Linas Jegelevičius for the BNN
In Lithuania, what makes some wail and fail is the source of sheer joy for others. A mom-and-pop store on the corner of the block you’ve been stopping by for years to buy snacks may be gone – and with a lock on amid the Covid-19 pandemic.
But obviously, the public health crisis did not spook local startups, which have already attracted record-high 420 million euros in investments this year and this is not the end, says Roberta Rudokienė, Head of Startup Lithuania, a national startup ecosystem facilitator.
Previously, 2019 was considered a record year with around 170 million euros in attracted investments.
Although in general the country’s larger picture of the economy seems bright – it is projected that Lithuania’s real GDP will expand by 5.1 percent in 2021, and by 4.1 percent in 2022, many sectors are in wildly contrast situations throughout the crisis.
«The Lithuanian startup ecosystem continues to witness record investment and sales growth this year. The summarised half-year sales results are almost three times higher than in the corresponding period last year,» Rudokienė told BNN. «It seems that we barely have time to record startup investment deals – we have more than 50 of them at the moment».
It is important to note that only publicly disclosed deals are counted, some of them are not disclosed due to confidentiality agreements and are therefore not included in the statistics, she says.
According to her, Lithuanian startups were able to quickly overcome the challenges of the pandemic and discover and seize new opportunities.
«As for Lithuanian start-ups, we see that during the pandemic they were able to adapt quickly, conquer new markets, grow and expand. Startups received special attention in the field of life sciences and education (EduTech). Remote meetings and online communication have made it easier for start-ups to reach foreign investors and agree on investments. In addition, in previous years it was difficult for start-ups in the field of life sciences to attract venture capital investments due to their specifics, this year we are seeing a change that is being invested in this field more and more boldly and more. It is also gratifying that in Lithuania more and more start-up developers, successful start-ups and IT companies like, for example, KiloHealth has invested in RevoLab, Tyler and Medical Score, and Telesoft in Aichom,» Rudokienė told BNN.
She says that this year’s startup performance has also seen record growth in sales, exports, and headcount. In the first half of this year, Lithuania’s startup sales and exports were almost 3 times higher than last year, while headcount grew by 15 percent and now reaches 12,400 talents.
And if everything goes as planned, more big news is to come soon.
Investuok Lietuvoje (Invest Lithuania), a state agency tasked with promotion of investments, has set goals to attract 225 direct investment projects in various fields by 2025 to create 21.5 thousand new jobs, while investments in long-term assets of these projects are expected to amount to 1.2 billion euros.
The minister of the Economy and Innovation, Aušinė Armonaitė, has recently said that the record-high number of attracted FDI projects has put Lithuania among the leaders in Central and Eastern Europe.
«Currently, we are among three EU Member States attracting the most investment and we start competing with the strongest players in this league. We therefore set ambitious goals to achieve the level of the leading EU Member States,» said Armonaitė.
Invest Lithuania sets its goals to attract within five years, investments creating 10 thousand new jobs in the business services sector of Lithuania. Just the sciences sector alone aims to attract 200 million euros of investment in fixed assets and create 2 thousand new jobs.
Investuok Lietuvoje (Invest Lithuania) is said to be is in talks with 117 potential investors now.
Attracting direct investment will focus both on traditional target countries, like Belarus, Denmark, the US, the UK, Norway, Finland, Sweden, Germany, and also on Singapore and Switzerland, the agency said.
By 2025, it is also planned to expand the representation of the public body Invest Lithuania abroad and to increase the number of representatives in Germany and the UK, new representatives are planned to be established in Sweden and the East and West Coast of the US.
Although the country’s investment picture seems rosy, yet not without specks – workforce repletion and an acute lack of high-skilled specialists especially are damaging the country’s upbeat goals.
Analysts say that, with the economy expanding, the real demand for high-skilled tech-savvy workforce exceeds the availability by two or three times now.
The most efficient solution to tackle the brain drought would be to invite talents from abroad. However, Lithuania battling the unprecedented migrant crisis, which is is fuelled by the authoritarian Belarus regime, has significantly slowed down workers’ relocation procedures and they, many say, became more intricate.
Meanwhile, many other sectors are in distress and sending Mayday calls amid the pandemic.
For example, Dalia Matukienė, chairwoman of Lithuania’s Small and Medium Business Council (LSMBC), says threat of bankruptcies is «very real» for many by the end of the year.
«We see that companies’ debts are rising, insolvency is an issue. This is happening amid a surge of new coronavirus cases, the enactment of the Opportunity passes and with many activity restrictions in place. When all of that will be added up, we will be facing a catastrophic plight, particularly in the regions,» the LSMBC head predicts.
Evalda Šiškauskienė, president of the Lithuanian Hotel and Restaurant Association (LHRA) describes the situation in the sector as «complicated». «Hotel prices have fallen down sharply, so did turnovers in restaurants while wages went up by 10-15 percent. In addition, taxes need to be paid, so the whole situation remains very complex,» she told BNN.
Meanwhile, Sigitas Besagirskas, president of Vilnius Industry and Business Association (VIBA) believes that a looming wave of possible closures is part of the natural economic process, into which no one should interfere artificially.
«It is obvious that the pandemic is not going to end soon – there is third, fourth wave, and so on. If we allow companies to pile up debts endlessly, we will be soon be dealing with a parasite-like system, feeding on state support and ridden with abuses. We tend to see crises occurring every ten years. If companies endure and make through them, they firm up and those that fail just go off of the stage, which is like the falling of leaves in autumn – a very natural process,» the VIBA head said.
Linas Jegelevičius for the BNN