Start in Latvia.

FirstLatvian

Start-up Listinside!

#StartinLatviaWelcome PacklaunchedPAGE 4

Latvian Start-upLaw explainedPAGE 5

Riga - a FinTech cityPAGE 14

Go Global.

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The Latvian Start-up Association “Startin.LV” represents the Latvian start-up community and is built on common values, and now has a united “voice” through the association. A year ago in February, 2016, the association was founded by 30 founding members – stakeholders of the Latvian start-up community – start-ups, start-up founders and employees, co-working spaces, incubators, accelerators and other ecosystem service providers, individual and corporate supporters, investors and other players.

Today, after a year of our active existence in the market, we have more than doubled the number of our members to 67. However, we still have a long way to go. I, as Chairperson

Talents are the most precious asset in Latvia as we possess a powerful body of knowledge – we are reliable, industrious, speak several languages, generate new ideas, and create world-class products and services with high added value. We are great ambassadors for our country — Latvia. We promote ourselves with high quality and reasonable cost.

More and more young professionals join the information and communication technology (ICT) sector in Latvia. Despite all forecasts the number of people employed in the sector increases every year – two to three times outgrowing the number of graduates from the IT programs. Even those who previously obtained degree in other fields unlock fresh perspectives in the IT sector. Accenture has experience in teaching software engineering to musicians, economists and financiers, and what is important – at any stage of their lives.

Maksims Jegorovs,Accenture Latvia Lead

Jekaterina Novicka,Latvian Start-up Association “Startin.LV”,Board Chairperson

of the Board, am more than happy with the results we’ve achieved during our first year, and of course we can’t underestimate the trust and support of our members. Our first wins within the country include the Start-up Law that is already in the market, the Start-up Visa already approved by the Latvian parliament in February 2017, the united hashtag #StartinLatvia, gathered start-up statistics, introduction of first Latvian hackathons Start-up Slalom, Riga Venture Summit policy making conference, this magazine and a lot more. We work hard to be an organization that promotes the Latvian start-up scene and connects it to the world, foster mutual respect, and represents its interests locally and globally.

When we are united, the Latvian Start-up ecosystem becomes stronger and more noticeable in the international arena. This is where we believe our true strength lies; when united business itself (not the politicians) is the driving force for the industry. Therefore, as tech business representatives, we believe in our talented people, and the knowledge and business experience that makes possible the ambition to become the number one choice for start-ups in the region.

When the Latvian Start-up Association “Startin.LV” was founded, we declared our Start-up Manifesto with the vision that by 2020 Latvia’s start-up ecosystem provides an unparalleled mix of reasonable start-up costs, access to international entrepreneurial talent and capital, start-up friendly regulation and excellent geographical connections. Now we see that this vision is real and to make it happen we continue to work with the Latvian Government, Riga city, public, private, and non-government sector stakeholders within three main paradigms: Ecosystem, Talent, Capital.

“As tech business representatives, we believe in our talented people, the knowledge and business experience that makes possible the ambition to become the number one choice for start-ups in the region.”

“The IT sector is increasingly merging with other sectors – borders are disappearing – this trend will intensify, and, thus, offer more business opportunities, which is good news!”

We see great opportunities of synergies with start-ups

Latvian Start-up ecosystem becomes stronger

The ecosystem of the ICT domain comprises a number of different sectors. Each segment is essential and vital, and produces powerful synergies if they are correctly used at the right moment. Given the importance of start-ups, one has to understand that we are no longer competing as one company, but as a sector. People, research institutes, an innovative economy and a wide spectrum of companies are our most valuable asset both in strong start-ups and larger players.

Major companies have to understand the importance of working with startups – investing time, resources and attention. For instance, during foreign customer visits, major IT companies like Accenture can introduce visitors to the offers of start-ups, thus, involving start-ups in the projects, and at the same time building those necessary bridges with investors and mentors, and providing management consultations.

Accenture is a global management consultation, technology services and outsourcing company. Every day we work with clients in more than 120 countries. We see great opportunities of synergies with start-ups. We see Accenture as serving as a bridge and we believe that we can help our Latvian start-ups by getting them meetings in a matter of minutes which would otherwise require months to arrange. The role of contacts is highly valuable and is sometimes underestimated as it cannot be measured with money, however, no one can take away your contacts.

Every year Accenture acquire or invest in other companies, including start-ups, and if we find the right company we would love to invest in the Baltic States.

The relationship between Accenture, start-ups, and the start-up ecosystem is building. We know that this can only benefit all of us in Latvia and the region.

Photo: Andrejs LosevičsPhoto: Reinis Oliņš

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#StartinLatvia Welcome Pack Latvian Start-up Law6 things you need to know

Start-up definition:Already in the market:

On the way to market later this year

On the way to market in 2018

Qualified start-ups only:

Flat start-up tax:

Qualified investor list:

Highly skilledemployee programme:

Start-upCommission:

the law provides the first attempt in Latvia to define what is a start-up

Latvian Start-up Association “Startin.LV”

helping to get established in the market

Business Angel co-investment programme

Start-up soft-loan50 thousand EUR loan withstart-up friendly conditions

Technology transfercenters

Start-up Tax and Highly Skilled Employee

Programme

Prototyping centers in universities and technology

centres

Start-up Visa for start-up founders and start-up

employees from outside the EU

3 acceleration funds with total 15 million EUR public funding

Ministry of Economics of the Republic of Latvia and Latvian Start-up Association “Startin.LV” have agreed to launch a package of start-up support instruments in 2017

2 seed stage venture capital funds and 2 growth capital funds with 60

million EUR public funding

in order to qualify start-ups must meet a set of criteria, key – 30 thousand EUR investment from a qualified VC fund

flat rate all inclusive social tax 259 EUR per employee plus 10% private pension fund contribution

preselected global VCs or qualified VCs with proven start-up investment track record are eligible

alternatively start-up can get full employee taxes paid from EU funds

on top of hard criteria a Start-up Commission will be set up to qualify start-ups and VCs

1

4

2

5

3

6

Flat startup tax

this is how much tax you would pay per salaried employee of a qualified start-up + private pension fund contribution of 10%

on the difference between pre-tax salary and 2 minimum salaries (example of calculation shown on page 29)

no extra taxes except on salaries above 4050 EUR

259 EUR

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Main start-up events

Main start-up players

Conferences

Hackathons

TechChill stands to serve as a launch-pad to help promising ideas succeed and innovative technology start-ups grow. Since 2011, TechChill is the main annual start-up meeting place in Riga and it has grown to a two-day event bringing 1000 participants together from the start-up community.

Latvian Start-up Association “Startin.LV” represents the Latvian start-up community and is built on common values and has a “voice” through the association. The organization also promotes the Latvian start-up scene, connects it to the world, fosters mutual respect as well as represents its interests locally and globally.

TechHub Riga is a community of new technology start-ups who can meet, work, learn and collaborate in a special co-working space. Located in the center of Riga TechHub Riga is the home for 20+ start-ups and a host of various events, such as Monthly Meetups and annual start-up community conference – TechChill.

Commercialization Reactor is Latvia-based international technology commercialization platform that successfully solves the contradiction between entrepreneurship and science by effective combining scientific excellence with entrepreneurial spirit. Practically, Commercialization Reactor is an ongoing business workshop combining features of pre-seed accelerator, seed fund, business incubator, technology broker, technology transfer office, commercialization agent of universities, and an educational project.

