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Saturday, August 13, 2022

Should You Start A Fintech Startup In The Baltics?

We decided to explore whether Baltic FinTech scene really is such a big deal, as this and other pracical questions will be central at Fintech Panel of TechChill Baltics on February 11th.

Every third euro in top 10 deals goes to fintech

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Among top 10 disclosed investment deals in Estonia, Latvia and Lithuania, the funding invested in FinTech is considerably larger than in other industries. In Estonia, Transferwise (€ 72 100 000) and Fortumo (€ 5 150 000) make 44% of top 10 deal volume.

In Latvia BitFury (€ 53 918 020), Creamfinance (€ 5 000 000), Monea (€ 1 050 000) altogether have raised 79% of top 10 deal volume.

The exception is Lithuania where TransferGo (€ 2 936 550) investment constitutes a minority (2.26%) of top 10 deal volume.

For the Baltics as a whole, fintech startups constitute 36.75% of each country’s top 10 deals’ club investments – and 52.9% of funds invested in top 5 Baltic deals.

The community and the people are key advantages

It is important to note that industry percentages applied to five, or even thirty top deals may not be telling the whole picture, though. After all, Baltics may just be getting their fair share of global fintech obsession. Are founders of BitFury and Transferwise exceptional few who just happened to ride the most popular tech wave, or is there a genuinely dense fintech community with a potential to create more success stories?

Probably, the best proof of a strong talent in the community are offices of fintech companies that still remain in the Baltics, despite international operations. TransferWise, Fortumo, Bondora, Creamfinance, TransferGo, Mintos and others continue to keep offices back home even after acquiring international client base and expanding to other countries.

“Riga and the Baltics has a lot of advantages to help us become the centre of European innovative finance service technology. We have knowledge, infrastructure, and people with experience in the finance field.”

Although TWINO is headquartered in Latvia, the lending companies issuing loans are based in local markets, such as Poland, Russia and Georgia. The company was originally founded in Latvia, however, with the international expansion it was an intentional decision to headquarter the core functions, such as IT, risk management, marketing and business intelligence in Latvia.

Money follows startups

Jevgenijs also shared his experience as CMO at Estonian P2P lending platform Bondora:

“If your company is successful at solving a problem in the financial world, the venture capital will follow. Nowadays, it is not a necessity to move to the US or UK to get top venture capitalists on board.”

This is also illustrated TechChill Baltics FinTech panel that Jevgenijs will moderate this Thursday. The discussion will include Nilan Peiris, Vice President of Growth at TransferWise, Mārtiņš Bērziņš , co-founder and CEO of micropayment app Monea and James Wise, partner of Balderton Capital.

During the discussion, participants will share their experience on how profitable it is to create a startup in the Baltics, its pros and cons, and what has to be done to promote finance technology innovation in the region.

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Marija Odineca
Marija Odineca
I cover Baltic tech startups sharing startup stories, data, insights, and opinions

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