In October 2022, the British company Revolut left the United Kingdom to establish itself in Lithuania on the Baltic Sea coast. The fintech company, a digital financial services company, finally relocated to the territory of the European Union as, as a result of Brexit, it became increasingly difficult to serve the market of the old continent. “We always focus on our customers and understand that no one likes the unknown,” said company spokeswoman Ieva Elvyra Kazakevičiūtė shortly before departure. In addition, there are already 263 companies that belong to the fintech sector, which employs more than 7,000 skilled workers in a federal state with almost 2.8 million inhabitants.
“We are the first country in Europe to issue licenses for digital banking,” emphasizes Diana Girdenyté, director of investment projects at the state agency Invest Lithuania. This milestone is possible, he adds, because they have managed to build “the largest hub for fintech companies in EU member countries and the tenth best country for these companies in the world rankings compiled by the Global Fintech Index.” a customer portfolio that includes more than 25 million users.”
The capital Vilnius ranks second among medium-sized cities in attracting foreign investment, according to fDi’s European Cities of the Future 2022 report. In addition to the British divorce, the massive relocation of Belarusian companies plays a role, , for security reasons – from 2020 and Lithuania’s strategy to position itself as a gateway to the European market for start-ups of American origin has given wings to the entire innovation sector. The country, which has already had three companies valued at more than $1 billion or unicorns since the beginning of this year – Vinted, Nord Security and Baltic Classifieds Group – has made every effort to lead the innovation sector in Europe until it has become a truly global sector benchmark in digital banking.
A very flexible regulation, coupled with an increasingly avant-garde digital infrastructure – the cost of broadband access is among the most competitive in the world – and prestige in cybersecurity – they rank sixth in the Global Cyber Security Index – These are some of the elements, which explain the growth of emerging companies in the financial sector in Lithuanian countries. In 2016, there were only 82 companies in the country, tripling in just six years. Of the current 263, about half are of national origin and have raised financing worth 67.9 million euros in 2022, quadrupling the figures achieved in 2020. The rest of the fintech companies mostly come from the United Kingdom (33), the United States (16) and Estonia (8). 34% of them are primarily dedicated to payment transactions.
The big question is whether a small country can really implement such ambitious growth plans on a continent like Europe with tough competition – with colossi the size of Paris, Berlin or Stockholm – not only in the financial sector, but as a hub of international economic innovation all levels. At least the intentions point in that direction. Among the novelties presented this year is Tech Zity, which, in the words of its founder and director Darius Žakaitis, is set to become “the largest hub in all of Europe”. What is now an old abandoned Soviet-era textile factory will have the capacity to house nearly 5,000 workers from companies committed to innovation and technological development.
“The aim is, in addition to relocating part of the offices of already consolidated companies in our country, to attract start-ups from the rest of the country and, above all, international talent.” The planned investment exceeds 100 million euros, capital “100% of private origin “, says Žakaitis. The aim is for the first phase of the project to be completed by the end of 2024.
So far the numbers are favorable for them: the main indicators show remarkable growth in recent years. In fact, over the last five years and despite the outbreak of the pandemic, the country’s innovation structure has experienced unprecedented growth. “The value of the technology sector has increased seventeen-fold in just three years,” Minister of Economy and Innovation Aušrinė Armonaitė, a member of the social-liberal Freedom Party (Laisvės Partija), tells EL PAÍS. This small Baltic republic – which, along with Poland, is the only country in the world that borders both Russia and Belarus – already has 1,000 tech start-ups and boasts of being the second-largest ecosystem in Europe in terms of growth.
Biotechnology and health
In addition to the financial sector, the country is also focusing its strategy on the two sectors of biotechnology and health sciences. Kilo Health is one example. According to Ilona Bernotaité, Head of Human Resources, they are “the second largest digital wellbeing company with the highest growth rate in Europe”. They currently have over five million users, they have tripled their number of employees in less than four years to currently 800 and will generate sales of more than 230 million euros in 2022.
But there were other success stories, especially in the ICT sector. According to Eurostat, Lithuania will create 52,200 jobs in the field of information and communication technologies in 2022. The Wix development unit (website manager), the engineering hub of the cloud services company Chronosphere or the digital restoration solution platform Raydiant are some of the recent success stories.
Lithuania wants to present itself to Europe as a digital platform as an alternative to Ireland. Its advantages are based on significantly more competitive prices, slight tax advantages and cheaper labor. According to the International Tax Competitiveness Index 2022, the country is already in eighth place in the OECD tax competitiveness rankings, replacing Estonia, which describes itself as a “unicorn nation” and has so far been a pioneer for further development in terms of innovation in Eastern Europe. In addition to some obstacles such as the complexity of the language and its location at the eastern end of the continent, we must see how external factors such as the war in Ukraine ultimately affect the development of the country, whose proximity and unpredictability predict a future threat with increasingly difficult ones Consequences. to predict.
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