Green Technology Incubator (GIIC) is the Technology incubator that is focused on supporting and encouraging businesses involved in green industry innovation. The GIIC supports development of products, services and processes that harness renewable materials, energy sources and efficiency, reduce the use of natural resources, and cut or eliminate emissions and wastes.

Startup Wise Guys is a Business Tech B2B start-up accelerator located both in Riga and Talllinn. Startup Wise Guys offer a 3+1 month programme; seed investment; high valued mentors and a well established business network.

The Mill - Designer and developer co-working and meetup space in the heart of Riga.

Riga Venture Summit (RVS) is an international start-up ecosystem policy roundtable with a focus on the Baltic start-up ecosystem development. RVS brings key policy makers, business leaders, start-up founders and investors from the Baltics with prominent international experts face-to-face.

The Digital Freedom Festival is a multi-event platform where geeks of the digital era meet with policymakers to solve problems caused by the clash of digital and analogue worlds. Investors and technology evangelists connect with young, bright minds from the start-up scene, and we as consumers discuss the impact of technologies on our lifestyles.

TechChill

Latvian Start-up Association

TechHub Riga

Commercialization Reactor

Green Technology Incubator

Startup Wise Guys

The Mill

Startup Slalom Garage48 Startup Weekend

Riga Venture Summit

The Digital Freedom Festival

“Latvia leads the Baltic states with the number of start-up events organized by the main start-up ecosystem players.”

Jekaterina Novicka, Startin.LV

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“The key is mentality – these are people who believe that they can do something different and have the hustle to go make it happen. They want to determine their own future, not implement someone else’s view of what that future should be.”

“The need to create products and markets where none existed means that development is often financed by the owners themselves or investors. As a result, this type of business requires different experience and skills from typical new businesses.”

Start-ups provide an opportunity for people to define and build their own future, and the process is an adrenaline-filled adventure.

“By contrast, in the case of start-ups the main risk is that when you start the business it is unclear whether there is a market at all.”

Text: Māris ZandersPhoto: LETA

Expecting a tornado of start-upsIn an interview about the start-up ecosystem, the co-founder of TechHub Riga, Andris K. Bērziņš, expands on this

What is a start-up, looking not so much at the legal status but the idea?

What do we mean by “short period of time”?

How is the ability to scale up developed?

How large is this proportion?

As far as I understand the USA is now leaping into the unknown offering something similar specifically focused on providing after school transportation for kids. It is quite clear it would make life much easier for parents, but to entrust your child to strangers...

Establishment of a new legal framework is to be welcomed, but presumably the ecosystem is also necessary, in order to facilitate creation of start-ups and their ability to succeed, correct? How does Latvia look in this context?

Another part of the ecosystem is the education system, an environment that facilitates skills development. In Israel, as far as I understood, startups thrive for the specific reasons; namely, focus on technologies in the country’s armed forces. Somewhere else there are strong and old traditions in engineering. What does Latvia look like in this context? How and from where will the startup ecosystem recruit and attract new talent?

It is a new company with the potential to scale to a large business in a very short period of time.

Typically this means a company can expand significantly within five years, and to reach the level that you could think of it as “the Skype level”, within ten years. The majority are likely to remain below that level but there will be exceptions.

Some kind of innovation is created – it could be technology, a business model or a business approach which allows the start-up to sell much more products or services without increasing cost-per-unit by as much as revenues. This description helps us to understand why scaling up is more common in information technology companies – put simply, you can, for example, create an Internet-based service having almost fixed costs regardless of whether the number of users tens or hundreds of thousands.

Start-ups are also different because there is much higher risk of failure. An easy to understand comparison would be with a hairdressing salon. A new hairdressing salon can count on the demand to cut hair for a certain number of people. There is already a market for this service. The

A simplified estimate is: one of the ten will be a big success, some of them will earn a little and six or seven will simply close their doors. Thus, one feature which distinguishes the start-ups is their efforts to develop something new while not being sure if there is a market for it. For instance, when Uber started its operation it was unclear whether people would be prepared to give up traditional taxi services.

Airbnb is also a good example. Who would have thought five years ago, that so many people would be willing to rent out their flat or house to strangers? And that at the same time so many people are willing to accept an offer made by strangers rather than a hotel. It was far from clear for quite a while whether this innovation would be successful. It is, largely to the fact that both parties can rate each other, so through the power of the crowd you get feedback that throws out misbehaving parties quickly.

The ecosystem certainly is very important. The unwritten rule in Silicon Valley is that experienced and successful entrepreneurs help those who are just starting out, passing on their knowledge and contacts with no expectation of something in return (coined “pay it forward”). This principle really works well in this relatively small community. Such ecosystems based on the same principles function elsewhere, even if the location is smaller than the Silicon Valley.

Some new talent will come from universities, but a lot also from other more established businesses, where they will have some business experience before starting out on their own. They might have seen a problem that they think they can solve and set out to build a company to do that. Students are also a source of start-ups of course.

question is whether your hairdressing salon will be better then other salons, how well you will serve your clients etc. However, the risks you’re facing are lower and more manageable than for a start-up. By contrast, in the case of start-ups the main risk is that when you start the business it is unclear whether there is a market at all. Of course, this also means a significant proportion of start-ups go out of business.

And it is important to remember that while we need founders to start and lead businesses, we also need employees who will work for them. Once you have been in a fast-growing start-up it is hard to go back – the experience is full of adrenaline, fast-paced and exciting. Most people who try it cannot go back to work for a big company any more.

Therefore, during the discussions with the Ministry of Economics of the Republic of Latvia we came up with a new law designed for limited and specific number of entrepreneurs which would help people working in this sector.

Latvia is not an exception in this respect. At TechHub Riga we can see that even entrepreneurs operating just 18 months to two years already can help the absolute beginners. For example, our experienced residents help their junior colleagues with feedback to finish ‘brushing up’ their products and getting them to market. It might sound obvious, but such advice is essential for beginners to learn faster and to reduce the risk of error. Our ecosystem is relatively small in Latvia compared with many elsewhere. Still, I believe it is strong relative to the size of our country. It would be wrong to try to beat ourselves up because we don’t have as many start-ups as the United Kingdom, for example.

1110

Year

Total € from LV investors Total € from Foreign investors

2010 2011 2012 2013 2014 2015 2016

10 000 000

400 000 7 040 519 2 346 000 6 134 000 51 146 943 31 885 883 44 134 107

400 0006 952 519

88 000 2 005 000

341 0004 042 750

2 091 250

8 596 000

23 289 883

10 045 500

34 088 607

3 571 997

47 574 946

0

20 000 000

30 000 000

40 000 000

50 000 000

Total € Raised

Distributionof start-up investments

According to the new law, a start-up company is a capital company possessing a high growth potential, and its main economic activity is related to the design, production, and development of scalable business models and innovative products.

In order to encourage the growth of start-ups and innovative businesses in the programming period 2014 to 2020, a new innovative program will be introduced into the market. The Latvian accelerator program will work with financial intermediaries participation and, for start-ups, will provide support such as mentoring, assistance in attracting industry experts and next round investors etc., and financial support in the amount of about 250 thousand EUR.

Latvia is the first country in the Baltic States that has adopted a special law for start-ups

“We are eager to make our vision come true – to have Latvia be the 1st choice for start-ups in the Baltics!”

