According to investment funds, venture capital investment volume has broken records, with Lithuanian startups raising around 10 times more capital in 2021 than during the first year of the pandemic. The second year of the Pandemic not only brought increased VC investment volumes to the startup community but also highlighted the need for safe, consumer-driven digital innovation. How did the participants of the Kaunas Science and Technology Park's business pre-acceleration program Evolut 4.0 evaluate such changes?
The growing demand for acceleration programs has opened up a wide range of opportunities for startups: due to the pandemic, most acceleration and pre-acceleration programs have moved to the virtual space and have become accessible to an even wider audience of founders. Having gone virtual at the start of the quarantine, Evolut 4.0 helps startups develop a product or service to enter the market more smoothly and increase sales.
"Last year we updated the program by adding experiences and insights from successful startups that had experienced acceleration themselves. With alumni of the US Y Combinator accelerator joining the team of speakers, Lukas Kaminskas, co-founder of IT training startup Turing College, shared with the participants how to identify the right metrics to measure progress. This is crucial for a startup to move forward and for the development team to stay motivated," says Romanas Zontovičius, coordinator of Evolut 4.0 and Head of the Innovation and Entrepreneurship Department at Kaunas Science and Technology Park.
Attracting investment from EU support funds
Ligence team of Evolut 4.0 alumni, who are now on the radar of investors, emphasize the importance of flexibility and the ability to find the options that help to attract funding from private and public funds. The need to seek investment from the public sector and EU-supported funds is also driven by the nature of the startup itself - the development and testing of a medical technology prototype take more time and resources.
"The fundamental difference of a medical technology startup is the long time to market. We need to ensure that we meet standards such as European Commission regulations, international quality management standards. We have few metrics that are important for private venture capital funds, and investors are asking for more footprints in the market. We do not look that attractive to funds because the returns of a startup are not fast", says Dovydas Matuliauskas, CFO of Ligence.
"Ligence secured one of its largest investments at the end of last year from a fund funded by the European Commission. The startup will receive a €2.5 million grant from the European Innovation Council (EIC). The startup will also receive an investment of almost €2 million from the European Investment Fund (EIF). The team notes that the healthcare sector in the Nordic region of Europe is most in need of such an innovation in Finland and Estonia, as well as in Western European countries such as Belgium, the Netherlands, Germany, and France.
"We participated in the first batch of the Evolut 4.0 pre-acceleration program. The program helped us to broaden our worldview, to hear expert insights and advice, and to get out of the bubble of our own ideas. This is very important for further development and growth," says D. Matuliauskas. This year, the startup plans to obtain CE certification and make its first commercial sales in Lithuania and the Baltic region.
Requires some allocation of team resources
Another important type of investment is the help with prototyping or go-to-market advice and mentoring sessions. Pre-acceleration programs do their best to bring technology developers closer to their first investment, but very often this journey does not start with the funding raised.
Once a startup has met the right mentors and applied the experiences that can accelerate product development, growth gains the necessary momentum. Stalo broliai, a startup that developed a digital kitchen furniture design experience after participating in last year's pre-acceleration program, is planning to open an e-shop soon and is currently testing a prototype and working with its first customers.
"The program has helped us a lot because it covers a lot of business areas and gives us theoretical and practical knowledge on how to start building a team structure. The insights into what investors are looking for and how to present your solution to them were very valuable," recalls Lukas Milaknis, co-founder of Stalo broliai. Finding good business partners is a big challenge for the team - when developing an innovative product that pushes the whole furniture industry forward, it is very difficult to maintain good relationships with partners who are used to working with conventional solutions.
"Developing a startup is a difficult task. Despite all the difficulties, we see that there is a problem in the market that we can solve with our product. As our team member Martina says, if you stay calm while facing the difficulties, things move forward little by little", says Milaknis.
Evolut 4.0 pre-acceleration program is in its fourth year of developing startup teams. Launched in 2018, the program has been fundamentally transformed by the pandemic. The remote, and this year hybrid, training, workshops, and mentoring have helped attract a larger and more diverse range of entrepreneurial experts from Europe and the US. The remote Demo Day events last November brought together fourteen venture capital fund representatives, individual investors, and business angels from the US, Lithuania, Israel, Austria, Ireland and other European countries.