becoming more international with foreign
founders and startup employees, and working on
facilitating the smooth entry process of foreigners
to the local startup ecosystem. So in short, more
startup success stories, more new startups and
more international talent. 50
Interview with Kadi-Ingrid Lilles
Do you think all of the digital initiatives in Estonia have
made a major contribution to the ecosystem?
Yes, for instance the founder of Jobbatical says that being able to run
her company online in Estonia saves her 5 working days a year. Over
3000 available e-services are now available through the government.
Do you think the small size of Estonia in some ways helps
its ecosystem by promoting connectivity?
Absolutely, we see it as a strong benefit, companies are physically
very close, there are roughly 450 startups but basically none are
competitive with each other, so there’s a great deal of mutual
support between startups.
What difference did Skype make in kickstarting the
Estonian ecosystem?
The importance has been immeasurable. Many co-founders and
previous employees at Skype have gone on to create their own
startups, they even have an organisation, Skype Mafia, that lists all of
the companies that have been started by Skype founders and
employees, the most successful being Transferwise.
Compared to other European countries Estonia ranks highly
when you look at per capita investment– above Germany,
the Netherlands, and France. What do you think has led to
Estonia’s success in having such a vibrant startup
ecosystem?
It goes back to the 1990s, by the way the government started to
reinvent the country from scratch after leaving the Soviet Union, and
unlike other post-Soviet nations, it went straight into building a
digital infrastructure, Internet access, etc.
In the past 10 years, the success story of Skype has contributed
greatly to the ecosystem. Having had the experience of building a
successful startup in such a small time, it inspired others to do the
same.
Despite being such a strong ecosystem for a country of its
size, we haven’t seen a clear growth pattern in funding
levels since 2014. Why is this?
The number of deals is going up, but especially early stage or angel
stage, and these startups will hopefully raise larger rounds later on.
51
 Interview with
Ragnar Sass,
Co-founder of
Pipedrive and
Garage48, Founder
of Lift99
What is your experience in the Estonian ecosystem?
My first startup began in 2007, it was called United Dogs, which is like
Facebook but for dog and cat owners. Later I became of the founders of
Pipedrive, which has been named the best B2B startup from Europe by
TechCrunch. We already have 50,000 customers, and Pipedrive was named
the best employer in Estonia in 2016. In 2010 I started Garage48 Foundation
with 4 other startup entrepreneurs , which organizes hackathons in Eastern
Europe and developing countries. We have held more then 80 hackathons
and our most successful alumni is MSQRD, what was sold to Facebook 3
months later with more then $100 million.
The main objective of a hackathon is to bring together professionals and
engineers. The idea is for participants to get the sense of what it would feel
like to start your own company, and to learn about startups.
Last year we moved this to the next level, I founded Lift99, a startup
founders community, coworking and event space.
Our aim is to help this movement, to connect experienced founders with
talented people, who have a lot of drive to startup new companies. If we
connect experience and young energy - miracles will start to happen.
Estonia is different because Estonian founders strive to give back to the
community. This is something I haven’t found in other countries.
How have you seen Estonia’s startup ecosystem change over the
years?
We are such a small country that the government has been doing things to
help us. They are looking at who we should give a Startup Visa to and who we
should not. Over a thousand companies have been opened because of e-
Residency. You can do everything online and it really helps the ecosystem.
As I mentioned, there is also a lot of giving back to the ecosystem. For
example, one successful entrepreneur started a nonprofit in Boston that is
now giving 3D printers to Estonian schools.
I think startups are becoming more popular, you used to only hear about
Skype, but now many more as we’ve seen much more of a variety of ideas,
we’ve seen that Taxify can be competitive with Uber. We look at how much
tax startups have been paying in Estonia, and it goes up every year 50-60%,
I’m sure that in the next few years we will see 3 or 4 new unicorns from
Estonia.
52
 Interview with Ragnar Sass, cont’d…