Total funding raised

*including period before year 2010

Foreign investors Local investors76% 24%

148 million EUR*

On our way to the innovation economy the development of start-ups is a priority of the Ministry of Economics of the Republic of Latvia. Latvia is the first country in the Baltic States that has adopted a special law for start-ups.The aim of this law is to promote the formation of start-up companies in Latvia thereby stimulate research, and the use of innovative ideas, products and processes in economic activity (commercialization of research products).

Arvils AšeradensDeputy Prime Minister, Minister for Economics of Latvia

Other advantages being a start-up in Latvia:

Furthermore, it is planned to improve the start-up environment in the following ways:

Latvia has developed the legal framework providing start-up companies in the first five years since the registration in the commercial register, the ability to receive state aid.

The main benefits for start-ups are incentives to reduce labor costs in the form of a fixed payment (with the possibility of obtaining corporate income tax relief of up to 100%) and co-financing of wages (45%) in order to attract highly qualified employees.

- to examine the possibility of extending the range of venture capital investors in the framework for start-ups providing conditions that should be flexible for attraction of investors while maintaining a clear selection criteria of investors;

- further discussions on worker motivation by developing regulations about issuance and valuation of share options for limited liability companies;

- further discussion on simplified liquidation process for start-ups etc.

Photo: Publicity photo

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Latvia is the first country in Europe to create such significant support for start-up companies. In addition to local initiatives, a number of European Structural Funds support programme have been launched, for example, acceleration funds for start-up support.

Being a part of the start-up ecosystem, the Investment and Development Agency of Latvia (LIAA) is the administrator of the innovation motivation programme and innovation voucher programme, which provides training programmes, covering expenses for prototyping, matchmaking events with international experts as well as attraction of investors and many other activities exclusively for start-up companies.

However, all of these support mechanisms can be brought to life only by creators of start-ups themselves. It seems that Latvia looks good amongst the Baltic and Scandinavian countries as the experts of British financial technology site “TechBullion.com” named Latvia and Baltics as one of the fastest growing regions in the world, because six of their Top10 fintech start-ups were established in Latvia. It must be said though, that the real breakthrough or success story for Latvia is still to come.

The start-up ecosystem offers excellent opportunities for new companies - to become global using the benefits of Latvian tax regime and receive other benefits of state support, to work in an open environment where the community is eager to try out new products and services. Not to mention that Latvia has strong traditions in the IT industry and this is a great place to live, and Latvia gives easy access to any location in Europe or the edge of the world.

Often investment attraction is considered as the success of Latvian start-up companies. More than two-thirds of the total volume of attracted investments has been brought by the leading ten companies out of 300 Latvian start-ups.

The start-up ecosystem offers excellent opportunities for new companies

Riga has one of the highest university attendance rates in the world

The leader in attracting investment is BitFury, which has attracted more than 50 million euros for its software for processing Bitcoin. This success is followed by the cash management platform CreamFinance, that has attracted investment of close to six million euros.

However, the true sense of the start-up environment and the reason it attracts such a wide public interest, especially younger generations and creative ones, is the ability to quickly become global, justify the confidence of investors, create new values and even change the world. These are the so-called exit cases. So far there are few of that kind. It is hoped that there will be a lot of followers in the footsteps of NACO Technologies which was widely publicized in 2016. Those are the fortunate ones we would like to highlight and wish for Latvia and our neighbours in the Baltics to have more successful companies.

“However, all of these support mechanisms can be brought to life only by creators of start-ups themselves.”

“Large international IT events which are attractive for start-ups also take place in Riga.”

Last year in Latvia could be described as a transition year for the start-up ecosystem; not only because of the approval of the Start-up Law, but also because of the agreement on a special tax regime.

Riga has proved itself as an economically active city with strong development potential – 50% of all economically active enterprises in Latvia are situated in Riga, and the value added production in Riga is about 50% of all production in Latvia.

Andris OzolsDirector of Investment and Development Agency of Latvia

Nils UšakovsThe Chairman of the Riga City Council

Photo: Publicity photoPhoto: Publicity photo

Photo: LETA

Additionally, our city boasts a highly skilled labor force. Riga has one of the highest university attendance rates in the world and 41.3% of the economic active population have university education. Furthermore, 70% of citizens aged under 40 speak English, and more than 85% of citizens speak Russian.

Riga is also to be regarded as the center of education as 77% of all students in Latvia are studying at higher education institutions in Riga. All this is creating advantages for a successful development of the IT sector. Large international IT events which are attractive for start-ups also take place in Riga. For example, Digital Freedom Festival, Riga Venture Summit, TechChill and others. Consequently, it is only logical for Riga to have an ambition to become the center of technology start-ups originally in the Baltic States and later in northern Europe. All indicators suggest that we are able to achieve it, therefore let us be active, creative and let us work together to fulfill this goal!

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Latvian Start-up association Startin.lv Board Member Renāts Lokomets is responsible for FinTech within the organization. He is also an experienced banking entrepreneur. Lokomets emphasises that Latvia just needs to keep on track and he thinks that the goal has already been accomplished: “Since the country’s independence 26 years ago, Riga has been and continues to be the financial capital of Eastern Europe. It connects the Commonwealth of Independent States (CIS) countries - nine out of the 15 former Soviet Republics and two associate members (Ukraine and Turkmenistan) - to Western Europe and the USA. Since banks were incorporated only 20 years ago, they have most advanced IT systems and technological solutions that were developed from scratch and can compete with any banking solution worldwide!”

There are 23 banks operating in Latvia, and 11 of them are local privately owned banks. The corresponding number of local privately owned banks in the neighbouring countries is significantly smaller - six in Estonia and four in Lithuania. According to data provided by the Latvian Start-up association Startin.lv, overall bank assets are estimated to be 30 billion EUR. An estimated 10 thousand people work in the industry.

The number of professionals available in the market, as well as cost–benefit analysis, were the main factors that encouraged the Mintos team to choose Latvia as the country in which to develop their start-up idea. Mintos is a peer-to-peer (P2P) lending marketplace that brings together investors and non-bank loan originators, allowing private individuals and institutional investors to invest in loans originated by loan originators. As of January 2017, the Mintos platform has over 18 thousand registered investors from more than 50 countries and 15 loan

There are always legislative issues when new services appear. The Latvian Start-up association Startin.lv is encouraged by the positive attitude and actions of Latvian governmental bodies including the Bank of Latvia, Financial and Capital Market Commission, and the Ministry of Economics in regard to driving forward the development

Riga instead of London

Open to changes

Riga emerging as a FinTech centreSuccessful FinTech start-ups born here have already proved that anything is possible

Text: Ieva TreijaPhoto: Fabian Irsara

Nowadays, a focus on start-ups is essential to any country that wants to fit into the modern world. But there is one more focus that is even more important, i.e. the focus on a particular industry. Latvia wants to be the FinTech industry centre of Eastern Europe.

“As a result, Latvian companies provide services in over 20 countries across Europe and have recently entered other global markets. What’s more, these companies are run from small offices in Riga.”

“We are waiting for the European Union Directive on Payment Services (PSD2) to come into force.”

“We started in Riga instead of London and we think that it was the right decision. There are many professionals with expertise in the FinTech industry here.”

originators that have financed loans amounting to 120 million EUR through the marketplace.

“We started in Riga instead of London and we think that it was the right decision. There are many professionals with expertise in the FinTech industry here. They have access to the appropriate education. Moreover, the banking sector has developed and accumulated a significant amount of knowledge. And, we have one very important advantage here that usually isn’t recognized enough – Riga has great flight connections to the whole of Europe,” says Mintos CEO and co-founder Mārtiņš Šulte in describing the main advantages of starting up in Riga.

