Since gaining independence from the USSR, Latvia has forged a name for itself as one of Europe’s most exciting start-up hotspots. Jenny Southan reports.
Up here on the 26th floor of the Radisson Blu Latvija, a remix of “Scooby Snacks” is playing while two slow-turning glitter balls stroke starlight on the men in suits. It’s dusk outside and the gold-domed Russian Orthodox cathedral shimmers against a watermelon sky, the Esplanade park stretching out beyond in rich greens.
Drinks have names such as “Wrong Island Ice Tea”, “What Women Want” and “Cocaine”, and the place is packed. It’s probably the glitziest bar in Riga, but I can’t help feeling I could be in Moscow or Dubai.
For an outsider, it’s almost impossible to imagine just how different life was when the country was occupied by the Soviets. “Riga in 1991 was an awful place – very poor, very neglected, with buildings crumbling,” says local tour guide Juris Berze. The Russians claimed control in 1944 and it wasn’t until 1991 that Latvia gained independence. They were long, hard decades for a people that had already suffered tremendously at the hands of the Nazis.
Since the collapse of the USSR, Latvia has embraced the free market and made a rapid transformation, despite two economic crashes along the way. Since 2000, the country has had one of the highest GDP growth rates in Europe, and is the fastest-growing of all three Baltic states, ahead of Estonia and Lithuania. It joined the EU in 2004 and introduced the euro in 2014, the same year Riga was European Capital of Culture.
Today, the Latvian capital generates half of the country’s GDP (US$27 billion in 2015). Earlier this year, Latvia was ranked 22 out of 189 countries by the World Bank in terms of ease of doing business, ahead of Switzerland (26th), France (27th) and Spain (33rd). It also came 27th for ease of launching start-ups – it takes only 5.5 days to register a company compared with an average of ten in the rest of Europe, and there are thousands of free wifi hotspots.
In the past few years, shared offices for entrepreneurs have started popping up across the city. There’s Startup Latvia Space, Innovation Café, Riga Powerhouse, Nordic Club House and Make Riga. Set back from a quiet residential street, on the lower levels of an apartment block, is Coworking Riga (coworkingriga.com), the open-plan interiors of which are fitted out with smart parquet floors, abstract art, a photo studio and communal kitchens. Out the back is a meadow garden where people can smoke or eat lunch.
Opened two years ago, its founder, Iveta Rozentale, says the hub now has 35 to 40 people working here, from an ex-political adviser and an architect to a photographer, a documentary maker and a graphic designer. One resident is Mikus Opelts, chief executive of Giraffe 360 (giraffe360.com), a tech start-up that creates 360-degree visualisations. “Real-estate developers and hotel companies such as Hilton use us to create presentations,” he explains. As his company has expanded, he now commutes to Tbilisi and London. “Using remote locations is great from a creative industry’s perspective and for small teams,” he says.
Community platform Labs of Latvia (labsoflatvia.com) says it has more than 200 start-ups in its database, “with new ones joining every week”. Maris Dagis is chief executive and founder of Sellfy, an e-commerce platform for digital content. In search of an office a couple of years ago, he found a “beautiful location” that was too big, even when sharing with his friend’s web design start-up, Froont (froont.com). They took it on anyway, and paid the rent by turning it into co-working space the Mill (millriga.com). It is now at capacity, with 35 members, and is looking to expand.
In 2014, global co-working provider Tech Hub, which also has a presence in London, Madrid and Bengaluru, opened an outpost in the city’s Old Town, with space for 90 members. It offers in-house mentoring, advice sessions, networking, promotion and events.
Dagis says: “From a start-up perspective, Riga is good because there is a lot of talent, it is really cheap and very welcoming. From an investor point of view, there are exciting companies that don’t have valuations as sky-high as in the UK. We are seeing a lot of interest from venture capitalists from the UK, a lot of start-up competitions, people going to accelerators both here and abroad, and people from outside of Riga coming here to host meet-ups and conferences. We also travel a lot because we are so small, we can’t just focus on the local market – we have to think global from day one.”
Jekaterina Zaiceva is chairperson of the Latvian Start-up Association (startin.lv) and spokeswoman for Commercialization Reactor (commercializationreactor.com). Founded by local nuclear physicist Nikolai Adamovitch in 2009, it helps scientists from countries such as Ukraine, Kazakhstan and Russia to patent their ideas and matchmake them with Latvian entrepreneurs who implement them. “We have 25 active start-ups right now – we bring brains to Europe,” Zaiceva says.
In its five or so years, the scene has already borne a few big successes, the best-known being social Q&A network Ask.fm, which has since been sold twice, first to the owners of dating app Tinder and then to Californian asset management firm Noosphere. In August, the government approved a new support programme that will see €30 million made available to seed and start up capital funds, as well as another €30 million for growth capital funds.
