Why to Keep Telling the World About Our Venture Capital Market


During my studies in the Financial Strategy programme at the Saïd Business School of University of Oxford the universally-known authorities in the fields of finance, private equity and venture capital knew very little about the Baltic States – everyone have heard the Skype’s success story, but only a few have been aware that this story had something to do with our region. Far fewer had heard about “GetJar”, “Vinted” or “YPlan” and all the more that these are Lithuanian projects.

Having inquired foreign private equity or venture capital investors, fund managers or academic communities of Oxford on their assessment of the return on investment in our region, an objective answer could not have been expected – the private equity and venture capital experts I have addressed did not have any knowledge, and often the prognostications they have shared have not been very positive.

Considering that the professors at Oxford as well as private equity and venture capital fund investors in the US and Europe are by no means the whole world, I could agree that “the sample is not very representative”; on the other hand, this experience is most likely representative of the experience of myself and the majority of other representatives of private equity and venture capital in representing the Baltic private equity and venture capital market in other countries.

Knowledge is scattered and often lacking objectivity

It is clearly nothing to wonder about – we had yet only a few world-class success stories in the region whereas the first inexperienced albeit really dynamic start-ups had been the brightest representatives of achievements of our region in the field of venture capital; until recently, the venture capital from the US and the UK had been their only option. This resulted in spreading of the first wave of knowledge about the Baltic region throughout the world. However, it has not yet reached some regions of it.

We started communicating more actively about our region’s venture capital to the world only in the last five years: public-sector bodies, associations of venture capital funds, accelerators, communities of more pro-active start-ups were founded. They strive to collect and systematize data about the market, gain knowledge from the more experienced actors and share them with others here, in our home region. Furthermore, these contacts also keep spreading the message about us to the world.

However, there is still not enough unbiased and systematic data on the return on investment of the funds of the Baltic States, which would be of interest to foreign investment funds. Knowledge about private equity and venture capital, its benefits as well as enormous potential to the region’s economics is miserable even among the Baltic entrepreneurs themselves, not to mention the government officials. Surveys show that the major part of the Lithuania’s society has not yet heard about the financing offered by venture capital and private equity funds, and even if they have, they do not consider these funds as an alternative source of financing.

Then what do the US and the UK or, for example, Israel – one of the world’s most advanced countries in this field – know about our venture capital market? Or perhaps it is not worth being concerned about the fact that no one will ever know about Lithuania and the Baltic region?

And yet we should be concerned that they would become aware about us

In order to attract interest from investors and foreign venture capital and private equity funds in the Baltic region, “the threshold of awareness” should be crossed at first. They must at least have heard something about Lithuania, Latvia and Estonia as an attractive region for investment; after all, choosing the direction of investment the investors naturally prioritize the countries they know about. Furthermore, institutional investors are often afraid to take risks and choose countries which are popular or where other investors alike are investing.

This is relevant for both for the beginners looking for opportunities of working with foreign venture capital funds and better-established companies seeking for trusted private equity funds which would be able to finance their growth and development in the region or the world at large.

Foreign investors’ interest is not less relevant to the managers of venture capital and private equity funds in Lithuania, who are willing to raise investments from foreign pension funds, insurance companies as well as other institutional investors. Therefore, targeted efforts aimed at spreading the message about the Baltic region to the world and the entrepreneurial culture which has started to flourish there recently are of critical importance.

This was one of the reasons behind the decision to write the final thesis at Saïd Business School, University of Oxford, on the subject of venture capital and private equity of the Baltic States – the first study of this market in the Baltic States.

We need to spread the knowledge together

This thesis has also attracted the interest of the Coller Institute of Venture at Tel Aviv University, a top-ranked in university in Israel. It published the article entitled “Growing a Wolf of Risk: Baltic States”, based on the said research, in “Venture Findings” journal and told Israel as well as the world about how Lithuania, Latvia and Estonia, having regained independence on 1990, had gone a long way in reforming their political, social and economic systems: they have transited from the centrally planned economy to the market economy, established well-functioning financial markets, where the international financial institutions had played a significant role.

It also revealed how this Baltic trio managed to lay the foundation for creation of the venture capital ecosystem in two decades: to educate the responsible government representatives, ignite the culture of entrepreneurship, cooperation and sharing, to grow as many as 20 professional venture capital fund managers and told about our market’s vibrant potential.

Venture capital funds, operating in the region or in the global market, such as “Andreesen Horowitz”, “Accel Partners”, “Insight Venture Partners”, “Intel Capital”, having invested in the start-ups of the Baltic region or related to them, have observed the progress of a quarter of a century in the Baltic States. But there could be more of such success stories. And the first thing we must do is to spread the message about ourselves.

The world finds us interesting, but we must not hesitate to speak about ourselves

The study of venture capital and private equity market of the Baltic States, which was recognised as the best thesis in the field of financial strategy in the Saïd Business School, University of Oxford, was the first of its kind; however, I believe that it will soon be followed by other works, and this example will inspire and encourage a more pro-active communication of our region’s achievements in the field of venture capital to the world.

We are interesting to the world and this is supported by an example from my practice. Considerably more people active in this field, than I could have expected, became aware of the progress of the Baltic region and the advanced venture capital ecosystem. To my knowledge, the insights published in the publication of “Venture Findings” have reached tens of thousands people through various channels. The fact that the Baltic States have captured the attention was seen from the reactions which have reached me. In the last week alone, I received tens of letters, calls and messaged from both our and another continent – some congratulated, while others called for a discussion on this topic: they were willing to grasp the vibe of the venture capital market of the Baltic States better.

Sometimes so little is needed: we just have to be vocal about your excitement about what we have created over the years in order to raise an interest that is capable of fuelling the progress of our region.

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