There is one more player in the FinTech game - banks. Good cooperation with banks is crucial for Nordigen’s business. It is a Latvian start-up company that helps credit institutions categorise transactions for credit assessment purposes. Nordigen allows banks and non-bank lenders to build automation tools that reduce applicant screening time from 15 minutes to 5 seconds. “It will always be more difficult for small companies to succeed in negotiations with banks - it is an issue of trust. However, nobody has closed the door to us. Overall, banks are open to cooperation and ready to adjust their services to the

of the FinTech industry. When asked about this, Lokomets says, “Many changes still need to be implemented to create a regulatory “sandbox” and develop flexible licensing procedures, but even so, some serious changes are already happening. This demonstrates an appreciation of the importance of the FinTech industry to the Latvian economy.”

needs of partners. And if they are not doing that yet, they are going to be forced to open their infrastructure. It will be good for our business, because companies will have better access to data held by banks,” says Roberts Bernāns, co-founder and Head of Development at Nordigen. He recommends Riga as a good place to launch any business for yet another reason, i.e. there are plenty of people here with a strong IT background, so there is still considerable potential to find specialists that can help an idea to become a real business.

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Latvian Start-up List 2016

Dripit.io

66

Datazenit

61

Aspice

22

FitRadar

88

Aminostream

12

EUROLCDs

77

Blue Bridge Technologies

33

Gagabeer

97

Clusterpark

50

AirBoard

7

Edurio

72

Beyondpad

28

FROONT

93

Carbocove

45

AppStrand

17

Fabula

82

BuzzTale

40

HackMotion

102

Creamfinance

56

Drive eO

67

DeskTime

62

Assistentis

23

Forgamer

89

Ampple

13

Eventech

78

Blue Shock Bike

34

Blue Shock Race

35

Clusterpoint

51

AirDog

8

Electo.online

73

Bindie

29

FullContact

94

CertesTechnologies

46

Arlabion

18

Factury

83

CakeHR

41

CS Games

57

Adia Nano Tech

3

Agility Sports

5

Drofie

68

Drone Plan

69

DexLab

63

AstroSecret

24

Formyoula

90

Anatomy Next

14

EventsAround

79

Booking Group

36

Giraffe360

98

Coinfide

52

ALINA

9

Entora

74

Bindio

30

Funderful

95

Champick

47

Art FairsService

19

FASTERCOURSE

84

Capsulink

42

Custom 3DTech SIA

58

Advanced Vector Analytics

4

eazyBI

70

Dimple

64

Autolevi

25

Avizu

26

Fragmentic

91

Animalslife

15

EVOLED

80

BranchTrack

37

GRANDMA

100

Conelum

53

Alloy Advisor

10

Ernest

75

BitFury

31

Globitex

99

Cheeksup

48

ASADRA

20

FELTMORE

85

Captomatic

43

DaSMS

59

Adaplab

1

AdForte

2

Displio

65

Data VisualizationSoftware Lab

60

Ask.fm

21

Fitnessant

87

AmberHousing

11

ET Tech76

Bling

32

Furnny

96

ClientCallUp

49

AgirVision6

eComCharge

71

BalticEmbedded

27

Frank Taxibot

92

CaptureIn

44

AntiChat.me

16

EZZCAT

81

BuyerDeck

39

Brocreation

38

Growth Race

101

Coshared

54

CozyCell

55

A

C

D

E

F

G

BFinch

86

Created by the Latvian Start-up Association “Startin.LV”

18 19

Sorry as a Service

197

Linkify

127

Sellfy

189

Socialphotos

192

Laps

122

RigaVision

184

Nano 55

149

Messente

138

OrangeLV

159

Printful

174

Maintenel Automation

133

Notakey

154

Pogritech

169

MolPort

144

PayTraq

164

RCGLighthouse

179

ListFellas128

Sendigo

190

SocWifi

193

Lastmin

123

RingBe

185

Nano RAY-T

150

MIITO

139

Micro Pilot

140

OROCON

160

Printify

175

Mapon

134

NotifyUs.net

155

Poker Art

170

Monea

145

PAYYAP Retail

165

Recap Guide

180

Lokalise

130

LiveOnRiviera

129

Solid StateArchitects

194

LED chemicals

124

RMRmotorbikes

186

NanoOptoMetrics

151

Mindscopus

141

Overly

161

Qfer

176

MapOnShirt

135

Olly Bee

156

PolyLabs

171

MOSES

146

Piedarbs

166

ReContact

181

Mahydy

131

Sonarworks

195

Lightspace Technologies

125

Roamer

187

Narratif

152

Mintos

142

PayBis

162

Qminder

177

Mass Portal

136

Online.dog

157

Practican

172

N Capture

147

Pilot Automotive Labs

167

Relative CC

182

Songtive

196

LingoJungle

126

Selfikon

188

Snowision

191

Landlordy app

121

Rention

183

NacoTechnologies

148

MaxTraffic

137

Opportunity

158

Prana Jet

173

Mailigen

132

Nordigen

153

PlayGineering Systems

168

Mobocars

143

Payment.Ninja

163

QPANO

178

H

I

J/K

L

M

N

O

P

Q

R

S

Happr

103

Healthchecks.io

104

Herbo

105

Horny

106

Infogram

112

i2istudy INC

107

Istabai

117

infy.me

113

IDX Shoes

108

InHub

114

iGotClient

109

inSelly

115

Inboard

110

inBudget

111

insta.ad

116

Juro.io

118

Kenzap

119

Koatum

120

Soundigo

198

SpatialInitiatives

199

2120

- Start-up hubs: Baltic cities competing for global smart capital and global attention.

- Melting pot between East and West: attracting start-up talent to the Baltics.

Co-Organizer Co-Organizer Co-Organizer

Supporter Supporter Supporter

Regional Partner

Regional Partner

T

U

V

W

Z/1

STROPSTechnologies

203

SuiteStory Inc.

204

Square Audio

201

Sportlex

200

Swipe

205

STERCUS Solutions

202

Trace

217

Tooth Fairy’s Tools

218

tawk.to

207

TWINO

223

Text2reach

212

TransfoElectric

219

Taxi Pocket

208

The FixHub

213

Treinio

220

TeamLab

209

TheMonetizr

214

Trip.Center

221

TelTel

210

Tinygain

215

Toneboard

216

TapCore

206

Tweetdeleter

222

Tennis Battle

211

UAV Factory Ltd

224

UrbnEyes

225

Visualoop

229

Viventor

230

VIVIDLY

231

Vendon

226

Vortex Oil Engineering

232

Veset

227

VIAINVEST

228

Vorty

233

Walmoo

234

WiFiAdManager

235

WISY

236

WPBakery

237

Zuumly

239

ZoomCharts

238

About RVSRiga Venture Summit is an international start-up ecosystem policy roundtable with a focus on the Baltic start-up ecosystem development.

The first Summit took place on November 6, 2015, bringing face-to-face key policy makers, business leaders, start-up founders and investors from the Baltics with prominent international experts. RVS 2015 resulted in closer cooperation among leading Baltic startup ecosystem players and led to birth of the Latvian Start-up Association “Startin.LV”.

On Februrary 9, 2017 Riga Venture Summit 2017 brings leading Baltic start-up minds and a host of international experts to zoom in on most effective policies to drive pipeline of competitive early stage start-ups and attracting global flows of smart money to the Baltics.

“Riga Venture Summit 2017 brings together leading Baltic start-up minds and a host of international experts.”