I’ve heard that Estonia is too small to support large VCs, and
the majority of Estonian startups are dependent on
accelerators or angel funding, or have to look for foreign
investment. Do you think this will change?
If you look at the statistics 90% of funding is from outside of Estonia. We
have to understand that we need foreign funding, and because we
depend on foreign customers it is important for us to be thinking
internationally from the beginning. I have seen more and more foreign
VCs taking interest in Estonia. We have to go pitch to investors in Berlin,
London, New York. What has changed totally in the past 10 years is that
we see a lot more experienced angels.
Looking at the data on funding per quarter in Estonia, there’s
no real trend as quarters seem to fluctuate, and there’s no
correlation between the number of deals and investment
volume. Why do you think this is?
The numbers we have in Estonia depend on a few outliers, so we have to
look at the numbers on an annual basis.
I don’t think the government can do much, I think it’s entrepreneurs who
help each other and build an ecosystem.
What government can do is support entrepreneurship. I would
encourage people to check out foreign accelerators like YCombinator.
Pipedrive was successful because we became active in accelerators in
Silicon Valley.
I spoke to one man whose parents were working in IT in the 80s… so in a
way you could say the Soviet Union actually helped Estonia evolve
digitally, because they had made some technological advancements.
What do you see for the future of the Estonian startup
ecosystem?
I think because of the Startup Visa and e-residency we will see many
more startups coming from foreigners. The amount of people who have
experience with successful companies is doubling, and they can help new
startups. We have been attracting people from neighbouring countries
like Russia, Belarus, and Ukraine, where they can have access to the EU.

How did the government help when you were building

Pipedrive?
53
 ANALYSIS: ESTONIA
• Estonia showed much higher
investment volume per quarter than
Latvia or Lithuania. Estonia’s average
quarter over the analysed period is
€18.8 million.

• The data shows no clear growth

pattern in the analysed period.
Investment volume and number of
deals do not correlate, and fluctuate
greatly from quarter to quarter. For
example, €80 million was raised in Q2
2015 across just 9 deals, but only €2.3
million was raised in Q2 2017 across
21 deals, the highest number of any
quarter in our analysis.

• As in the Baltics as a whole, high

volume quarters tend to depend on
one or two large deals, while the
majority of deals are worth €500,000
or less.

54
• Both the average and median
round sizes for Estonia tend
to be larger than the Baltics
as a whole, suggesting that
Estonian startups raise bigger
rounds than Latvia and
Lithuania.

• Median round sizes for

Estonia were of 500,000 or
less, with one outlier of
770,000.

• In 8 of the quarters, the

median was at or above
350,000, while in 7 of the 15
quarters more than half of
the rounds were worth less
than 200,000.
• However, average round size in
Estonia is less than half of the
average round size for Europe as a
whole of 5.2 million. Median round
size as well is less than half of the
median round size for Europe.
• Average and median round size in
Estonia show no growth trend in
the analysed period, meaning that
deal size is not rising.
55
ANALYSIS: ESTONIA
Top industries, 2014 – Q3 2017

• The top vertical in Estonia was by far

fintech, with €114 million raised across
23 deals. Estonian fintechs include
Bondoroa, Funderbeam, Investly,
LeapIn, Paytailor, and TransferWise.

• Marketing startups brought in €20

million across 8 deals, including startups
like Adcash, Clipman, SorryasaService,
and Promo Republic.

• €16 million was raised for robotics by

Starship Technologies.

• Developer tools raised €12 million for

ZeroTurnaround and High Mobility.

• Analytics raised €9 million across 24

deals – the most of any vertical.
Estonian analytics startups include
Nordic Automation Systems, Planet OS,
Spectx, and TeamScope.

56
 ANALYSIS: ESTONIA
Top rounds in Estonia, 2017
Top rounds in Estonia
• Starship Technologies raised the highest round in Estonia in
2017, raising €16 million in a seed round led by Daimler. Starship
is building a fleet of self-driving delivery robots that can deliver
food and other goods locally within 30 minutes and potentially
upend the delivery market.

• Jobbatical is platform for job recruitment and job seekers,

especially those looking to relocate to new countries. It has
recently moved into scale-up territory, raising €3 million in 2016
in two different seed rounds, and another €3.4 million Series A in
2017 from Mistletoe.

• TransferWise has already reached European unicorn status, with Top rounds in Estonia, 2016
a valuation of €1.6 billion. The company just raised $280 million
in Series E funding from numerous investors in Q4 2017 – which,
unfortunately, is left out of our analysis. However it also led
Estonia in 2016, 2015, and 2014 – though their deals in these
quarters don’t approach the $280 million raised in its Q4 2017
round.

