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Aug
03
2017

Riga vs. Tallinn - different or not?

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Egita Polanska travels a lot, and her mission – recruiting applicants for the Startup Wise Guys Riga batch. Though applications have ended, Egita has collected a vast amount of experience in “selling” Riga as the ideal spot to accelerate a startup. What did she learn through this process? We sat down with Egita to learn everything she knows about the differences between Riga and Tallinn.

What are your goals when traveling as a Startup Wise Guys representative?

We will be launching a new Startup Wise Guys program this fall – the ninth in a row, and the second for Latvia. The Tallinn program has closed, the demo day was part of Latitude59. Now is a time when one program comes to a close and you have to start preparing for the next one, looking for new participants and startups. Participants could sign up by filling out the application that we later examine. We also looked for participants during our visits to various countries where we meet local startups. At the moment, our focus is on companies from Central and Eastern Europe.

Why were you not looking for participants exclusively from Latvia?

We do look for companies from Latvia also, but our efforts are not limited to Latvia. First of all, there currently aren't enough startups in Latvia to develop a qualitative program made up of 10 strong participants. Secondly, we actually welcome diversity and consider it beneficial that there are different participants from different countries. Sometimes we purposely bring Estonian startups to Latvia and Latvian to Estonia, so the participants are not at home. That way, during the intense three-month program the participants can communicate with each other, establish new contacts, and explore a foreign market.

The startups that come to Latvia from other countries, how do they cover their three-month stay here?

What we offer is a three-month program and an investment of EUR 20,000. We understand that this is not extraordinary amount for a startup, but it covers the team’s expenses and a few other costs. Because living in the Baltic countries is certainly not as expensive as, say, in London or some other Western European countries.

Does Startup Wise Guys see a return on the investments made? Are you a profitable enterprise?

That is hard to say. One thing I can tell you is that five year old start-up VitalFields which we supported, was successfully acquired last year by U.S. company Monsato. So yes, there is a return on our investments, and it covers the fund’s expenses. According to overall startup statistics, one in ten startups will be highly successful, three will be moderately successful, a few will keep afloat, and three or four will fold.

How do you present Latvia to foreign startups?

The program takes place in both Tallinn and Riga, so we mostly focus on selling the Startup Wise Guys program at our meetings. As for Latvia, I believe the main thing is that Latvia, after all, is similar to Estonia. In my experience from the previous program in Tallinn, there are no major differences between the startup environment of Latvia and Estonia. There are pros and cons, of course. For example, Estonians are different in that they have far more mentors in their startup environment, which is probably thanks to the success of Skype. That is not the case in Latvia yet.

In your opinion, why is mentoring in Latvia not so well developed? Is it because people are not willing to help, or because they actually lack the experience?

The will to help is certainly there, and the actual reason could be that there are fewer startups in Latvia. As I said, the knowledge and experience following the sale of Skype definitely prompted the number of startups and, furthermore, Estonia offers substantial state support for new enterprises. Even Estonian ministers try to popularize their country and startup environment and pay startups a lot of attention. In our country, support for startups is only just beginning - far later than in Estonia. Now there are new startup laws in place and we get invited to the Ministry of Economics to discuss the development of startup-related projects.

Speaking of other differences, there aren’t many – one thing that Estonians have and we don’t is e-residency. When we meet with foreign startups, they already know that Estonia offers the e-residency program. In addition, Estonia is very good at marketing and advertising itself. From the outside, everything seems to be working great for them, though in reality that’s not always quite so. That is something that Latvia lacks.

And yet you said Latvia was similar to Estonia after all. Similar how?

The rules on establishing startups in Latvia are the same as in Estonia. In terms of environment, Estonia may have a slightly better-developed company registration system and legal procedures, plus receiving a startup visa takes less time and, on top of that, everything is done in English. In our country, you also can register your company, there are startup visas available, and even a law on startups has been adopted – something that Estonia hasn’t done yet, but the Register of Enterprises only works in Latvian. On the other hand, we have met with representatives from the Register of Enterprises and we know that they're working on developing an English version and we're also helping them with translations for the online application system. But there are still lots of documents to be handed in to register a company, and they have to be translated from Latvian to English. We hope that for the next program in Latvia, we’ll be able to assist startup teams with registering their companies in Latvia. Judging from past programs in Latvia, when we had five startups that had to choose where to register, all of them preferred Estonia, although the Latvian Register of Enterprises was just around the corner.