Summit 2017

Two main topics

Organizers Main Supporter

4SmartStreets

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The media is talking about start-ups. People are getting more and more interested and involved in start-ups. Do you also feel that interest is growing?

How does Latvia look on the global science-based start-up landscape?

Where do scientific ideas that are interested in participating in Commercialization Reactor come from?

So how does it all work in practice?

What is the future aim of the Commercialization Reactor?

Where are the opportunities to find private investors?

Is there interest from other European countries in cooperating with the Commercialization Reactor in Riga?

What has the Reactor’s biggest success been to date?

InterviewThe winding road to success of science-based start-upsThere are people in Latvia that have found a way how to help scientific ideas become commercially viable. This is how the Commercialization Reactor was born. The organisation’s founder Nikolajs Adamovičs is happy that this project is still alive and kicking. If it wasn’t for help from the Reactor, some bright ideas would probably still be gathering dust on a shelf in some university or laboratory. On the other hand, life is not easy for science-based start-ups. Their road to start-up success is not as quick as we might expect.

Let’s start with the definition. There are different start-ups and they develop differently. The overall rules of development for all start-ups are the same, but their approach and results are totally different. We work exclusively with science-based or deep-tech start-ups. They are not the same as IT or FinTech start-ups that have been created due to a market push or demand. Deep Tech start-ups can survive for a longer period of time and involve more people. Moreover, much more money is needed for development and there is a different threshold of expectations. Market pull is always easier and simpler, but scientists simply don’t care about it. They just invent something.

At the beginning, somebody owns the science achievement and only afterwards does he look at where to apply it in the market. This can take a lot of time. And you should remember that you don’t always earn a lot of money from your invention. On the other hand, things that change our lives are based on science and only find the way onto the market afterwards. Many inventions that are popular nowadays were created 10, 20, 30 or even 50 years ago.

Right now, we have more than 30 start-ups in the Commercialization Reactor. Only two of them are developing scientific technologies created in Latvia, but this is fine for such a small country. On the other hand, the biggest part of the rest of these projects are managed by Latvians. So we can offer good entrepreneurs. This means that we should create circumstances that allow us to take scientific ideas from abroad, adapt them here with the help of local universities, and develop them as Latvian start-ups. There is a demand for that. And we already have a very good example - Naco Technologies that exited a year ago. The technology was imported and commercialized here in Latvia.

There are a couple of things we need to develop this model here. Firstly, we should look for entrepreneurs and this is what the Commercialization Reactor is doing. People here don’t have language barriers with Eastern and Western countries and they want to work. This is good. The second precondition is legislation that is moving in the right direction. Thirdly, we need money. Accelerator funds should be available along with pre-seed, seed and venture funds, but unfortunately they are all still on the drawing board.

They are all from different universities where they are made. Most ideas come from Russia, Armenia, Kazakhstan, and probably, there will soon be interest from Ukraine as well. We are looking for scientists who are willing to commercialize their products using our chain of experts. We are not taking them away from the country of origin. We are just creating and then accelerating them.

There are several phases of development for science-based start-ups. Scientists must have a laboratory prototype. This is just a prototype that can be demonstrated to the industry to introduce it with a view to exploiting potential opportunities. When it gets to business, this knowledge should be transferred to another level. An established startup should create a small-scale or mass-scale product. This happens with the participation of local scientists and universities. The scientist who has created the technology just visits the team from time to time and takes part in the whole process.

This depends on the amount of money available, because our plans are subject to those of the government. We are creating approximately 10 start-ups a year. For last two years, we created less because of the lack of money in the market. We were forced to launch new companies just to stay in the market. But we need pre-seed money for development, which is local public money. For some time, this wasn’t available.

Overall, I think that there should be a separate flow of money for science-based start-ups. The impact from these start-ups is totally different. Let’s go back to the example of Naco Technologies. They created a unique nano-coating and previously there was no knowledge at all about this in the local market. The start-up was lucky enough to meet the Schaeffler Group. They got interested in this project and finally bought it. What’s more, they have created the Competence centre here in Riga on the basis of this start-up. This was the only way how this could have happened. Later it will even create the demand for local universities to teach students for work in new industry.

They are interested after the pre-seed stage. It is the riskiest investment, but it is the only way to move forward. When you have done that, more money is available.

People from different countries are interested in what Commercialization Reactor is doing. They understand our model, but we never wanted to fight for European technologies to develop. It is easier, for example, for a scientist from Germany to commercialize his project there — he has the whole market and industry right beside him. Moreover, there are qualified people to attract. There is interest from countries that have recently joined the EU. But it is a bit harder to find good technologies there.

The most important thing for us is that we are still active. When I started this project, I thought that five years would be enough for me. But I’m already into my eighth year doing this. I’m proud that there is interest from young, mature and highly motivated as well as very enthusiastic entrepreneurs who want to cooperate and develop new technological products. They can stay in Latvia and work here. And another thing to be proud of is the proven success of Naco Technologies. This just shows that the model we have created here works.

Text: Ieva TreijaPhoto: Reinis Oliņš

“Science-based start-ups have been created through a technology push.”

“An established start-up should create a small-scale or mass-scale product.”

In regard to the popularity of science-based start-ups, I do feel the interest. But there is no difference in terms of what it takes to bring the product to the market. It is the same as it was five or even 10 years ago. Let’s be realistic — development of new material takes the same amount of time as 30 years ago. There are more opportunities, but there are fewer niches available. It is more difficult to tap into them.

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“Finally, I learned a lot about myself. Being a CEO is sometimes a very lonely place. There are times when there is no one to ask for help or advice.”

Cap table

Technology

Pilot clients and product-market fit

Team

The good parts

Investor communication

Lesson learnedErnests Štāls, CEO and co-founder at Dripit.io: “How did my first B2B SaaS start-up fail?”When failure is written about in the business literature and stories of successful people, it seems awesome. It is part of a great story where there is a hero who stumbles, overcomes challenges and comes out as a winner. In reality, when you fail and hit that low, there is no winning part! Not yet! You have just failed and that’s it. You feel bad. People around you might like to read about failures but in real life they won’t be that passionate about you. Below are the hands-on failures I have had at Reach.ly. In no particular order. More of a list for me to come back to and check to see if I’m doing something wrong again.

Reach.ly had two totally different iterations – as a Twitter mining solution for hotels and later as Behavioural analytics for e-commerce. I didn’t start fresh with the second pivot, but instead kept all angel investors who had been involved in the first iteration. At the time, it seemed to be the correct decision as I personally still had a decent number of shares. What I didn’t have was room for other investors. Not at a reasonable valuation.

We started out with Big Data stack. As we were tracking onsite visitor behaviour, we thought that there would be a large amount of data and we would need an appropriate stack which could handle the load. I used to say, “If it doesn’t scale, it fails”. We didn’t start with a simple stack to solve a business problem and test the idea, we started with the stack which solved the scaling problem.

Ironically the crucial point was availability of resources. I got a start-up deal from Softlayer which gave us 1000$ worth of hosting per month for free for a year. It is an “all you can eat” buffet for developers. As a result, we had cluster of nodes running hadoop and hbase, logging system, monitoring solution and all the dependencies in the middle. Very close to 1000$ spent per month on hosting without having a single customer or working prototype for that matter. More on technology and failure here.

