Welcome To Vilnius, A New Silicon Valley Rising In Moscow's Backyard

The “Unicorn" bus stop

The new site is located in the Naujamiestis district, near the Vilnius railway station, which until recently had been in a state of disrepair. It is now undergoing a major redeployment towards the tech scene. A few meters away stands the headquarters of Vinted, Lithuania's first unicorn, an online used clothing retailer whose valuation passed 1 billion euro mark in a 2019 fundraising round. New investors raised its value to 3.5 billion euros two years later. Vinted, which has more than 27 million members in France alone, its top market, has radically changed how younger generations dress.

Another Lithuanian tech champion, Nord Security, thrives opposite Vinted’s headquarters. A cyber protection specialist, the company is well known to VPN users. Last September, it raised $100 million to raise its market capitalization to $3 billion, double that of 2022. It is part of Tesonet, a galaxy of companies that have set up shop in the former Sparta sock factory — a legendary brand that survives in the form of a popular bar.

The municipality of Vilnius, the capital of a country of 2.8 million inhabitants, is naturally very proud of its two flagships. It has renamed the bus stop between the two headquarters "Unicorn," or "Vienaragiy" in Lithuanian. "Some people here even call them 'wolficorns,' in reference to our iron wolf," explains Andrius Grigonis, Vice-Mayor of Vilnius, from his office with a panoramic view of the all-white metropolis. According to the legend, Grand Duke Gediminas, having dreamt of a howling iron wolf after a day's hunting, decided to build a new city on the River Neris, 700 years ago.

As far as I'm concerned, I'm sure we have other hidden unicorns here.

Rounding out this flattering picture is the Baltic Classifieds Group, which owns several online advertising sites in the three Baltic States (automotive, real estate, jobs) and has chosen to list in London, where it is worth 1.1 billion pounds. BCG's head office is north of the Neris, in the modern business district, where high-rise buildings have been springing up in recent years, giving it a Baltic 'City' feel.

“As far as I'm concerned, I'm sure we have other hidden unicorns here," Karolis Zemaitis, Deputy Minister of Economy and Innovation, says confidently. “I call them the unicorns in the closet. They're self-financing, so there's no way of knowing how much they're worth. My goal is to have 10 unicorns by 2030.”

Ministerial bluster? Maybe not. At the tech park in Vilnius, Donatas Keras, founding partner of Practica Capital, a venture capital firm that has invested in more than 50 companies, says "we have between five and 10 companies here with the potential to reach 1 billion euro threshold."

Returning to the motherland

Among them is Kilo Health, a company founded in 2013 to help people eat better and improve their physical well-being. Today, it has almost 7 million customers, mainly in the U.S., and has never needed to raise capital.

"Just six years ago, Lithuania wasn't really on the investors' map, so the co-founders didn't even think about it," says Ilona Bernotaite, chief people officer at Kilo Health headquarters, which is reputed to be "the most Instagrammable" in Vilnius. The former brewery has some very attractive spaces, starting with the bar, where some of the city's most popular parties are held. Nearby, a cinema, a poker room, and a barber shop allow employees to unwind.

Many of us who had moved abroad are now coming back.

"We're working to ensure that our employees have an experience that's worth the commute back to the office," Bernotaite says. The 30-year-old worked for a long time in Spain and Germany before moving back to Lithuania in 2021. "Many of us who had moved abroad are now coming back," she says.

At Tesonet, Matas Ignatavicius, in charge of development and investments, confirms: "I worked in investment banking in London for 10 years, and came back during the pandemic. Obviously, I knew the 20 or so Lithuanians who worked in my sector over there, and I'd say about 15 made the same choice as me."

The Lithuanian tech scene indeed offers many opportunities. "In 2023, a difficult year for tech worldwide, funds raised in Lithuania remained stable compared with 2022, at around 300 million euros. Now we have 900 start-ups employing at least 18,000 people," says Inga Langaité, CEO of the Unicorns Lithuania federation. In the 2010s, local entrepreneurs suffered from a lack of visibility and had to fend for themselves. That original weakness has become a strength.