• Skeleton Technologies creates ultracapacitors and energy-

storage systems to deliver high energy, reliable and long-life
storage solutions across industries. It raised €17 million across
two rounds in 2016, after raising €10 million in 2015. The
company works with global engineering companies including the
European Space Agencies and car manufacturers. 57
 ANALYSIS: ESTONIA
Top rounds in Estonia Top rounds in Estonia, 2015

• TransferWise allows customers to transfer money

internationally at lower rates than before. Customers have
already moved £1 billion through the platform. It raised €53
million in 2015.

• Adcash raised €20 million Series A from Naxicap Partners.

Adcash’s platform provides publishers and advertisers with
highly targeted solutions and tools for profitable online
campaigns. The company currently has a portfolio of over
70,000 websites.

• Pipedrive raised €10 million in 2015, and another €16 million Top rounds in Estonia, 2014
in 2016. The scale-up makes sales CRM (Customer
Relationship Management) software for companies with big
ambitions.

• Lingvist is an online language learning platform and app,

similar to Duolingo. It uses a smart algorithm to track the
mistakes and progress of users, and adapt its lessons to match
their level and memory patterns. It raised €7 million in a Series
A round in 2015 led by Rakuten.

• ZeroTurnaround is known for its award-winning product

JRebel, a Java development productivity tool. It raised €6
million in two rounds in 2014, led by Bain Capital Ventures. 58
 ANALYSIS: ESTONIA

• Startup Wise Guys, an accelerator based in Tallinn,

has backed the most rounds in Estonia since 2014.
Startup Wise Guys typically provides seed
investments of €20,000. It also offers mentoring and
office space to new startups.

• The next most active Estonian investor is Jaan Tallinn,

a programmemer and physicist who co-founded
Skype in 2002, and has funded 11 Estonian startups
since 2014, including Fleep, Shipitwise, and Plumbr.

• SmartCap is a government held fund of funds

supporting the development of the Estonian
economy, that manages the early stage venture
capital fund Early Fund II. It has €40 million in assets
under management. SmartCap has decided on a
strategy to make new investments into early stage
venture capital funds, or accelerators. It has invested
in Jobbatical, Vitalfields, Fits.me, Lingvist, and the
accelerator Startup Wise Guys.

59
Notable Estonian startups
Taxify was launched in 2013 in Tallinn, and is one of the
fastest growing companies in Europe and Africa with over 3
million customers in more than 20 countries. Taxify was
founded in Estonia in 2013 as a market-leading platform
connecting riders to private drivers or licensed taxis.
Taxify has steadily grown its Uber-like service across Europe
and in Africa, fuelled by €2 million in funding and a recent
undisclosed financing boost from Didi Chuxing, the Chinese
ride-sharing giant.
Testlio helps companies to improve their products and their
customers’ experiences by testing products for quality assurance
before they go to market. It has a growing customer base and
already has some major clients including Microsoft. Testlio tests
iOS, Android, web, and desktop applications.
According to the company’s website, it’s mission is to “Connect
enterprises with the best testers in the world to provide amazing
customer experiences.”
The company was founded in 2012 by the tester couple
Kristel and Mark Kruustük. It raised €6 million Series A led by
Vertex Ventures in 2016, after a €900,000 seed round in 2015.
60
Notable Estonian startups

Deekit is a virtual whiteboard, which allows real-time

Sprayprinter is a smart spray can technology which
collaboration between remote teams or individuals to
prints pictures from smartphones to different surfaces.
work together on projects. The whiteboard can also be
For that, users need a SprayPrinter, the smartphone
used in meetings to show and discuss ideas with
app and spray cans. The phone tracks movements of
stakeholders. Users can add various forms of content,
the printer and tells it when to release paint and when
including drawing, text, and images.
not.
The platform provides templates for specific uses such
SprayPrinter was founded in 2015 and is based in
as marketing or business plans. was the winner of
Tartu. The young company did a successful global
“Estonia’s Best Early Stage Startup” in 2016. Deekit has
crowdfunding campaign on Indiegogo which resulted
been enjoying international success ever since. Besides
with over 200 pre-orders and massive amount of
the winning investment, the company has raised an
inquiries from retailers, promoters and strategic
additional €468,940 investment, received international
partners.
recognition and was named the finalist at the Startup
Europe Awards.

