"In order to select 10 good startups from one acceleration program, at least 100 candidates are necessary. We can only agree to what the Latvian Business Angel Network (LatBAN) has highlighted – there is a lack of "investable" startups in Latvia. Even if we wanted to organize the next Riga program of only local startups, it would simply not be possible at the moment," Cristobal Alonso, the head of the B2B startup accelerator Startup Wise Guys, said in an interview with the Dienas Bizness newspaper.
However, on the flip side, we should not underestimate how tempting the Baltics, especially Estonia, are to startups from Central Europe, and especially from non-EU member countries like Ukraine and Belarus. The previous two StartupWise Guys programs had several startups from these countries, and frequently Ukrainian startups are more active than local ones when applying for these accelerations. During the recently completed Tallinn program there were two companies from Ukraine, one from Belarus, as well as Romanians, Armenians and even from India, who view the Baltics as an excellent base for their businesses and a "gateway" to the European market.
If Estonia’s advantage (including focused marketing) is its ecosystem and e-resident program, then Latvia can play its geographical location and airport card. When we began our program in Riga last autumn, foreign investors and mentors sighed with relief when finding out it is easier to fly to Riga than to Tallinn. Furthermore, the only Estonian startup to participate in the Riga program praised the local ecosystem in Latvia, and said that there is not much of a difference between Estonia and Latvia. News about the new startup law in Latvia has also been heard outside the country’s borders, and many potential startups are asking us about it. However, the main challenge is not bringing startups over here to Latvia for several months, but to entice them to stay for the long-term. Not only do the necessary legislation and support instruments play considerable roles here, but the ecosystem itself.
Yes, it is likely most of the successful startups from this region will move to a larger market in time, like to the United States or Great Britain, however the Baltics can serve as a great location from where startups can focus on resources and business development, instead of daily expenses due to the relatively low costs. We see such a model being used by several startups which have completed our program, where programmers, for example, remain in their home countries, like Ukraine, a part of the team is located in Estonia, while the sales team is in the United States. With a view towards the future, when with ALTUM administered EU support Latvia will have three acceleration funds, without the attraction of foreign startups this would simply not be possible. To carry out 15 acceleration program within three years, several thousands of startups would be needed, from which the best candidates are selected. They also must be divided into specialization, so that the accelerators do not compete with one another. One of the solutions is the so-called "vertical" program, which concentrates on and selects startups in a specific industry, like, for example, VR, Fintech, Cleantech etc. Such vertical programs also attract the interest of larger companies.
Meanwhile, for the survival and development of startups which have already gone through the acceleration program, regional business angels play a substantial role, which represent the next logical investment step before startups are ready for larger international investments. For example, the ecosystem in Estonia already operates in such a way, where EstBAN members not only make follow-up investments, but also make direct investments into the accelerator so that they could follow along activities or startups for that three-month period. In addition to the Estonians, Latvian and Ukrainian business angels have invested in our accelerator, and one of our partners and investors is NordicBAN (Nordic Business Angel Network) board chairman Esben Gadsboll. In any case – this certainly isn’t a story about competition, but more likely highlights the fact that each element in the ecosystems has its place and role to play. And a well-organized acceleration program will be a benefit for all – startups, investors, as well as Latvia’s national economy.