The man who started Infogr.am talks about differences between garages in Tartu and Silicon Valley, 1€ to start a company and open policy discussions behind closed doors.
Uldis, we’ve seen Infog.ram grow fast, hire a Finnish CEO and even buy a Brazilian startup. Now you are organizing a Pan-Baltic event with Silicon Valley. What’s going on?
All is fine, each of these has helped Infogr.am a lot. Mikko Jarvenpaa was indispensable in establishing truly global operations. Acquiring Visualoop is still feels more like a community partnership and less like an acquisition.
Organizing Silicon Valley comes to the Baltics (SV2B) in Riga on Nov 7 is a way for us to support the startup community we come from, not only Riga but the Baltics as a whole. It is my private effort together with Dagnija Lejina and is not directly linked with Infogr.am, though we will surely benefit from the results, just like everyone else.
We know that the sun never sets at Infogr.am, with your representatives all around the world. Is keeping your HQ in the Baltics a patriotic move, or is there more wisdom to it?
That’s true, we have representatives in Tokyo and Sydney, an office in San Francisco and the main HQ in Riga. There are also over 100 Infogr.am ambassadors worldwide from South Africa to Iceland.
Keeping our main office in Latvia is definitely not just a patriotic move.We are here because Riga is an amazing city. There is world-class technical talent and the place is very livable. A lot is happening in the startup ecosystem, and all hotspots are a walking distance from each other. It is very suitable for a startup to feel great.
We also have one of the fastest internet connections in the world, and the best-connected airport in the Baltics.
Any major hub in Europe is only 2h away. The travel tickets and, in fact, everything else, is more affordable than in most other cities, which makes Riga particularly great as a hub.
Taxation and legislation are okay, too. It only takes 1€ and one day to start a company here. The legislation is not perfect, as everywhere, but it is rather stable and not overregulated. I have never heard any foreign startup investors complain about legal impediments to investing in Latvian companies.
Riga is becoming more and more international, and it is easy to attract talent that is already in Riga or ready to move here. You can find people speaking and coding pretty much any language you need.
Is that the reason for developing a community in the Baltics – because you are here to stay?
I have a theory that startups develop in generations. It takes about 2-3 years from one generation to another. If there is one generation that is very strong, it can eat up to 1-2 next generations. If they become incredibly great, they just hire all the talent from 2nd and 3rd generation, give them stock options and other
In Estonia, we have huge successes started 3-4 years ago: Transferwise, Pipedrive, GrabCAD and others. The market for potential startup employees there is just a few thousand people, and these companies have hired most of the best. So there are very few talented people actually starting something new for a while. But then after 3-4 years as the employees hired by these great and successful startups become more experienced and knowledgeable, they move on to start their own thing.
Most Estonian companies have someone from Skype behind them. These founders have much more ambition, knowledge and experience. As a result, their companies also become greater and bigger.
After you have been in a great startup, you will only want to build an even greater one. In Latvia about 70% of those who have left Infogr.am went on to start their own business.
I see this trend in other companies, too. This is the contribution to the ecosystem. Companies from Riga that are growing internationally inspire others to do so.
I am very positive about our current generation. Infogr.am generation is doing fine, and I also see some great
Is that the purpose of Riga Venture Summit and SV2B?
Eventually, yes. We focus on investment, but we realize: money goes where talent grows. We know that innovation is global and startups are built everywhere. The Baltic region has no problem to be one of the great startup hubs. We work to establish more mutually interesting links with Silicon Valley, especially in terms of financing and visibility for international investors.
For Baltic startups it is important to know when they should or should not go to the Silicon Valley. We established our office in San Francisco because our customers needed it, not because we thought it would solve all our problems.
SV2B will have some interesting speakers, both from the Valley and from the region. We will have partners from 500 Startups, TechStars, the biggest Latvian exit Ask.fm, Estonian Transferwise and more.
We know Silicon Valley comes to the Baltics as an annual event. But what is Riga Venture Summit?
That’s a very interesting new addition to SV2B. The program is put together by Daniels Pavluts, our former Minister of Economics and professional mediator and Ernests Stals, one of the first Latvian startupers, co-founder of Reach.ly and TechHub Riga.
Riga Venture Summit will be an open startup policy discussion behind closed doors. It will gather policy makers, investors, angels and tech community representatives from all 3 Baltic states and some foreign experts from outside the region.
We will meet in Altum, close the doors, turn off all recordings and really talk about things that matter. How can we make the Baltics more competitive in terms of startup financing? What specific actions need to be taken? How should we cooperate to implement them?
Because the roundtable is not public, it will be a very open discussion. Each participant will bring 1-2 most pressing concerns from their experience to the table and we will discuss them. The policy makers will not be there for representative reasons: most of participants will be practitioners – the people actually working on the issues at hand and relevant policies and legislations.
We will also publish a summary of the results. Our vision is to develop clear action points for everyone involved, and then have a set of milestones to review annually. We want everyone to come back next year and see how we performed in accomplishing our goals. We want to have common milestones, something clear to hold ourselves accountable.
Oh, and by the way, the first people to buy the investor tickets will be invited to participate in Riga Venture Summit.
Why is funding the central theme at the event?
Well, we want to finally get Latvians to talk about the money. When we raised our seed round back in 2014, it was incredibly easy to get press coverage – everyone was writing about us raising €1.4 million, as it was the biggest publicly disclosed startup funding round in Latvia at the time. In fact, I even publicly stated back then that I challenge other Latvian startups to come up and say: “Hey, we raised more than Infogr.am”. But it wasn’t up until AirDog’s $2million seed round this March that someone actually did it.
