#LTstartups Ecosystem 2014 in Review - 46 Million EUR Invested in Lithuanian Startups

From StartupLithuania.com

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When we think about the best places to launch a startup - San Francisco or London comes to mind. However, new startup clusters are springing up all around the world, driven by lower costs and availability of talent. Many are quite promising, but not well known in the global startup movement. One of them is Vilnius city, the capital of Lithuania, a small & tech-friendly country in the Eastern Europe. Also, my choice for HQ location of our startup TrackDuck. 2014 was yet another record breaking year for #LTstartups with over 46 million Eur in investments (statistics according to StartupLithunia) and bunch of important events.

Sometimes it looks like everyone is moving here

Though there was plenty of action from local players in 2014, I would like to start from a growing trend of international startups moving to Vilnius. Last year, month after month new divisions and offices of foreign startups and IT companies were being announced:

• Uber established an office and started hiring developers. They currently already employ 8 people dev team, looking for at least 3 more and what I have from rumors could hire up to 50 more people.

• Wix opened an office and created „Wix one team“ to tackle some of their strategic projects. During office opening there were mentioned initial plans to hire around 150 IT people. They currently employ 31 people in Vilnius and looking for at least 6 more engineers and designers.

• Revel Systems established “a division in Lithuania to expand its team of IT engineers and to distribute products in the EU”. They have hired prominent local businessman Tadas Vizgirda and at least 4 engineers already. 

That’s just to name a few, more about such companies as Nasdaq and Devbridge Group opening IT departments in Lithuania you can find here or in the press. As happy I am that Lithuania is recognized in global IT industry, this is also worrying because salaries for developers are growing month to month. On other hand there are side benefits - while newcomers do warm up the salary market, competition for talent has spilled over to improving managerial practices and work environment - foreign capital companies for past years have been ranking as top choice as employers. There also more benefits, as foreign and local companies with dedicate more attention on the youth who are just entering the labor market. My biggest hope is, that some of the people from these companies will later on start their own startups and build products using their experience and network from international startups and corporations.

From InvestLithuania.com

Another big part of the wave of companies establishing divisions or fully moving HQ to Vilnius are coming from the east. Specifically, Russia, Ukraine and Belarus. Official reasons range from “entering EU market” and “diversifying talent pool” to being “closer to customers”. However, it is kind of clear that this part of moving startups and established companies are coming due to general instability in Russian and Belarus markets:

• Game Insight, this global game developer with offices in San Francisco, Moscow etc established HQ in Vilnius and was covered quite extensively by media from different angles. It certainly shook up the local tech and especially game dev scene straight away with it’s activity and events, like Live Mobile Congress, the biggest LT Game Jam in country’s history with more than 60 games created etc.

From 2015.GameJam.LT

• Charlie Oscar studio initially worked from Stockholm, Kiev, Perm, Moscow and Sebastopol. In May 2014 they moved to Vilnius to develop new “Gremlins Inc.” steampunk strategy game. Founder managing director Sergei Klimov, with their international team. Sergei with his positive and super outgoing attitude with PR skill has since became a promoter of Lithuanian game dev community and Vilnius. If you read Russian, check out this blog post about our lovely Vilnius.

• Flazm, Dash & Dot, Sky Games, Plawius, Melior Games are some of the other game development companies that also moved recently. And there is a pipeline with a companies in the process of relocation. 

If you noticed that most of them are into game development, that’s because it is so due to effort of Invest Lithuania, a Lithuanian government agency which work to help foreign investors start their ventures in Lithuania smoothly. I was happy to get my 2 cents in with “Pavel, come to Lithuania!” initiative, which was signed by 52 startups, attracted quite some media attention and tweeted by President of Lithuania :)

@Grybauskaite_LT Thank you very much, this means a lot to us.
— Pavel Durov (@durov) April 29, 2014

25 Lithuanian startup stars

There has been so many developments in the past year, that it is really hard to pick sensible number of news from the local #LTstartups announcements. I decided to focus on the funding, as it’s easier to confirm. So name an industry - we have it covered, from the Mac App of the year to 3D printing platforms. Here are some of the gems of Lithuanian startup scene action in 2014:

Aidas Dailidė, co-founder of Pixelmator at Apple event

Image editing app Pixelmator, which belongs to the best evaluated apps on the Mac App Store, Apple's Pick For Best iPad App Of The Year. Oh, also at last Apple’s Town Hall meeting, the Pixelmator team demoed its app for the iPad.

The fastest growing second hand clothes marketplace, Vinted, has raised $27m B round last year. A record breaking one in the Baltic region, setting new new standard of performance for all startups in the region.