61
Notable Estonian startups
Leansite is collaborative platform to support the
management of construction projects. It allows users to
create master schedules and set milestones, and connect
them to weekly work plans, where tasks can be assigned to
different team members. Documents and other files can
be uploaded to the platform, where everyone has access
to them along with schedules and work plans. There is also
a discussion forum for workers, managers and other users
to talk about the project.
Leansite raised an undisclosed seed round from Startup
Wise Guys in 2016. You can try the platform for free for 14
days, or get the full unlimited version for €499.
Tebo is a platform for teachers to organize all of their
materials, by uploading their files and creating new ones,
Teachers can also add links and videos to their collection, and
the site provides templates for interactive exercises like
creating quizzes and assignments, or simply texts for lesson
plans or syllabi. Teachers can automatically assign homework
or tests to students through the site. The platform can also
automatically evaluate students’ performance on certain
assignments.
Tebo also allows teachers to create or join groups to share
their files with students or other teachers. Students are also
able to create content on the site, and the platform can be
accessed by teachers and students from any digital device.
Founded in 2015, the startup raised an undisclosed seed
round in 2016.
62
Notable Estonian exits
The Climate Corporation, US-based subsidiary of Monsanto,
acquired VitalFields, a farm management software company
based in Tallinn, Estonia, in Q4 2016. Founded in 2011 and
available in seven European countries, VitalFields offers an
easy-to-use tool for farmers to plan, manage and analyze their
field activities, including simplified tracking and reporting of
all crop inputs to help ensure compliance with European
Union environmental standards.
The VitalFields team is expected to strengthen The Climate
Corporation’s ability to deliver industry-leading digital
technologies to farmers around the world.
Teleport was founded in April 2014 by early Skype
employees Sten Tamkivi and Silver Keskküla while
Tamkivi. The company’s main product – Teleport Cities –
uses data science and matching algorithms to help
knowledge workers discover their best places to live and
work. Teleport Cities provides income, cost and quality
of life data from 260 cities around the world, and served
over a million searches by its 250,000 users in 2016.
Teleport was acquired by MOVE guides in April 2017.
63
Notable Estonian exits
Lithuanian-founded Fits.me is an ecommerce tool that
fashion retailers can integrate into their websites,
allowing customers to try on clothes virtually.
Customers can enter details about their weight, height,
and body type, and see how an item of clothing will fit
them.
Rakuten, a Tokyo-based company that provides global
ecommerce solutions, acquired Fits.me in 2015, but
the platform continues to run as a stand alone
business.
In August 2017, Intertrust Technologies acquired
Planet OS, a geospatial big data service provider
founded in 2012 by Estonian entrepreneurs. Planet OS
has built a multi-party data platform that has broad
applications to the Internet of Things.
Planet OS allows users to manage and visualize multi-
format, large-scale data from numerous sources,
enabling operators to see patterns and act on analyses
that they may have previously overlooked. The
platform can allow device makers and service providers
go to market with innovative data-driven products in
broad markets from self-driving cars and modern
public transportation to food security value chain
monitoring and healthcare.
64
 CONCLUSIONS
Considering population and GDP, the Baltics are tech superstars
When one adds up the numbers, it is clear that the Baltics are punching way
above their weight class in tech innovation. On a per capita basis, Estonia is
neck and neck with the UK, and this is especially impressive given that GDP
per capita in the UK is more than double that of Estonia and other Baltic states
(with GDP per capita below €15,000). On a per capita basis, Estonia also beats
Germany and France for tech investment.
Though we may not see clear upward funding trends in the Baltics (in part due
to certain startups moving abroad), it is clear that their ecosystems are
growing in several ways. Leaders from the respective ecosystems speak of a
supportive community, with more events, a growing number of startups, and
increasing interest from international investors. The ecosystems are gaining
more and more government support and EU funding to make their countries
more startup friendly, helping to fund accelerators and other programs, and
each launching Startup Visas programmes within the past year or two. An
influx of EU funding is in fact expected in the coming year, so the Baltics can
look forward to an uptick in funding.
The Skype Phenomenon
Multiple leaders from Baltic ecosystems cited Skype as a major factor in
encouraging tech entrepreneurship, and not just Estonia. Ilja Laurs from
