The start-up ecosystem is growing rapidly; it is important to improve state aid

12-09-2019

“Start-ups develop innovation, promote the attraction of investments, promote the transition of the Latvian economy to a modern and innovative economy, the creation of new business models, development of talents and strengthen the venture capital sector. The start-up ecosystem is growing and the sector’s contribution to the economy is also growing rapidly – start-ups create high value added products and services, new, well-paid jobs and attract skilled labour,” emphasises Ralfs Nemiro, the Minister of Economics.

 

This year, an in-depth assessment of the start-up sector in Latvia has been carried out for the first time and it reveals that both the number of start-ups and the amount of investment attracted are significantly higher than had been estimated so far. Within the framework study, 100 start-ups and 80 industry representatives were interviewed, existing policies were analysed, and proposals for further development of the sector were gathered.

 

“The ability of Latvian start-ups to export their products effectively and attract foreign investment is confirmed by the fact that nearly 30% of start-ups have a branch or a subsidiary outside Latvia. “We can be proud of 12 sales of start-ups, as well as of the 8 start-ups that have participated in the prestigious US Silicon Valley accelerators,” continues the minister.

 

Data from the study show that at the beginning of this year 418 start-ups were registered in Latvia, around 150 start-ups are in development stages. In 2018, start-ups attracted investment of more than 82 million euro, while slightly more than 65 million euro were attracted in 2017. The amount of taxes collected also continues to grow significantly – if the taxes collected in 2012 amounted to 1.2 million, then these were 8.2 million in 2018, and the turnover of start-ups has increased four times since 2012. Only a small percentage of start-ups (8%) have a status of the microenterprise, and almost each of them pays taxes in full. Start-ups employed more than 1600 employees in 2017, when their turnover was almost 120 million EUR, where the turnover per employee amounted to around 75– 80 thousand EUR.

 

Today, on 12 September, the Start-up Day, the traditional and waited annual ecosystem event that brings together more and more participants each year, is celebrated in the VEFRESH innovation district in Riga with a broad programme of activities. The Start-up Day is an open ecosystem engagement platform to promote cross-sectoral cooperation and to highlight the contribution of start-ups to Latvia’s innovation development and economic vitality. The day will include open masterclasses and discussions, the Start-up Community Forum organised by the Ministry of Economics, presentations of the TOP10 Baltic Startup brands and a seminar of the Riga City Council grant programme “Kick-off”.

 

The Ministry of Economics is organising the Start-up Community Forum as a platform for dialogue for the third year in a row. “The Start-up Community Forum is a way of encouraging dialogue between different actors in the start-up ecosystem and stakeholders – start-ups, the academic sector, the public sector and corporations – looking for the best forms of cooperation. I am pleased that the forum, which is organised for the third time, has become a tradition, where we explain not only the members of communities, but also to the public the role of start-ups in the development of the innovation system and their contribution to the economy. It is particularly delightful that this year the focus of the Forum is not only on the cross-sectoral sector, but also on the opportunities and challenges in cooperation between the Baltic States,” indicates the Minister of Economics.

 

In the first part of the Forum, during the discussion “Promoting the start-up ecosystem and cross-sectoral cooperation: challenges and opportunities” participants will share experiences and discuss the challenges of the industry and potential solutions. In the second part of the Forum, representatives from different sectors will be invited to work together in the hackathon of ideas “Intersectoral cooperation opportunities and cooperation models”, where participants working in interdisciplinary groups will have to present 4-6 practical solutions to promote cross-sectoral cooperation. The Forum will also include a top of start-up brands, which is organised this year on the Baltic scale in honour of the 30th anniversary of the Baltic Road, listening to the 10 best Baltic start-ups in the Baltic and learning about the innovative solutions they proposed.

 

“It is important to strengthen the start-up ecosystem, to improve the state aid mechanism, and to encourage the involvement of universities and large corporations for the further development and growth of the start-up ecosystem. Active discussions have started with industry representatives and public authorities on amendments to the Law On Aid for the Activities of Start-up Companies in order to extend the scope of state aid beneficiaries and adapt it to the international practice of the sector, continues the minister.

 

The amendments to the Law On Aid for the Activities of Start-up Companies plan to extend the scope of aid beneficiaries by introducing more friendly conditions for receiving the aid. There are also plans to make changes to the eligibility criteria of the aid programme, extending the start-up’s eligibility to receive aid to 24 months (currently the aid can be received for up to 12 months) and providing with the right to re-apply for aid.

 

As it has already been reported, the Ministry of Economics and the bodies subordinated to it have been actively working on the creation of uniform supply for the start-up ecosystem over the last three years. In 2017, the Law On Aid for the Activities of Start-up Companies entered into force, which offered innovative support for start-ups, which was unprecedented for Latvia and was a clear signal to entrepreneurs, society and policy makers that start-ups are an important source of innovation in the national economy. Since 2018, Latvia, start-ups have access to representation in the Silicon Valley, which serves as a networking place and an investor attraction point. Also, on several occasions, start-ups have received support for participation in exhibitions, conferences and direct visits abroad. Last year, three acceleration funds (Overkill Ventures, BuildIT and the Commercialisation Reactor) started to work, and still continue to work this year, with each of the funds having European Regional Development Fund (ERDF) funding of 5 million euro of the total funding of 15 million euro. Similarly, start-ups have the option of obtaining a start-up visa, innovation voucher and business incubator support services, as well as seed and growth venture capital funding are also available.

Last update:    28-01-2020