In the beginning, we had a pilot client. The client was an E-retailer with proper size and amount of data to develop behavioural analytics and with the potential to do whatever we wanted (within privacy policy limits) with data. As we were so much into Big Data technology, we didn’t create an appropriate tracking solution and had holes in our dataset. Instead of fixing it, we decided to switch to the Shopify platform because it has a standardised API and app marketplace. Sounds great but it wasn’t. As we discovered, Shopify players were too small for our solution and we couldn’t get decent one to

First of all, there is no such thing as bad employees. There are just bad hiring decisions. I had a team which was technology centric and were not that much interested in the actual business side. As a CEO, I was the one who got them on board. They were interested to work for Reach.ly and so it seemed to be OK. I didn’t evaluate their personalities, their goals and how they fit with our company goals. As a result, there were big misunderstandings. In the end, some people left and I finally let go others.

With this experience in hand, I spent half a year hiring people who fit the company, the team, and the product. The new team could iterate really, really fast. In retrospect, I should have let people go much earlier and halted operations till I got the proper team on board. It comes down to people who can work together as a team. If the team cannot ship, there are problems. Even worse, deadlines are missed and as a CEO I become the front facing over-promiser.

In the start-up environment a lot of attention is on pitch. You sell yourself, your idea, your team, your vision. After the sale comes the communication part. In the very beginning I didn’t communicate at all. There were just so many delays in development that it just didn’t matter, and it wasn’t required either. But once I got team in place I started to communicate. I followed a simple structure for my monthly reports: summary, accomplishments, let-downs and goals for the next period. One thing I missed was financials, especially burn rate and runway. The structure above is focused on product and market. On the other hand money is the fuel for all of this and gives a reality check for everyone.

Lesson learned: “Always have someone who can give you fair feedback on your prototype. Always.”

Lesson learned: “Passion (really) matters more than knowledge.”

Lesson learned: “Keeping everyone on the same page is crucial in the long-run.”

I fixed the team:

I learned a ton about people:

I stretched my Python muscle:

I learned a lot about myself:

The best feedback comes from people who have been in your shoes:

“It just feels so good when one sees the result of hiring the right people and things start to move fast.”

“Everyone has their own agenda, and if it doesn’t align with your company’s agenda it can become a waste of time really fast. Team, advisors, investors, potential clients. It doesn’t matter.”

“I managed to build my own client database, populate it and create highly targeted campaigns.”

“Being a CEO is sometimes a very lonely place. There are times when there is no one to ask for help or advice. I learned to be critical about myself, thoughts, feelings, attitude. There are uncomfortable situations you just have to put yourself in.”

“They are straightforward and honest. One might not like what they say, but it turns out to be the best feedback.”

Lesson learned: “A new venture should be started as one.”

Lesson learned: “Start small, build on it.”

As it happens, I got into this situation slowly. The previous idea didn’t fail straight away, and I got some money from consultancy jobs and could hire back some employees. I got some funding. We just kept on moving till at one moment I started to talk with VCs, they asked for a Cap table and I realised that it sucked.

work with us and become pilot. Without a pilot client, we became like minions without a master to serve.

Text: Ernests ŠtālsPhoto: Reinis Oliņš

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Before CakeHR, I ran a digital agency. I set up an office in Riga while living in London, and I wanted to hire quickly and scale fast. It worked to an extent  — developers were working, projects were rolling in, we kept growing but then a few years in we started to struggle and I couldn’t understand why.

We had nice customers and projects, but somehow there were issues with each project up to a moment when we

It is hard to overemphasize the value of a start-up having the right team – these are the people who will have to have the passion and skills build something that has never been built before and convince partners, customers and investors of their vision.

When you start from nothing, all you have is an idea (that many people are likely to have had before) and a team that has to deliver it. A good team, is also incredibly difficult to get right. From the very start you need to have extremely different people that are all passionate about the same thing. It’s much easier to find like-minded people who have a similar professional skillset or way of thinking but that’s a waste of collective capability. Edurio was started by a strategy consultant, academic and a digital project manager, who were all ready to devote themselves to improving education.

I think that there is only one way that Latvia can stand out in international markets - innovative pixel-perfect products, keeping a flexible and personal service. Our core added value should be intelligence, experience, the cosmopolitism of the teams.

What do we have for that? Talent in IT, financial services, engineering, telecommunications, etc. What do we lack?

As in Latvia we do not have a lot of valuable natural resources, our biggest asset are people. And as the history shows, with those very smart people Latvia has been a place for many world’s firsts. For instance, Latvia was the first country to a virtual electronic signature. It is not a very known fact as Estonians have been doing a lot of PR around their e-residency. Nevertheless, it has helped the Baltic region in general to establish a reputation as pioneers in digital identity.

Kaspars Upmanis,CEO & co-founder atwww.cake.hr

Ernests Jenavs,Founder at Edurio

Jevgēnijs Novickis,CEO at Swipe

Jānis Graubiņš,Business Developer &co-founder at Notakey

Start-ups sharing experience

“It also forced me to take a look at our team from a different angle.”

“A good team, is also incredibly difficult to get right.”

“Our core added value should be intelligence, experience.”

“We have smart people, who can make great products.”

started losing them. Long story short  —  it went to a point I had to make a painful decision to let half of the team go in order to save the company. It was hard and painful decision but it also forced me to take a look at our team from a different angle and I realized what had happened. It was entirely my fault. The business failed because of bad hiring. Bad team and bad employees.

As we grew, having to jump from 8 to 18 people in two months due to kicking off a major project, there was one feature we knew we had to maintain - an output driven culture where every member of the team cares not just about doing the thing right but about doing the right thing.

Everybody’s job and responsibility first and foremost is taking the company closer to finding a scalable business model. That is why, when people are interviewing for a role, we spend a lot of time talking not about them but about Edurio, our strategy and the value we place on reliability, constant feedback and proactivity. People join start-ups to have real impact and to achieve that, they need full appreciation of where the company is trying to get to and how.

International marketing success stories and local investment capital. A good example? Take a look at what’s happening with Latvian micro-lending and P2P investment companies. They have local founders, team, capital, find their customers internationally and serve them online. Other sectors with internationally proven demand and scalable business models should follow them soon.

This reputation has helped also our company to sell our digital identity solution to other countries such as Switzerland. In particular, we have sold to Swiss banks, who are very cautious about security and privacy in general. I believe that this is a great indicator that in the space of digital identity we are very well positioned – we have smart people, who can make great products and the Baltic region itself has a reputation as innovators in this field.

It is extremely exciting to start something new and, so, being in a start-up is an unforgettable experience for both women and men. As start-ups think globally from day one, each person working for the start-up can create or change something and see immediate impact even on people on the opposite side of the world! It is the same for IT companies that usually work with global clients and solutions. We need more women in IT to ensure that

Anna Andersone,Founder of be-with.coCo-founder of THE MILL, FROONT, Berta.meInitiator of Riga TechGirls

“We also need women and girls to have digital literacy.”IT product and service development takes into account diversity. We also need women and girls to have digital literacy to be valuable and competitive in the future job positions. This will ensure prosperity to our society. Being in IT is exciting, interesting, impactful and it is the future of workforce development, and we need more women joining in today!

