This article is written by Cristina A. Fernandez__, Vice President for Policy & Research, Global Entrepreneurship Network. This post is part of a special entrepreneurship policy series for Global Entrepreneurship Week (#GEW2020). Curated in partnership with the Startup Nations policy community, these articles seek to highlight how public servants can remove barriers to entrepreneurs, by highlighting examples of policy approaches from around the world.

Entrepreneurship depends largely on startup talent within Government agencies.

Global Entrepreneurship Network (GEN) is always busy combing the world for such talent, engaging public servants via the Startup Nations policy community. Behind the scenes are its members modernising their own government's’ approach to supporting entrepreneurs.

In Lithuania, Lina Vaiciuniene serves as Chief Official for Business and Science Cooperation at the Ministry of the Economy and Innovation.

The Baltic country is not unfamiliar with one of the largest hurdles to strengthening an entrepreneurial ecosystem anywhere: increasing the pool of entrepreneurial human capital.  Lina outlined for us her country’s multi-pronged approach to address this barrier.

Lina noted for her peers in the Startup Nations policy community that integrating startup-friendly policies required officially recognising them in the country’s legal framework.

Lithuania included the definition of a start-up in the 2019 Law on the Development of Small and Medium-Sized Enterprises as: “A micro or small enterprise less than five years old, which has a high potential for innovation-driven business development.”

She explained: “In the absence of a clear definition of a "start-up" at the EU level, having an official start-up definition in Lithuania has unlocked key processes. For example, this definition enabled us to build a data infrastructure to take the pulse of our entrepreneurial economy and guide our decision-making.

Startup Lithuania can now compile statistics for Lithuanian start-ups in their dedicated database, which helps us monitor the change of our start-up ecosystem.” In April 2019, the Ministry of the Economy and Innovation set up a dedicated Working Group which submits proposals on regulatory matters affecting start-ups.

All the while, the following policy levers and programs are underway:

Startup visa program for foreign entrepreneurs

Since 2017, 40 start-up companies have relocated to Lithuania via the country’s Startup Visa program.

Lithuania is not the only EU country to offer foreign startups a gateway to the European market. This is why the government is constantly seeking to iterate on its program to attract foreign start-up founders.

For example, it has improved and shortened the procedures for foreign entrepreneurs to apply for a visa by cutting the timeframe for the evaluation of their applications in half. This effort responds to the fast-paced nature of innovation processes which high-potential startups undertake.

Soft-landing program

Startup Lithuania – a non-profit agency powered by Enterprise Lithuania under the Ministry of the Economy and Innovation – is the country’s national start-ups facilitator. Its “Soft Landing” program offers additional support for current and potential entrepreneurs entering the Lithuanian startup scene by offering counselling services for local and foreign start-up founders. In a nutshell, the soft-landing program helps entrepreneurs navigate the full start-up ecosystem.

A streamlined hiring process

This additional program helps startup founders based in Lithuania attract, retain and integrate talent into their teams. A one-stop-shop hiring procedure is open to Lithuanian start-ups that meet the official start-up definition, and are registered as such in the country’s official start-up database.

These businesses have access to posting a job ad on Lithuania Labor Exchange’s website, and to request a work permit for the chosen applicant(s) via Lithuania’s Labor Exchange.

Flexible stock options regulation

In order to motivate employees of the existing start-ups and to attract new ones, Lithuania ensured the flexibility of stock options under the Law on Personal Income Tax, effective as of February 2020. Under these new rules, the value of shares vested under stock options no earlier than 3 years after the date of grant will be tax-exempt. These changes enable an additional benefit for start-up employees.

The work to build an entrepreneurial economy does not end there. The Lithuanian Ministry of the Economy and Innovation is also seeking to expand the pool of start-up financing, in cooperation with the Central Bank of Lithuania, the Venture Capital Financing Facility Accelerator Fund, the Lithuanian Business Angel Network (LitBAN), among other stakeholders.— Cristina A. Fernandez.

You can explore these and other policy levers from around the world via the GEN Atlas.

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