Lithuania also credits Skype for inspiring tech startups in the Baltics. And in
Estonia, former Skype employees and founders have together launched over
40 startups, and call themselves the “Skype Mafia”.
Scaling-up
Some Baltic startups have really begun to scale in recent years, though those
who do usually depend on Series A and B rounds from foreign investors, as
local funds usually can only provide seed or angel rounds. The most notable
scale-up in the Baltics is TransferWise, which is already an Estonian unicorn.
Ragnaar Sass, co-founder of another scale-up, Pipedrive, says he expects to
see another 3 or 4 Estonian unicorns in the next few years. Lithuania’s Vinted
is a clear scale-up, having raised two rounds of €20 million or more in the
analysed period, and Trafi and TransferGo are also scaling. Laurs predicts that
the Lithuanian ecosystem will grow 10-fold in terms of the number of startups
and people working for startups in the coming years. While the most
successful scale-up from Latvia, BitFury, has unfortunately moved its
operations abroad and therefore is excluded from the analysis, the fintech
Creamfinance has raised over €25 million in the analysed period. While many
Baltic scale-ups move their headquarters abroad to have greater access to
international markets and resources, most maintain the majority of
operations in their home countries, and give back to their ecosystems.
Focus on early-stage investments
As Baltic states still lag behind in terms of wealth compared to their Western
European counterparts, they lack big VCs that can provide large rounds, and
scaling startups have to look abroad for funding. This isn’t necessarily a bad
thing, however, because as small countries, Baltic states need to have an
international focus to market their products and establish an international
presence. 65
METHODOLOGY & DISCLAIMERS
From November 2013 onwards, Tech.eu has continuously monitored
approximately 120+ sources of news and information across multiple
European regions and languages.
All the transactions have been analysed by the Tech.eu team for the purpose
of this report, along with additional transactions that were collected by
various individuals and associations in the Baltics.
According to our methodology, we do not include startups whose
headquarters have moved abroad, unless the majority of staff and operations
are still located in the startup’s home country. Therefore we excluded several
startups, including major scale-ups like BitFury and YPlan, from the analysis,
and so our figures may diverge from numbers given by startup associations in
the Baltics.
Also, many Baltic deals were not reported by the press but by founders or
investors, and collected by local startup associations. Many deals may not be
reported at all. However in bigger ecosystems such as the UK and France,
there are several deal aggregators, such as UKTN in the UK, and in France
through websites including Maddyness and Alloweb. The Nordic Web is a
good example of an aggregator of deals in the Nordics, including Iceland,
Denmark, Finland, Sweden, and Norway.
The Baltics could benefit from similar news sites or aggregators in order to
ensure that accurate data is collected and recorded.
Also, in many cases when deals are reported, the deal size is not disclosed,
which prevents a completely accurate picture of funding within startup
ecosystems. This goes for the Baltics and many other countries.
We did not provide an analysis of acquisitions or IPOs in the Baltics, because
there were so few (less than ten per country). However, we tried to highlight
the most important exits in each country.
We include non-European Union member states such as Russia, Turkey, Israel,
Norway, Switzerland and others as comparisons in our analysis, as we consider
them an integral part of the European technology industry as such. This is in
line with Tech.eu’s overall editorial policy.
Considering the vastness, fragmentation and breadth of different languages
that defines Europe, it is possible that certain transactions were not included in
our analysis.
We believe, however, that this is as comprehensive a report as possible. The
date of each transaction is recorded on the date it was initially reported by an
authoritative source, not necessarily the inking of the agreements or listings in
question. Hence, transactions closed at the end of 2015 may be included in
data for 2017.
Please subscribe to our newsletter to be kept up-to date on future reports,
which will dive into specific verticals, geographies and other groups.
66
METHODOLOGY & DISCLAIMERS

We welcome any feedback you may have on our report and methodology. If you’d like to report inaccuracies, flag
possible omissions or additions to the data set, or have any other comment to share or questions to ask, please reach
out to reports@tech.eu and we will respond as soon as possible.

Thank you for reading our analysis.

Robin Wauters Mary Loritz

(Founding editor, Tech.eu) (Data analyst, Tech.eu)

67
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