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Pension contribution by Employee1000 EUR

1500 EUR 2000 EUR

2500 EUR 3000 EUR

Net salary paid to Employee

Social contribution paid by Employer

Pre-tax salary in employment contract259,08

716,92

24

259,08

1166,92

74

259,08

1616,92

124

259,08

2066,92

174

259,08

2516,92

224

1000 €

28,31%

22,21%

19,15%17,32% 16,10%

1500 € 2000 € 2500 € 2500 €

Example: How much start-up tax you would pay on salaries of a qualified start-up in 2017

Effective tax rate

Countries or cities in the world, where a start-up ecosystem is thriving, could be divided somewhat arbitrarily into two categories. The first includes countries/cities, where this ecosystem was established without direct State aid, thus governments might not even been expecting it. Consider the example of Silicon Valley in the USA or Stockholm in Sweden whereby market forces seem to have played the major role. The second category is when the particular country or city government observe things happening elsewhere, and understand the power of digital economy and start-ups – so they start considering: now, what do we have to do to have a thriving tech ecosystem, a start-up hub? This would be more likely our case in Latvia. We certainly have the preconditions for creating an advanced technology-based economy here. For instance, the tradition of having generations of engineers or existence of technology intensive production in general – let us mention such companies as Mikrotīkls, SAF Tehnika, Hansa Electronics, Baltic Scientific Instruments and others that continue the proud engineering traditions of VEF, Alfa etc.

OK, today we have lower proportion of specialists in this sector than before, however, there is a foundation to build on. We have a lot of young and dynamic people who not only are not afraid of technologies but also want to create them and change the world. In short, Riga in the aspect of start-up development has the same opportunities as any relatively well off and open-minded mid size city in the world. But, we have to work hard to make sure public policy supports technological development in a smart way. The recently passed “Law on Aid for Start-up Companies” frequently referred to as Latvian Start-up Law is but one of the building blocks in this direction.

We have to work hard to make sure public policy supports technological development in a smart way.

Start-up LawIn an interview, former Minister of Economics, now Board Member of Latvian Start-up Association “Startin.LV” Daniels Pavļuts talks about the new Start-up Law

When it comes to the State’s participation in development of the ecosystem, we have to bear in mind, it may not always be successful, because, to put it very delicately, the State’s awareness might be very specific. By way of example I could mention Skolkovo megaproject in Russia, where, as far as I understand, the results are yet far from expected.

As we discussed - in places where market forces are not sufficient to produce a vibrant tech ecosystem, the public sector plays a significant role. I would like to emphasize – in a co-ordinating and helping role. This is tricky and few policy makers have done well in this respect. Skolkovo seems to be a case of a heavy-handed approach - large amounts of public money have been spent there. Thus, there is not enough logic of private entrepreneurship. Projects like that tend to attract ideas and businesses, which become dependent on government subsidies and fail in the open market. But let us talk specifically about our situation. For better or worse we have no resources for projects like Skolkovo. We live in a certain legal environment, which is quite prescriptive in nature – everything needs to be described clearly, there have to be hard criteria for public support. That in turn requires the regulations to define clearly what, in line with our discussion for example, a start-up is?

Is a newly opened grocery store a start-up? Or maybe the establishment of a software development company? In order to avoid any misunderstanding, it has to be clearly defined somewhere, therefore it made sense in our case

Text: Māris ZandersPhotos: Reinis Oliņš

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to draft a specific start-up law. In terms of definitions we wanted to stress the technological and innovative nature of start-ups, as well as the imperative of scalability. The law was essential to create a foundation for having a Start-up Tax and perhaps other support programmes in the future. The start-up law thus becomes a point of reference for policy making.

This law was drafted in close collaboration between the Ministry of Economics of the Republic of Latvia and the tech sector. What are the main challenges of our sector? One of the greatest needs is capital, but it is not just any money. Start-ups need money that comes along with knowledge and experience from people, who have already created start-ups on more than one occasion, and who in every detail understand the new disruptive business models. We are talking about smart money. As you can imagine we are lacking smart money in Latvia, and this is issue number one. I will state it differently. The State in the past has invested in seed and venture capital funds – some are more successful, others – less, but the foundations have been laid. Still, on the whole we are still short of venture capital. We have more than 240 start-ups in Latvia, which have attracted almost 150 million EUR in investment from angel investors, local and international VCs. This is a remarkable achievement, but we have a long way to go. In particular, we have to get the attention of experienced global seed and venture capital investors; hopefully the Start-up Law will help.

“Investment from a qualified seed or venture capital fund is the key prerequisite to being eligible for Start-up Tax and other benefits.”

“In start-up terms – the Latvian Start-up Law is an MVP (minimum viable product), a prototype that needs to be tested and improved / amended as necessary. ”

“We hope both Latvian and foreign start-ups will find this useful and attractive.”

As to national legislation favourable to start-ups, an essential element is the ease of termination for unsuccessful projects. So that a person who has ventured and tried does not have to agonise with insolvency proceedings for years.

I assume intellectual property rights issue is essential for start-ups ecosystem. Not that innovation cherished by you is “borrowed” by somebody else and you have to go through the court system for years.

What timeframe is set for this work?

This is among several issues in our sights. When we launched the Latvian Start-up Association less than a year ago, we published a Latvian Start-up Manifesto. Easier termination of failed businesses was among the issues listed.

I have heard many appreciative words about the Latvian Patent Office from the people who have had a contact with this institution lately. It must also be clear that patent enforcement is not as relevant for start-ups focusing on software and IT. It has much more significance to science based start-ups that depend on IP protection. For software start-ups the speed of development and time to market are far more important.

I would like to come back to the special Startup Tax arrangement provided by the Latvian Start-up Law. The purpose of it is to increase the possible speed of development for the best early start-ups, to provide rocket fuel for their development. What are the best? Those, who have convinced the hard-nosed venture capitalists, and who have already raised smart money from experienced investors. Start-up companies normally do not operate under micro-enterprise tax regime due to salary ceiling, thus employees of start-ups are normally subject to the general tax regime. Let us say, for example, you have attracted hundred thousand Euros in seed funding, you have built a team, you are working hard to validate your product, attract paying clients etc. In the first year post seed investment, half of the funding attracted from the investors will be paid in salary taxes. It is good and necessary to pay taxes fully, but we had to reflect - what would the start-up be able to do in the

The main policy proposals are focused on this year, also the next one in any event. An important initiative, amendments to Immigration Law that provide for creation of Latvian Start-up Visa have just been approved by the Parliament and will have to be implemented now – the project is aimed at granting residence permits for up to three years to persons from third countries (for instance, the USA, Australia, Asia, CIS countries), who are willing to set up start-ups in Latvia. Requirements for employing highly qualified foreign specialists are also liberalized. Equally, this Startup Policy Agenda refers to the next wave of public investment into seed and growth stage venture capital funds (60 million EUR), accelerator programmes (15 million EUR), opening up a representation in the Silicon Valley and a range of other issues.