Jean Mauris is co-founder and chief executive of business accelerator Eegloo. “We have so far invested in six companies – three of them closed, two are live and one is doing very well,” he says. “That one is BranchTrack – we want to help them become a world leader in corporate training and e-learning, and to build a company worth at least half a billion dollars.”
He adds: “The biggest competitive advantage will be next year, when three accelerator funds will be operating here, so very early-stage start-ups will have the chance to incorporate, get funding and start building and selling. Our government is working on introducing start-up friendly legislation too.” Earlier this year, Latvia’s former minister of economics, Daniels Pavluts, joined the Latvian Start-up Association to help nurture the blossoming eco-system of new business.
RESTORED TO HEALTH
Riga has a population of 700,000, out of a country of two million. It’s not a big city but it is a pretty one, reminiscent of Vienna with its immaculate boulevards, brightly planted public gardens, cobbled old town and art nouveau architecture, much of it designed by Russian architect Mikhail Eisenstein (father of Battleship Potemkin director Sergei).
The entire city has been restored over the past two decades, with parts earning UNESCO World Heritage Site status in the 1990s. When religion was banned under Soviet rule, the Nativity of Christ cathedral was turned into a planetarium and café but was reborn as a gilded place of worship after liberation.
Riga Central Market comprises four cavernous, arched pavilions 20 minutes’ walk from the Old Town. Dating back to the 1930s, it is one of the largest in Europe, at 72,000 sqm, and people flock to it for fresh flowers, fruit, smoked eel and rye bread. Over in Piens, an emerging hipster district set among traditional wooden houses dating back to the 19th century, a group of volunteers are packing basil plants, eggs, cheese and tomatoes into rubber baskets. The co-operative sees excess local produce distributed to members of the community.
“I should participate because I grow a lot of apples,” says Janis Vanags, vice-president of corporate communications for Air Baltic. “Latvians are obsessed with fresh, organic food because we come from generations of farmers.” Across the way is the Labietis Microbrewery and Valmiermuiza bar, a good stop for a glass of the local Talavas cider.
Launched 20 years ago, Air Baltic has a fleet of 24 aircraft, with 20 new Bombardier C300 Series planes to come over the next five years. It operates a hybrid business model offering a low-cost economy product and full-service business class, and flies 12 times a week to London, codesharing with British Airways. The airline links Riga, Tallinn and Vilnius to 60 destinations in Europe, Scandinavia and the Middle East.
Located 10km from the city centre, Riga International airport will complete a new m27 million terminal by November this year. Flying in, the fact that the country is 50 per cent forest is immediately apparent. One of the greenest countries in Europe, it also hopes to generate 40 per cent of its power from renewable sources by 2020.
But for now, it’s all about the start-up scene. The city recently hosted Silicon Valley Comes to the Baltics, a tech showcase that had been held by Vilnius three years in a row. Last year, Start-up Weekend Riga saw teams battle it out in a 54-hour pitching contest. Helsinki’s Silicon Vikings staged a Startup Sauna pitching competition in February, and next year will see the return of the annual TechChill Baltics conference. Riga is hungry for success – and could well be your next big investment opportunity.
WHERE TO STAY
Carlson Rezidor is the biggest international hotel operator in Riga, with four Radisson Blu properties totalling 1,250 rooms – the Latvija, the Ridzene, the Daugava and the Elizabete. It opened a Park Inn in the city this year, with two more to come, and also manages the 60-room Astor hotel.
Other global brands with a presence in the capital include Hilton
Garden Inn and Accorhotels’ Mercure, Ibis Styles and Pullman. Next year, 1950s hotel the Riga will be converted into a 136-room top-end Kempinski. Along with a terrace facing the opera, it will have a spa, conference space, restaurants and bars.
In Bergs Bazaar, in the Centrs district, the five-star boutique Hotel
Bergs has 38 chic, minimalist rooms set across two renovated buildings joined by a striking atrium. A Small Luxury Hotels of the World member, it also has a superb restaurant serving tasty, creative cuisine. slh.com.
Ten Latvian start-ups
AIRBOARD World’s smallest manned aircraft (a hoverboard crossed with a Segway) airboard.co
BITFURY The world’s largest producer of semiconductors, servers and data centres for Bitcoin and crypto-currencies, Bitfury has received €53 million in funding bitfury.com
DESKTIME Real-time tracking software for analysing employee productivity desktime.com
FACTURY Online loan verification and trading platform based on blockchain (crypto-currencies) factury.co
GAGABEER App to find the nearest store selling your favourite beer for the best price gagabeer.com
INFOGRAM Web-based infographic maker for data visualisations infogr.am
LANDLORDY App for managing expenses and payments from tenants landlordyapp.com
OVERLY First augmented/virtual reality company in the Baltics overly.lv
RECONTACT App to help you remember important things about your friends and their kids recontact.co
VORTY Unlock electronic locks in your home and garage by smartphone vorty.eu