At the meeting of 31 May 2022 the Ministry of Economics (ME) presented to the Cabinet of Ministers (CM) the latest information on the start-up ecosystem in Latvia and the support provided to start-ups.
The start-up ecosystem in Latia keeps growing and developing, with at least 50 start-ups being established each year – 512 start-ups were operating in Latvia in 2021 employing more than 2,500 qualified and knowledgeable employees. During the year, investment volume has quintupled and reached EUR 350 million. The cooperation partners of start-ups are not only in the Baltic States but also outside the EU, including in the United Kingdom and the United States. Our aim is to raise investments of at least 400 million euro and to create at least 4,000 new jobs in Latvian start-ups in the next three years, so, in cooperation with representatives of the start-up ecosystem, we will develop a strategy for the next three years that will contribute to both the establishment of new start-ups and the development of created innovations and raising of new investments,” the Minister of Economics Ilze Indriksone says.
To promote the development of the start-up ecosystem, the ME drafted the Law On Aid for the Activities of Start-up Companies (hereinafter referred to as the Law), participated in the drafting of amendments to the Commercial Law, in order to enable employees of joint stock companies and limited liability companies to obtain the right to acquire capital shares in the company and to sell them after a certain period of time. At the same time, the ME provides support programmes for start-ups and maintains cooperation with associations representing start-ups. Start-ups have access to aid instruments such as a start-up visa for 3 years, where third-country nationals may receive a temporary residence permit for 3 years, provided that they intend to create or develop an innovative product and certain conditions are fulfilled after the issuance of the temporary residence permit. Similarly, start-ups have access to funding for loans, business incubators and accelerator funds, as well as in the innovation voucher programme.
Under the law support is provided to a total of 75 companies for a total aid amount of 3,489,768.54 euro, attracting 130 employees, as well as an increase in average business volume from 1.3 million euro to 4.2 million euro.
The number of investors has tripled – from at least 70 investors in 2018 to 203 investors in 2021. The total tax payments of start-ups also increased from 16.2 million euro in 2018 to 25.9 million euro in 2020, exceeding the total amount of state aid approved more than 7 times.
Half of Latvian start-ups operate in ICT, 17% in manufacturing, 17% in professional, scientific and technical activities and 5% in wholesale and retail trade. The largest investment of 318 million euro in the Latvian start-up ecosystem comes from the United States, 39 million euro is investment from the United Kingdom, while 28 million euro is investment from Latvia. Most investments are invested in ICT and manufacturing.
The CM decided that the Ministry of Economics, in cooperation with representatives of the start-up ecosystem, will develop a strategy for the operation of the start-up ecosystem for the next three years. At the same time, it is expected that the ME will submit to the Cabinet of Ministers by 1 June 2025 a report on the implementation of the Law On Aid for the Activities of Start-up Companies.