"When the investment cycle turned around, investors turned away from growth-at-all-costs business models to look for already profitable companies like ours," says Ignatavicius, who believes the resounding success of Vinted and Nord Security is reflected in the entire ecosystem, just as Skype's prowess boosted Estonian tech in the 2010s."

An attractive European capital

"Seeing all these Lithuanians returning to their homeland gives confidence to their compatriots who have stayed behind," says Alexandre Pinot, co-founder of the anti-financial crime software firm Amlyze. Having discovered Lithuania in 2008 during his studies, the Frenchman ended up settling there (and marrying a Lithuanian). He has seen the fintech segment develop at a breathtaking pace since the mid-2010s (today 260 companies employ 7,000 people), thanks to the inventiveness of Lithuania's central bank.

"Thanks to the Centrolink payment system, which gives fintech direct and very cheap access to the entire euro payments area, a huge number of operators have come here to seek their license, including Revolut. After the Brexit, there was a massive movement of British operators relocating to Lithuania," Pinot says.

We don't have the climate of California or Barcelona. But we do emphasize our high quality of life.

Elsewhere in Europe, experts have even vaguely accused the central bank of regulatory dumping. And over the past two years, controls have been more rigorous. This was a necessity for Vilnius's application to host the new European Anti-Money Laundering Agency (AMLA).

The Baltic capital is pulling out all the stops to attract new businesses — and talents. "When I meet investors, their questions are primarily about human capital. They don't ask about inflation, tax rates, or geopolitics," says Deputy Minister Zemaitis. "We certainly don't have the climate of California or Barcelona," he concedes, as new snowflakes fall outside his window. “But we do emphasize our high quality of life."

Vilnius offers its inhabitants plenty of green space: 60% of its total surface area. In summer, easily accessible lakes are ideal for swimming, while the harsh winters bring the joys of ice skating. Vilnius will be the European Union's Green Capital in 2025.

Disruptive marketing

In terms of culture, the former Lukiskes Prison plays a key role. Built during tsarist rule in the early 20th century, it was notorious for its deplorable prison conditions. After it closed in 2019, the prison became a cultural venue, where hundreds of artists have opened their studios. It was also a filming location for the Netflix series "Stranger Things" — Lithuania's advantageous tax system attracts many film shoots.

Lithuanian authorities are going to great lengths to enhance Vilnius' image abroad. They offer newcomers a 3,000 euro start-up grant. They emphasize the low corporate tax rate (15%). And they make it as easy as possible for entrepreneurs to deal with administrative formalities. In February 2023, Germany's Digital Minister made a study trip to the Baltic States to draw inspiration from their agility.

There's also innovative marketing. The city won an international award for its campaign targeting London in late 2022, after a wave of tech layoffs. "Fired by Meta/Twitter? Move to Vilnius," suggested 3,000 posters in strategic locations such as King's Cross station.

In 2018, another more daring advertisement sparked controversy, showing a woman lying on a map of Europe with her hand gripping Lithuania and the slogan: "Vilnius, the g-spot of Europe. Nobody knows where it is, but when you find it, it’s amazing.” The Bishop of Vilnius, an important moral authority in this very Catholic country, protested in vain.

Lithuanian fighting spirit

Of course, the city has its weaknesses, such as limited air access. But the airport is currently being expanded, to open new routes. Lithuania also has difficult neighbors to contend with: Belarus, 35 km (21.7 miles) from Vilnius, and the Russian enclave of Kaliningrad, some 150 km (93 miles) away.

But this dangerous proximity has had some positive effects. Lithuanians' long-standing concerns about cybersecurity have translated into global expertise. After the rigged 2020 elections in Belarus, many tech companies relocated teams to Vilnius, including for example, video game publisher Wargaming.

The war in Ukraine is omnipresent in the streets of Vilnius. Above the town hall, a large banner reads "Putin, The Hague is waiting for you," a reference to the International Criminal Court. Buses read "Vilnius loves Ukraine." Blue and yellow flags fly from many balconies. But this brutal conflict has further stimulated the fighting spirit of Lithuanians.

"Many people here want to impress. They're hungry for more," says Ignatavicius. “We don't want to be seen as an Eastern European country, but as a Northern European country.”