I have said it before: startups that don’t talk about money, don’t get any. I have traveled over 100 countries from the US to Iran to Japan, and Latvia remains the only place where startups that raise funding try to hide it.
Besides this, secrecy is discouraging. If you announce your funding, it drives others in the ecosystem to think bigger. It gives a message that it is not that expensive to start a company, that anyone can start a global business from the Baltics, that you can wisely use the financing around you. Because: “If these guys and girls did it, then so can I”.
One would think: why should I care about anyone else starting a company? The thing is: the more there are startups around you, the more talented people you can hire for your company. In 2-3 years, many of them will fail, and the talent will be there for you to tap into. Some others will succeed and be targets for acquisitions by emerging companies. In the end, everyone wins.
The same goes for attracting investment. Of course, investors do not turn down startups just because they have not heard of anyone from that country raising money or making an exit. If you are great, you will get it. However, if they read more about deals from other countries, they will go to events there.
Places that show good dealflow are on investors’ radars. The more interesting people hear about startups from your city, the more likely they are to fly in.
For a Latvian startup to pitch to a UK investor, you probably need to fly to London. For Finns, you have a good chance of meeting him in Helsinki.
What else will be the central themes at SV2B?
Another essential topic will be collaboration. Even though investors view the Baltics as one region, there is still a lot of energy and ambition wasted on trying to put one of the countries first. It is time to realize that all 3 states are strongly interconnected. Just look at Infogr.am: our CEO Finnish, our HQ is in Riga and part of our sales team comes from Lithuania. It is common for many Baltic companies to have Pan-Baltic teams and business partners across several Baltic states. Sellfy is another good example: a team of Latvians who incorporated their company in Lithuania and raised money from Estonians.
Another reason to cooperate is that the small talent pool makes cooperation a necessity. If you want to build the best team possible, you cannot be picky about the country you hire from. TransferWise is hiring across the Baltics, and Sorry as a Service was started by an Estonian, a Latvian and a Norwegian with Irish roots. If you are solving a global problem, you need to have a diverse team. This also means that Baltic countries must sit at one table and talk about startups.
We all need common decisions about both startup support and investment environment. We have business angels, BaltCap (which is the first Pan-Baltic fund), and we need common understanding what is right for us.
We may differ in some aspects, but we face many similar challenges, and often the answer is just 100 km across the border.
To grow successful global companies from the Baltics it is important to have global talent and global investment here. We must make sure that the early rounds that our companies raise at home would help them attract follow-on funding, and not the other way around. At the end of the day, it is not about the money itself, it is about smart money that open doors for your business to succeed.
Does that also mean SV2B will encourage more collaboration between Baltic and foreign investors?
They should definitely talk more. Some of them do. I am not sure who exactly is talking to whom, but we are inviting international investors to the event, and this is part of our agenda.
What is important, is to foster more networking between the Baltic investors first. We have seen Latvian business angels invest in Jobbatical together with Estonians. We could do more of that. It is important to develop the understanding that we are one region establishing visibility in the global market, not competing against each other. If the Nordic countries did it with all their famous exits and unicorns, then why wouldn’t the Baltics?
We are inviting big names from the Silicon Valley but it is important to realize that for them we are all Baltics. Our goal is to make sure they fly back and tell their friends that Baltic startups are hot.
Let’s talk about the money. Inforgr.am was one of the first Latvian startups to raise external funding and openly tell about it. However, none of your investors are from the Baltics. Does it even matter to develop the ecosystem then?
We raised our round abroad: in Berlin, Hamburg and London, mainly because of the knowledge that those people bring onto our team. If you want an international company, you need people on your board who have international background. We aimed for it. However, at that time we had no choice.
When we started in 2012, we just had a few .jpeg images and an ambition to make it global. No Baltic investor would trust us at that stage. We now have 25 million unique visitors a month and some big-logo customers like The Wall Street Journal, The Washington Post, Al Jazeera and Yahoo.
This early funding is still very complicated in our region. Some funds are appearing now, but generally local investors prefer to wait till you have something more to show. And that, of course, makes sense as the earlier you put your money in, the less likely you are to ever see it again. However, this also means that they can buy a ticket to be part of a company early on, if they can contribute real value and assist the team on their global journey. My best example is BaltCap investing in YPlan before their massive $24 million round from the big guys last November.
Risk-taking at Baltic regional investment funds is still very low. Up to a series A the valuation in the region can be off by up to 70% as compared to Western Europe or Silicon Valley.
It is important for local investors to realize that they are not competing with loans from commercial banks. They are competing with Riga International Airport. Nowadays it takes up to 24h to be anywhere in the world, and the tickets are cheap. Just two hours will get you to Helsinki, Berlin, London, Amsterdam. This is their real competition. If local knowledge or terms are not better, the most ambitious startups will move out. There will be some 2-3 years old startups, but these deals will not be big for the region itself.
I see investor choices improve in the last 3 or so years, though. They are picking more companies that are likely to succeed than before. I also see them taking more risk and going in earlier.
The role of local investors is to find bright, ambitious minds from Kaunas, Valmiera and Parnu. They must be the ones to tell them: “Your garage in Tartu is just as good as a garage in Silicon Valley. You can build amazing things from there.” This is how startups improve – if investors are there to help. Therefore, it is very important to develop an ecosystem that empowers grassroots initiatives and then connects early-stage teams to the global ecosystem for their next big move.
Find out more about SV2B on Nov 7 and grab your tickets here.
