The success of a startup and tech ecosystem depends on more than a single variable. It is the result of a complex interplay between infrastructure, talent, capital, regulation, and community maturity. Yet, among all these elements, venture capital stands out as one of the most powerful catalysts for growth. It enables early-stage technology companies to scale more quickly, build professional teams sooner, and compete on a global stage.
Academic research and international experience provide ample evidence that venture-backed companies grow faster and more sustainably than those that rely solely on their own revenues. Venture capital is not only about money – it also brings expertise, mentorship, international networks, and strategic discipline.
In that context, Lithuania’s story is unique. It shows that a startup ecosystem can emerge and thrive even with limited access to capital – but also that once venture funding becomes available, growth can accelerate dramatically.
Lithuania’s path – from bootstrapped to CEE’s fastest-growing tech ecosystem
Although Lithuania’s tech ecosystem has grown the fastest among CEE countries over the past five years, with combined enterprise value expanding seven times between 2019 and 2024 to reach €16 billion, its beginnings were humble. For much of the 2010s, venture capital was scarce, and startups had little choice but to bootstrap their way forward. Founders learned early to rely on customer revenue and reinvesting profits into growth rather than seeking external investors.
This bootstrapped discipline shaped many of today’s leading Lithuanian tech success stories – Nord Security, Hostinger, Kilo Health, Omnisend, Surfshark and CarVertical, among others. Their path was longer and more challenging, but it ensured that their products addressed real market needs and that their business models were fundamentally sound.
From zero to €270M in early-stage capital
Things began to shift around 2017–2018, when the Lithuanian government started to systematically develop a venture capital market. Through the state investment agency, the government introduced financial instruments to stimulate early-stage funding and attract private investors into the ecosystem.
The impact was immediate. By 2019, the number of venture capital deals in Lithuania had grown nearly fourfold compared to the previous year – a clear sign that the ecosystem was entering to a new phase.
Importantly, Lithuania’s public financing helped to seed the early-stage venture capital market. With state support incentives, local VC funds and angel investors directly invested around €90 million into early-stage startups, with a total of roughly €270 million in pre-seed and seed capital attracted overall. These early investments helped local startups to scale and secure larger, follow-on rounds from international investors.
Public investment that paid back 12×
Overall, between 2017 and 2024, the government invested about €158 million into the venture capital ecosystem. During this period, Lithuanian startups attracted approximately €1.83 billion in private capital – more than 90% of which came from foreign funds. Startups and scale-ups together have contributed around €1.8 billion in taxes, meaning that the state’s investment in venture capital has effectively paid off nearly twelvefold – an extraordinary return for any public initiative.
The ripple effects on the broader economy are evident. In 2024 alone, Lithuanian startups added €477 million to the state budget. The sector now employs over 20,000 professionals, with an average monthly salary of €4,600, more than double the national average.
In addition to Lithuania’s three unicorns Vinted, Nord Security, and Baltic Classifieds Group, nearly 30 technology companies that started as startups now generate more than €20 million in annual revenue, and several exceed €100 million. They continue to grow rapidly, with many already seen as potential unicorns – or “soonicorns.”
This wave of expansion is driven by several factors – from improving infrastructure and better access to global markets, to an increasingly professional investor base – but the rising availability of venture capital has undoubtedly been one of the key enablers. Without it, Lithuania’s ecosystem today would be smaller, less competitive, and progressing much more slowly.
In a little over a decade, Lithuania has gone from having only a handful of startups to being recognized as one of Europe’s emerging technology hubs. The ecosystem’s trajectory – from bootstrapping to venture-backed acceleration – highlights a clear lesson: public investment in venture capital works when it is well-targeted, transparent, and designed to attract private co-investment.
More capital, not lower standards
A common misconception is that easier access to capital can dilute investment quality or lower market standards. Lithuania’s experience shows the opposite. Data from 2019–2021, a period of unusually high activity in early-stage funding, demonstrates that broader access to venture capital encouraged the formation of new teams without compromising the quality of investment or startup performance.
During this time, many Lithuanian startups secured pre-seed and seed funding through newly established funds, further supported by low interest rates that encouraged risk-taking among investors. Yet, conversion rates from seed to Series A rounds did not decline. Startups continued to mature successfully and attract larger follow-on rounds, suggesting that the expansion of capital availability strengthened rather than diluted the ecosystem.
Capital alone won’t define the future – its direction will
The next chapter of Lithuania’s innovation story will depend heavily on how effectively the country can channel venture capital into artificial intelligence, deep tech and defense technologies. The latter two sectors demand patient capital – investors willing to finance long development cycles before reaching market maturity. Such funding is crucial for sustaining innovation and keeping Lithuania competitive on the European and global stage.
Our goals are to make Lithuania the global leader in unicorns per capita. Reaching that milestone will require not only policy continuity and talent attraction but also a consistent supply of early-stage venture capital. This type of funding is what helps young teams transform prototypes into scalable businesses, reach international markets, and attract global investors.