Together with the Ministry of Economics, which has been extremely enthusiastic and helpful, we are now developing a package of proposals necessary to facilitate improvement of startup ecosystem – we call it “Start-up Policy Agenda 2017”. This includes swift and uncomplicated liquidation procedure for failed companies. Start-ups often fail and it is quite normal. The important thing is for the founders to be able to move on quickly to a better idea. Proposal under discussion with the Ministry of Economics of the Republic of Latvia and the Ministry of Justice of the Republic of Latvia is as follows: if investors/debtors are able to reach the settlement, the liquidation process progresses rapidly. Several proposals on the table, such as simplifying existing liquidation procedures, have already been approved on a working level. However, Start-up Policy Agenda 2017 includes many more points. On the top of it is making sure Latvian Start-up Law is implemented smoothly and starts working.

same year for development of their business, if they could legally spend more on growth? Wouldn’t their chances of success increase? Speed is critically important in start-up development, by increasing the speed we simultaneously increase the potential for those companies to mature successfully and become reliable taxpayers within the general tax regime after a certain period of time.The Startup Law provides for two main support mechanisms – the broader Startup Tax scheme, whereby a qualified start-up pays a flat, all-inclusive tax (calculated as a typical social security payment from 2 minimum salaries), which in 2017 will amount to 259 EUR per employee. On top of that a 10% private pension fund contribution has to be paid from the difference between pre-tax salary and 2 minimum salaries (example of calculations provided in in a graph on page 29). That’s it. The effective tax rate changes with the amount of pre-tax salary, but savings are quite substantial. The other scheme is Highly Skilled Employee Programme – this one is more focused and can be utilized to help pay the salary bill for top highly skilled employees. To those eligible, the government will use EU funds to pay all relevant salary taxes. In this case, the salary tax bill for the given startup employee will be 0.

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Start-ups sharing experience

As long as there have been start-up companies, there has been the question of how to protect the idea. We have to understand that in this age of information, the idea itself might be worth very little, and that it’s the execution that matters.

As soon as you have your idea ready, tell everyone – friends, family, or use internet surveys and make sure there is some initial interest from your target audience. Once you have made a proof of concept (created a prototype or MVP), made the first sales (pre-sales should be started even before the MVP is ready) and only when you see traction and growth you can start to think about how to protect the idea. When this is done, register a trademark, receive a patent for the technology and everything else,

It’s always hard to decide if it’s best to share your ideas with others to get some valuable feedback, or if you should keep it to yourself so that nobody steals it. Going by my experience, I would say you absolutely have to share your ideas!

Maybe people around me have too much to do anyway, or maybe my ideas aren’t that easy to execute. But I have only ever received positive feedback and some useful criticism. That has helped me immensely to figure out if it’s worth spending more time on this particular idea or move on.

You most likely have a different level of trust with different groups of people. There will be some with whom you can talk to about everything. You can share your idea in really early stage without any worry that they will steal it or that

ZoomCharts is developing new technologies and we early understood that it will be just a matter of time until our ideas are copied and re-used. While we are not against that, we want a fair license fee for the use of our technology.

To ensure that we have legal tools to enforce such licensing strategy, we have filed for a patent in the US and we have obtained a trademark in US & EU. This has already helped us in one case to fight with unfair competition. The case is still being settled - one of our competitors decided to use

Artūrs Burņins,CEO of Qfer

Guntis Čoders,CEO and founder at Walmoo

Jānis Volbergs,CEO at ZoomCharts

“You just have to be better and faster than everyone else.”

“Ideas are a dime a dozen. It’s execution that will set you apart.”

“Ideas are and will be stolen in different ways.”

because doing it earlier will take a lot of resources and time that companies in early stages might not have. Keep in mind, that in some cases there is no way how to protect idea from copying (usually if you are building software), but you can protect brand, logotype, design.

Almost every large company or brand out there has had a company that has done it before, so the key to success is the right execution. You can never be a hundred percent sure that your idea will not be copied if you tell someone, but that doesn’t mean you won’t take action and work on it. You just have to be better and faster than everyone else. There is actually a very good quote on this: “Work like there is someone working 24 hours a day to take it away from you!” – Mark Cuban.

you might look stupid - unless it’s a very stupid idea! Then there are those with whom you might talk to once you have run your idea past a couple of others and done your market research.

All in all, if your idea is unique and you have spent some time researching it then there is no reason not to tell others about it. Ideas are a dime a dozen. It’s execution that will set you apart. So talk to people – at the very least you will get practice pitching, useful feedback (positive and negative), find likeminded people who can help you, and maybe even some useful contacts!

wording similar to our trademark to trick potential users into thinking that what they are offering is similar to our product.

That said, it is quite clear that ideas are and will be stolen in different ways. It is therefore important to look for tools that are financially reasonable to create a layer of protection for the company and the underlying investment. Patents and trademarks are things that can help you to ensure safer future.

A common pitfall for many early start-ups in development is that they don’t meet customers in person and plainly ask, “Why are you using our product?” It’s a simple open-ended question, but the open-endedness of it guarantees unexpected and often intriguing results. When we started Nordigen, we knew that there is a need for financial institutions to automate the process of analysing bank statements, and so we built a product for this need.

But, despite our beliefs about customer use, after a few accidental client meetings we quickly realized that

Rolands Mesters,Managing Director at Nordigen

“Why are you using our product?” It’s a simple open-ended question!automation is not the “why”, it’s merely a small part of the “how”. The “why” is the necessity to innovate in the credit assessment area to stay ahead of the increasing competition in lending. This gave us perspective of what market we actually operate in, and what are clients are actually paying us for. This also gave us new ideas for how to help our clients use transactions for more purposes, e.g. in credit scoring models, in pre-scoring solutions and in customer segmentation based on their financial behavior. The great thing about being a startup is that you are allowed to ask simple and direct questions.

Latvia is increasingly seen as a regional FinTech hub, having grown rapidly since 2009. Now ranked as the third largest fintech cluster in Europe, Latvia is increasingly attracting multinational fintech companies to Riga, and is attracted by the excellent infrastructure, relatively low operating costs and a substantial talent pool.

Despite being home to just two million people, Latvia is looking to become the number one destination for peer-

Jevgēnijs Kazaņins,CEO of TWINO

“Latvia is increasingly attracting multinational FinTech companies.”to-peer lenders in continental Europe for 2017. TWINO, Latvia’s best-known homegrown P2P lender, has grown substantially since it established a peer-to-peer lending arm in 2015. In a short time it has funded over 100 million EUR of consumer loans across nine European countries. The company continues to grow and expand throughout Europe and has become a clear leader for the Latvian peer-to-peer community.

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Altum

Main SupportersDear Reader,

Our Friends

Investment and Development Agency of Latvia

Triniti

Orients Audit & Finance Twino

Balta

Accenture Latvia

Rigas Dome

Dyninno

Rietumu Bank

Lejiņa & Šleiers

Sorainen

Labs of Latvia Baltic International BankEmbassy of Israel in Latvia

Netherlands Embassy in Latvia

Live Riga

Transact pro

Exactly one year has passed since the founding of the Latvian Start-up Association Startin.LV. This first year was busy, interesting and fun. Although we exceeded the results we planned, it was not an easy year. And we totally understand that it would not have been possible without the support of our Members, Volunteers, the contribution of each Board Member and of course without our Supporters.

To give back at least a small portion of our gratitude we would like to share the names of all brands who were with us in 2016. Main Supporters of the Latvian Start-up Association Startin.LV 2016: Investment and Development Agency of Latvia (LIAA), Altum, Riga City Council, Balta and Accenture.

Our Friends who made the first year of the Latvian Start-up Association Startin.LV activity possible and bright: Embassy of Israel in Latvia, Triniti, Sorainen, Lejiņa & Šleiers, Orients Audit & Finance, Transact Pro, Dyninno, Twino, Rietumu Banka, Live Riga, Labs of Latvia, Baltic International Bank, Netherlands Embassy in Latvia. And last but not the least. We would like to say big Thank You to the Supporter who has made our dream of having the First Latvian Start-up Magazine true – to Accenture Latvia!

Jekaterina Novicka,Latvian Start-up Association “Startin.LV”,

Board Chairperson

Photo: Reinis Oliņš

Latvian Start-up Association “Startin.LV”Email: info@startin.lv

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February, 2017