Vinted story

Mobile app market Getjar, the one’s behind ‘Steve Jobs is not our Dad’. It since has been acquired by China-based Sungy, the developer of Go apps for Android, for estimated $35 million, including $5.3 million in cash.

CGTrader, the digital material marketplace for 3D printing and computer graphics, raised an undisclosed series A round, backed by Intel Capital.

mWallet platform WoraPay, has secured a €400,000 funding round from Israel-based Entrée Capital.

TRAFI raised more funding in August, 2014 from BaltCap and expanded to Brazil.

Social trading app MoboFree, which is expanding West African countries after series A round with help of funding from Netherlands based eVentures Africa Fund (eVA Fund).

TransferGo was featured as "Top 25 Hottest Fintech Start-Ups" and attracted additional funding.

Rewalon got followup investment from Polish venture capital fund Online Venture and Practica Capital. They also recently introduced a new product - Challenger, a customer development platform for B2C companies.

Our startup TrackDuck raised 200k Eur seed round from Kima Ventures and Practica Capital, which was the 1st investment for Kima in Lithuania. We also went from 0 to over 10 000 clients and first 100 paying clients without any paid advertising :)

AdDuplex is strengthened further their position as the leading cross promotion network for Windows apps) has crossed a billion ad impressions a month mark and has been featured on stage at the main Microsoft developer conference Build 2014. Btw, if you're interested in Windows phone market, AdDuplex blog is the main industry stats and info source.

Friday Lab smart fish finder sonar gadget and app called “Deeper” is now available in Apple retail stores. It has been spectacular to watch these guys grow from Indiegogo to tens of thousands users in
such short time.

Donatas from Friday Labs presenting Deeper sonar at Sunrise Valley 

I must mention Yplan, who raised $24 million series B last year. Lithuanian startup shining "expat" representative, Yplan started and grew out of London. The founders are Lithuanian, they were living in London for past 5 years before starting Yplan. Baltic fund BaltCap with number of Lithuanian partners was one of the first investors. Right now Yplan mentors #LTstartups when they have time and share their valuable contacts / insights.

Lemon Labs mobile app development agency, which worked with number of prominent startup from Lithuania and abroad, was acquired by health and beauty marketplace Wahanda. Now the deal was only announced recently in 2015, but Lemon Labs has been working with Wahanda for a while and clearly started negotiations a while ago.

ManoDaktaras.lt strengthened its position by acquiring the most popular in Lithuania health related website Sveikas.lt

MailerLite email marketing platform startup continues to grow without investment - in 2014 they fully redesigned their UI and went over 40 000 clients.

Exacaster, which works big data predictive analytics, was named as one of Tech Tour Names Top 25 Nordic Tech Companies and recently "was recognized as the most advanced high-tech services business in the country by a star-studded jury, winning the Knowledge Economy Company 2014 award".

TutoTOONS games platform, which allow to create games without any programming knowledge in 2014 had 85 games published, 4.7M game downloads reached without any outside investment. Just after the near years they hit 6M game downloads.

AdTarget.me successfully expanded to Poland and Ukraine after closing investment from Practica Capital.

Place I Live startup which provides deeper insights into neighborhoods launched in San Francisco, Chicago, London, Berlin and New York.

Dragdis bookmarking tool continued to develop, getting featured (2nd in the list) and participated in Blackbox Connect Summer 2014 program in Silicon Valley.

Bliubliu language learning startup got a grant and went to Germany for The Berlin Residency programme set up by EIT ICT Labs XEU Outreach.

InsideWarehouse, startup which allows for any online publisher to start selling products highly related to content on any device in 10 minutes, joined The Alchemist Accelerator.

PlateCulture, a marketplace to find and book dinners at local people homes in South East Asia, sort of "Airbnb for dinners" launched in Thailand, Malaysia, Vietnam and Singapore.

8 early startups were selected for 2014’s Startup Lithuania Roadshow, all of them look pretty interesting and worth the time to check out.

Meeting Lithuanian startups

The startup community in Lithuania is pretty easy to reach - in 2014 LT Startup’s Community in Facebook grew to over 1,6k participants, Internship @ LT startups to 800. if you prefer Twitter, use #LTstartups. English is considered a default language next to Lithuanian, so feel free to post and comment.

Go for the biggest startup conferences: LOGIN and Silicon Valley Comes to the Baltics. LOGIN in particularly, it attracted 5 thousand tech geeks and startups from the whole Eastern Europe, not only Lithuania. LOGIN has been around for nearly 10 years now and has a strong brand, thus manages to lure in even the hackers, startups and large businesses alike.

