The Startup Ecosystem in Kaunas: The Emerging Features Reflect the Strengths of the City
Leadership in progressive business and innovation sectors, a modern and attractive cultural center, and a place where happy people live: this is a direction for growth and development at which Kaunas is aiming with a special focus to innovation as one of the key conditions for urban competitiveness. Introducing and moving innovations into business, society and everyday life is the central axis which helps to create a vision of a modern city.
Factors of the attractiveness
Businesses opting for their own development or establishment in Kaunas usually name four key components of the city’s attractiveness: people with the right competencies, higher education institutions that are preparing specialists, adequate infrastructure, and a convenient geographical location both for local and international travel. Meanwhile, startups and creators of innovations care about the availability of talents, the conditions, costs of launching and developing startups, the availability of capital and the quality of the local startup system.
Kaunas Higher Education Institutions, Vocational Training Centers are the main source for talented professionals coming to the market, bringing the most innovative ideas and raising sectors of the city that attract the most investments: medical technologies, information and communication technologies, automotive components, and aviation.
But not only that: Universities are actively working and initiating entrepreneurship promotion programs and collaborating with a startup community that develops technology-based products.
In 2012, Kaunas University of Technology (KTU) has established KTU Startup space for creating startups and growing them. It is a place designed for a startup community, providing incubation programs, access to the necessary infrastructure and a university database, consultations and funding opportunities.
Vytautas Magnus University (VMU) Centre for Enterprise Practices offers a practical program to help develop entrepreneurial skills and competencies, therefore, students can set up their own businesses or start building a successful career.
Lithuanian University of Health Sciences (LSMU) Development Department, which carries out innovation and technology transfer functions, unites the startup community of life sciences by providing pre-incubation services, organizing events that help to develop entrepreneurial and innovation skills, offering access to the necessary infrastructure and expert advice on innovation, intellectual property and funding issues.
Powerful innovation promotion system is developed in Santaka Valley, where universities, science parks, institutes, and business representatives are working together. Creators of innovations work in Kaunas Science and Technology Park: the first incubator in Lithuania and the largest in the Baltic States.
In several years, Aleksotas Innovation Park will join the startup infrastructure. Kaunas City is planning to invest 5 million euros in the territory of the former aviation factory, where the area of 35 ha will be dedicated to a new innovation park which will attract companies oriented towards innovation development, high-technology and applied research.
Startups in Kaunas today
According to the Startup Lithuania and Dealroom.co database statistics, about one-seventh of all startups in Lithuania are operating in Kaunas. It is the second largest startup hub in Lithuania after Vilnius. Kaunas startup ecosystem is less mature than the one in Vilnius: startups in the city were created later than in the capital, thus, fewer startups have reached the stage of a mature company. Over 90 percent of Kaunas startups are in the early stage of growth. About 60 percent operate in the top five subsectors: business software, health protection, education, games, and marketing. All of them directly correlate with the strengths of Kaunas city: the profile of higher education institutions (KTU, LSMU), well-developed information and communication technology infrastructure and availability of employees with high technological skills.
“The aim of Kaunas city is to grow startups in the sectors that have the strongest foundations: technology, health, and ICT while using the potential of human, intellectual and infrastructural resources of Kaunas competence centers,” says Neringa Valantinė, Business Division Chief Project Manager at “Kaunas IN”.
The success stories of the companies that were established in Kaunas prove the potential of the startup ecosystem: UAB NFQ Technologies, developed in Kaunas Science and Technology Park, creates large-scale web and mobile solutions for travel, logistics, aviation, and retail sectors; UAB Telesoftas finds its place among 1,000 fastest growing European companies announced by the Financial Times; UAB Virtustream LT provides business-class cloud computing services and software; the startup UAB Helis took its first steps in the KTU Startup Space and now develops specific software for business related to computer games and e-sports.
Among the most interesting projects / success stories: ViLim Ball created for reduction of hand tremor and stiffness by MB Fidens and KTU scientist Dr. Mantas Venclauskas; mobile app Voice Screen for early diagnosis of voice disorders developed by LSMU in collaboration with business; BrachyDOSE, the winner of “Kaunas startups 2018” program: a medical device that helps oncologists to accurately evaluate delivered dose for the patient during the treatment procedure; Gerda Liudvinavičiūtė, the author of MB “Cemento juvelyrika”, who has won the title of the most creative business in the Business Woman Awards for her CELSIUS 273 jewelry collection dedicated to Kaunas interwar modern architecture.
The range of services for startups is expanding
The ecosystem grows together with the range of services that are being offered. According to the review carried out by the VšĮ “Kaunas IN” in 2018, Kaunas startups receive incubation and consulting services, there are events organized specially for this business community, but until now, there was no startup accelerating service, networking activities and events uniting various Kaunas startup ecosystem players.
Considering this data, it was decided to change the startup support program “Kaunas Startups” initiated by Kaunas Municipality. For three years, it has operated as a competition for support, and in 2018, “Kaunas Startups” became entrepreneurship promotion program which provides the necessary knowledge and skills for startups, accelerating the startups with the most potential, consolidating individual parts of the startup ecosystem into a coherent whole, preparing startups for the funding-raising phase and raising the attractiveness of Kaunas for new startups, attracting them from other regions of Lithuania and abroad.
In 2015-2018, Kaunas City Municipality allocated more than 343 thousand EUR for startup program: both financial support for the development of prototypes and support services for the development of the idea. 30 startup ideas received municipal support. Most of them are from healthcare, training and B2B sectors.
Distribution of “Kaunas startups” program participants by sectors in 2015-2018.
In 2018, “Kaunas Startups” program provided consultations, organized various trainings and intensive acceleration sessions: in 3 months, 11 startups were accelerated, more than 100 hours of training and over 350 hours of consultations were spent, more than 20 open free events were hosted and attended by 1,000 participants having startups in different levels of development or those who are just thinking about starting one.
Today, all 11 participants of “Kaunas startups” Accelerator program successfully continue their work. A couple of teams has also attracted funding: Houseys, who has participated in the program as Superhost, providing professional short-term rental management services (https://houseys.com) and Dear Deer (https://www.deardeer.lt), using 3D photo printing technology to produce exclusive frames for glasses, attracted investments worth 30 thousand EUR.