I spent part of this summer returning to Europe’s Baltic countries (Estonia, Latvia, Lithuania). Over ten years had elapsed since my last visit, so a return trip was overdue. Not to mention that I had never been to Latvia.
It’s incredible how digitally-connected these small countries have become, and how much they continue to punch above their weight in so many areas. Indoor fiber and outdoor 4G networks are ubiquitous (71% fiber penetration in Lithuania, 65% in Latvia, for example). Mobile voice and data subscriptions per capita are over 140% in all three countries.
The cashless economy is also on the rise in Baltics. Estonia leads Europe in over half of all point-of-sale transactions taking cashless form. (For comparison, cashless represents only 13% of all POS transactions in Spain and only 14% in Italy). Anecdotally, almost every merchant interaction I observed in Riga and Vilnius were not only cashless, but also contact-less. All three countries have adopted the Euro, beginning with Estonia in 2011 and finally Lithuania in 2015.
Establishing a business now in Tallinn is the most painless incorporation process I’ve witnessed in any developed country. This is thanks largely to Estonia’s move in 2014, when the country extended its e-Estonia digital identity system to non-Estonians worldwide, called e-Residency. With e-Residency, eligible citizens of other countries can gain access to many of the digital services provided through the government’s e-Estonia portal, as well as register a location-independent business in Estonia. This endeavor allows Estonia to further extend the virtual borders of its national influence into digital communities and attract global citizens.
Blockchain talent actually felt deeper in Latvia (population 2 million) than in Japan (population 127 million). Bitfury is probably one of the most well-known success stories of Latvian origin within the crypto community, representing over 10% of worldwide bitcoin mining at one point. However, there are dozens of other interesting projects, both crypto and blockchain, currently flying under the radar of most international VCs (hardly any VC firms reside in Latvia).
In Vilnius, I had the honor to meet the developers behind an AI-based image recognition technology that even the NSA can’t reproduce. Lithuania’s capital also houses the Vilnius Blockchain Centre, a central hub attracting blockchain talent from all over Europe.
Baltic entrepreneurs hold no illusions about the size of their domestic markets and hence aim global in their ambitions. Skype, Bitfury, Revolut are of course brand name global successes now, yet all had their roots or early traction in Estonia, Latvia, Lithuania, respectively.
If you’re interested in witnessing agility on digital innovation in Europe these days, the Baltic States are a must-see.