LOGIN 2014 Conference

Part of LOGIN is LOGIN Startup Fair with startups pitching on stage and matchmaking possibilities with foreign investors. Last year over 200 startup-investors meetings with were arranged and small fortune was made in making coffee stands in the Fair.

Monthly startup meetup Open Coffee Club Vilnius. It has been happening for few years, in 2014 every month 50-150 people gathered to discuss what’s going on. For the latest event check out #OCCVilnius.

Life Sciences Baltics 2014, an international forum of world-class biotechnology, pharmaceutical and medical devices had a number of startup participants and looks to grow even more this year.

For more startup events and meetups check out StartupLithuania.lt and StartupDigest.com/Lithuania, I am unable to list them all :)

Coworking, hubs, tech centers

Last year was also marked by number of new co-working spaces for Lithuanian startup ecosystem:

StartupHighway X (SHX) at Rupert Art and Education Center, runned of course by StartupHighway accelerator.

ISM University started Innovators base, which became popular startup event location and already host a bunch of startups.

Vilnius Tech Park was announced in 2014 (opens in 2016), which will have 100 seats coworking space established by TEO, the biggest telecommunications company in Lithuania.

Vilnius Tech Park

Talent Garden “Tag” coworking space was announced and recently launched in Kaunas. Already dubbed “the most creative space in Kaunas”, Tag got a great reception.

Sunrise Valley together with Western Union launched a new coworking space for startups. Sunrise Valley is the leading tech center in Lithuania with companies and R&D in lasers, optic industries and other hardware focused technology definitely worth to check out.

KTU StartupSpace incubator-coworking space in Kaunas continues to evolve, hosted a number of startup events and grew their portfolio to 19 student established startup companies.

Local startup investors

In terms of fundraising, the situation has improved dramatically from zero early stage startup investors just few years ago. The biggest contributors are VC funds financed by JEREMIE initiative. They recently published performance analysis, which states that more than 40 mln. EUR have been already disbursed to 75 SMEs.

From Lithuanian Private Equity and Venture Capital Association report 

One of the most active funds in Lithuania is Practica Capital. They invest in an early-tage development and a later-stage expansion of startups in Lithuania. In 2014 alone they invested in at least 6 startups. For startups who are not ready for seed round yet, Practica has partner Startup.lt accelerator. Together they last year also signed a partnership with Kaunas University of Technology to set up a dedicated scholarship for KTU students and invest in their companies over 30k Eur.

New VC fund Nextury Ventures was launched. Set up by GetJar founder and investor Ilja Laurs. Nextury is planing to back 20 Eastern European startups a year, until now Nexture has made 5 investments.

Lithuanian accelerator Startup Highway in 2014 announced partnership with UC Berkeley to take LT startups to Silicon Valley Skydeck incubator and later with Barclays bank to develop fintech businesses. The applications to UC Berkeley | Skydeck incubator are still open and Startup Highway is still in the selection process of the best team which will participate in the programme, so apply now.

In 2014 Startup Highway in partnership with a high-profile Russian investor, Igor Matsanyuk has invested in two new start-ups - Planner 5D and DevtoDev.

Mr. Matsanyuk has moved to Vilnius and is founder of IMI.VC fund, with over 40 investments worldwide. From IMI.VC portfolio Kula, 4talk, Planner5d, DevtoDev and Plague app have also moved to Lithuania. With such concentration in Lithuania it is logical to expect some investments to other local companies also, thus looking forward to hearing more news from IMI.VC in 2015.

What should we learn from 2014?

What is encouraging local startups and why all this moving to Lithuania happening you may ask. Well, because Lithuania has a pretty good general environment for startups. Taxes and prices in Lithuania are among the lower ones in Europe. IT labor is competent and hard-working, but still relatively cheap. We also have great ICT infrastructure: Lithuania continuously ranks among 1st for Internet upload and download speed, competitiveness rankings for communication technology, mobile penetration and for cloud readiness (whatever that means:).

Things to learn from 2014 and expect in 2015:

• We have a great advantage with our tech talent and lower costs compared to bigger startup hubs. 
• Sometimes, if not often, our ecosystem is valued more by foreign startups and companies, than by ourselves. 
• Next year product managers, marketers, biz devs etc who have experience working with global products will be in even higher demand. Developers won’t be the only focus of startup head hunting. 
• Lithuanian government should continue to support and even step up it’s game with startups based on last years results. 
• There is a lot of great things coming up in the next few years then all the current startups will start to mature and enter growth stages.

So stay positive, kick-ass and chew bubble - this year should be pretty fun! :)

Oleg, thanks a lot for help with this post! Folks, follow Oleg for the latest Lithuanian and global game dev news in Twitter @iWozik and his blog drinkandcode.com 

Eddy