Lithuania is a regional leader in startups choosing to keep their headquarters locally, but the investment environment still needs improvement.

In the latest overview of Lithuanian startups by the Dealroom platform, it is stated that only 26% of our country’s grown startups (so-called scaleups) have moved their headquarters abroad. This is the best result in Central and Eastern Europe and shows that successful businesses can be built while paying taxes in our own country. Nevertheless, when it comes to Lithuania’s attractiveness to investors, there is still room for improvement.

One of the main reasons why entrepreneurs increasingly develop international technology businesses in Lithuania and do not move their headquarters abroad is the increased availability of capital. Especially over the past seven years, more financing opportunities have emerged specifically for technology businesses registered and paying taxes in Lithuania.

Successful startups have also significantly contributed to this by bringing new investors from Silicon Valley and Europe to our country and the region as a whole.

Yet less than a decade ago, growing startups often moved their headquarters to the United Kingdom, the United States, or other countries because Lithuania’s legal system and investors’ lack of trust in regulation encouraged them to do so.

Some companies, for example those operating in the financial technology sector, also relocated their headquarters abroad because regulatory conditions or customer proximity made it more favorable.

Despite some disruptions, however, Lithuania’s most valuable technology companies—unicorns such as Vinted and Nord Security—have kept their headquarters in Lithuania, setting a good example for others. Over time, Lithuania has also become attractive to foreign companies that moved their operations here from Eastern countries and now hire employees locally.

The fact that startups build businesses in Lithuania while maintaining their headquarters here means more tax revenue for the country’s budget. Most importantly, it shows that globally successful technology companies can be created from Lithuania. Ten years ago, many people might have doubted that.

To encourage even more domestic businesses to keep their headquarters in Lithuania and to attract new technology companies from abroad, it is important to maintain high capital availability and stability. It is also necessary to improve tax conditions for angel investors. Currently, angel investments are subject to capital gains tax, and angel investors (individuals) do not have the opportunity to reduce their taxable profit base by the losses they incur.

When investing in startups, part of the investments inevitably has to be written off. Therefore, if such a loss-offsetting opportunity existed, it would encourage investors to reinvest capital after successfully exiting a startup. This is particularly important for maintaining and increasing the activity of angel investors and attracting more top-tier investors who could finance new startup ideas and innovations.

The value of startups to Lithuania is already enormous and continues to grow every year. According to the Unicorns Lithuania association, Lithuanian startups paid €544 million into the national budget last year—15% more than in 2024. This is a clear signal that a strong startup ecosystem directly contributes to the country’s prosperity. If even more favorable conditions for capital are created, tax revenues to the state budget will only increase in the future.