So it will be different this time? Will program participants be registered in Latvia?

We want it to be different. As Startup Wise Guys, we don’t force a company to register in a particular country, we can only offer that. But, indeed, we would like them to be registered in Latvia, as Latvians make up half of our team. At the same time, we don’t want to make this process harder for startups in any way, quite the contrary – we want to make it easier. And if they are in Latvia, they should have the opportunity to register here. In terms of laws and regulations there are no differences, and our business is done in accordance with the Latvian Startup Law.

Is it harder to bring a startup to Latvia than to Estonia?

No, I don’t think so. People tend to know more about Estonia, but there hasn’t been a case when a start-up refused to go to Latvia and would only go to Estonia. One major advantage about Latvia, and one that has to be pointed out, is the airport and transit connectivity – in Tallinn the problem is that arrival times are inconvenient and prices are high. It's a real problem for us, as most mentors are from other countries. In Riga you have AirBaltic and the airline operates direct flights from many countries, and many of those who go to Tallinn travel via Riga anyway. This is in startups’ interest – the team is working in Riga while the CEO is traveling abroad, and that is easier to do from Riga. Moreover, Riga is larger and with more entertainment opportunities, but at the same time Tallinn has more specific events targeted for startups.

By now you've seen startup communities in Riga, Tallinn, and the United States. How do these communities differ? Is there something we could learn from them, or maybe there is something we do better?

I think there are no major differences between Latvia and Estonia – the communities are small. Estonia may have a little more specific meet-ups, while in Latvia, the TechHub meet-up is the biggest one, and the smaller ones are held in small, private circles. Meet-ups in Tallinn are more specific – some focus on marketing, others focus on other topics. What else is different about Estonia – they have closer ties to Scandinavia, and the Scandinavians themselves consider Estonia a Scandinavian country. Latvia has to do more to get involved and take more initiative.

As compared to the United States, of course, the first thing is that everything there is bigger, and there is more of everything. I wouldn’t say that the U.S. startup environment is better developed, but the startup culture is older – people are bolder, not afraid to start something new, and they are more active. In this part of the world, the Baltic mentality prevails: everything happens more slowly, startups keep a low profile and aren't as ambitious. In the United States, startups try to sell their products before they launch, while our people are more concerned about the technical side, especially those startups that come from Ukraine or Belarus – they will continue to work until their product is perfect. It's also harder for a startup to enter the market here. The United States is a large country, a large market, everybody speaks the same language, there is cohesive culture, and therefore things are easier for both B2B and B2C startups. In Latvia, B2C startups have major difficulties, which is why we mostly focus on B2B startups, and still, we have to take into consideration different languages, different cultures and attitudes. But to sum it up, everything is smaller here, while in the United States everything is bigger.

In your unbiased opinion, how do Startup Wise Guys rank among European accelerators? Is it something very prestigious, or not know very well?

Objectively speaking, and based on what I’ve seen on my travels – by focusing on the B2B sector we have become the largest such accelerator, and the only of its kind, in Central and Eastern Europe. We have organized eight programs, now we’re working on the ninth one, and we have accelerated a total of seventy startups, of which 75% are still in business. There are also other accelerators, for instance, Techstars in Berlin and London, and the StartupYard accelerator, but in the B2B sector – judging from what I’ve seen and heard - Startup Wise Guys is one of the leading accelerators. And that’s what we’ve been working on, to become the leaders in the B2B sector.

Is there anything you would like the readers to keep in mind?

I would like them to realize the importance of initiative. I remember how I felt: wait, how will I, a Latvian, go work and teach in Estonia? Latvians have to take more initiative and stop comparing themselves to others, including Estonians and Lithuanians. And it would be even better if we could unite – currently the communities are small, but we could develop pan-Baltic startup environment.