Exploring Europe’s Unexpected Tech Hub: A Look into Lithuania’s Startup Ecosystem

Despite its population of just 2.8 million, Lithuania has become a hub for software development, fintech, AI, cybersecurity and SaaS. The country is home to around 70,000 ICT professionals, including 20,000 working in startups.

Since 2020, the value of the tech sector has grown to €16.4 billion, as per a Dealroom and Startup Lithuania 2026 study, while startups paid €228.2 million in taxes in the second quarter of 2026, a 38% increase compared to 2025, reflecting the growth of the tech and innovation sector. 

In 2025, exports of ICT, IT, and financial business services reached €1 billion, says Greta Illekyté, senior economist at Swedbank. The expansion of the startup sector is also contributing to Lithuania’s wider economic performance.

“Lithuania’s GDP is growing much faster than other countries such as Estonia, Finland, or Sweden, and fintech, startups, and high-value-added companies play a big role in this growth,” Illekyté says.

Lithuania’s EU membership, adoption of the euro and strategic location have strengthened its appeal. Since 2021, the government has invested more than €42 million in Lithuanian-language AI resources, and in 2025 backed the launch of LitAI, a separate €130 million national AI infrastructure centre. 

Why start a business in Lithuania?

According to Gintarė Verbickaitė, CEO of Unicorns Lithuania, the largest startup association in the country, financial incentives are one of the drivers that make Lithuania appealing to founders.

As of January 1, 2026, newly registered companies pay 0% corporate tax for their first two tax periods. The standard rate for businesses is 17%, while small companies with annual revenue below €300,000 pay 7%. Startups carrying out R&D can also claim a triple deduction on eligible expenses, which Verbickaitė describs as “very generous.”

Dividend income is taxed at 15%, allowing Lithuania to compete with other European countries where dividend tax can reach 20 or 30%. Verbickaitė underscores that employee stock options are taxed at 15% to attract highly-skilled professionals.

Lithuania also offers a startup visa for non-EU citizens who are interested in registering their business in the country. The scheme provides a temporary residence permit for two years, extendable to five years, with the possibility of receiving residence permits for family members. Entrepreneurs who are granted the visa face lower initial capital and hiring requirements.

Regulatory accessibility is another advantage, according to Vykintas Maknickas, the Lithuania-based CEO of travel eSIM platform Saily. He described local regulators as approachable and willing to explain requirements in detail.

“Lithuania is a good entry point in Europe because of this reason,” Maknickas explains. Digital bank Revolut, for example, chose Lithuania for its first European banking licence, a specialized bank permit granted through the Bank of Lithuania, in 2018. This allowed the bank to operate without issuing loans before it received its full licence in 2021.

Venture capital and funding opportunities

Lithuanian venture capital funds have raised €2.28 billion since 2007 and, from 2017 to 2024, the country indirectly invested €158 million into startups through venture capital funds, Verbickaitė said.

The country offers not only VC funds but also loans for different sectors with certain conditions, applicable to business owners.

Lithuania has made itself an attractive destination for potential investors by providing public policy instruments for investment projects, including the Investment Highway, a framework for qualifying large-scale projects. 

Under the scheme, investors might benefit from a 0% corporate income tax rate for up to 20 years, and eligible candidates must demonstrate over 150 employees and at least five years of employee retention as well as more than €20 million of CapEx investment.

Lithiania’s fintech hub

The country is the largest fintech hub in the EU by number of licenses issued, according to Invest Lithuania, an agency promoting direct foreign investment in the country. 

As per the agency’s Lithuania’s Fintech Overview 2025-2026 report, the country is home to 248 fintech companies that serve over 40 million people throughout the EU.

What makes Lithuania competitive is the access to the EU market, a strong local talent base, and advanced digital infrastructure. 

The Bank of Lithuania also supports the fintech ecosystem through initiatives such as the Newcomer programme, which provides a one-stop consultation service to companies seeking financial licences in Lithuania, and the Regulatory Sandbox, aiming to help firms test their financial innovations in a live environment under supervision.

Success stories

The country is home to six unicorns, ranging across sectors like e-commerce, cybersecurity and health tech; Vinted, Nord Security, Baltic Classifieds Group, Flo, Cast AI, and Oxylabs. 

Vinted and Nord Security are some of the most recognisable names. Founded in Vilnius in 2008 and 2012, respectively, the companies have expanded across the world, demonstrating that a product developed in the Baltic state can compete internationally. 

Lithuania is also a home to successfully bootstrapped companies such as Hostinger. “In the past, there wasn’t VC funding,” Verbickaitė explains. “Founders had to build something that would sell, and they had to be focused on revenue, which they could reinvest and continue to grow their company.”

Maknickas says the Saily team had to “cut out everything that’s unnecessary” to launch the product in 19 weeks, and advised all new entrepreneurs to first assess demand before jumping into development. 

“Start one step at a time. First, understand demand and realistically assess it; that’s the best decision before building any product,” he says.