State support for entrepreneurship in Latvia — from first steps to global expansion
By: Latvian Startup Association, Startin.Lv
Tags: Latvia, Support, Financing, Startup

Entrepreneurship is a tough game from day one. From finding your first paying customers and attracting investors to scaling, hiring and expanding to other markets — building a business comes with a lot of challenges.

But here’s the good news:

In Latvia, there are several state-provided support mechanisms to help you start and grow your company. No matter what stage your business is at — either just in the idea phase or already up and running and ready to conquer the world — in this article, you’ll find the help needed.

Looking to expand your knowledge?

Want to take your business behind the borders of Latvia?

Need investment? Loan? Grant?

Read below how to get it all.

⚙️ Part I: Start

Ideas don’t work unless you do, right? Here’s the help needed to get your idea to the next level — a functioning business.

1. Startup visa

Startup visa is a temporary residence permit for non-EU startup founders who are interested in launching their business in Latvia. The application process takes one month, and once approved the residence rights are valid for three years. The maximum number of founders who can receive a startup visa under thesame business idea is five, and it’s also spouse and kid-friendly.

💶 Type of funding available: n/a

🌠 Success story: Digital Marine Systems provides marine safety solutions, such as firefighting and life-saving equipment, for onshore and offshore facilities. Originally launched in the United Arab Emirates, the founder has received the Latvian startup visa and the company is on its way to conquering the European market.

✔️ Application guidelines: a step-by-step guide available here.

📌 More info

2. The Idea Cup

The Idea Cup is a business idea contest that provides contestants with an opportunity to undergo professional training under the guidance of experienced entrepreneurs, gain valuable contacts, as well as win a cash prize — the first capital — to bring the idea to life.

💶 Type of funding available: grant (up to €7'000)

🌠 Success story: Diegu Meistars allows you to create a web-like portrait or other artwork out of sewing thread. Diegu Meisters was the winner of ‘’The Idea Cup 2018'’ and received a €7'000 cash prize.

✔️ Application guidelines: When the application is open (the next one opens in August 2019) fill out and submit a one-page long application form via The Idea Cup website.

📌 More info

3. Business Pre-incubation

14 LIAA regional business incubators and Creative Industries Incubators in Riga offer Pre-incubation support program for very early stage companies. During the pre-incubation period, entrepreneurs receive support in business idea valuation, consulting on creating a business plan, as well as other training. Startups are also provided with an office, necessary office equipment and the chance to participate in local exhibitions. The total pre-incubation period lasts up to 6 months.

💶 Type of funding available: n/a.

🌠 Success story: RocketGrip is a more durable and visually pleasing alternative to traditional hockey stick tapes. The company started as a school project, then moved on to the pre-incubator. Now, the business is in the LIAA incubator and, besides that, the company has also signed an agreement for receiving the aid for the participation in exhibitions, conferences and direct visits abroad.

✔️ Application guidelines: Make sure you qualify. Then find your closest business incubator in this map, fill out your application (available here) and submit it to your chosen incubator.

📌 More info (in Latvian)

4. Accelerators

Accelerators are short-term programs that provide early-stage startups with seed investment, mentorship, connections, etc. in order to accelerate their growth and competitiveness. Altum sub-contracted acceleration funds — Overkill Ventures, Buildit and Commercialization Reactor — all together allocate €15 million to innovative start-up companies.

💶 Type of funding available: investment (depending on the accelerator program and the stage of a startup — between €40'000 and €250'000)

🌠 Success story: Asya is an AI-powered app that listens to your voice, then provides real-time feedback on the conversation’s quality to help people build stronger relationships. The startup participated in the BuildIT Latvia accelerator and, among other things, received a €120'000 pre-seed funding.

✔️ Application guidelines: Start with choosing the relevant accelerator for your business, then follow the application process provided by the particular program.

🔹 Overkill Ventures — for B2B software startups (focus on workplace efficiency and automation)

🔹 Buildit — for hardware products

🔹 Commercialization Reactor — for deep tech startups

📌 More info

5. Business loans

Altum offers loans to start a business of up to €150'000 for investment and working capital. The loan term is up to 10 years, and it’s offered with a fixed annual interest rate of 3–7% + the resources fee of the State Treasury.

For micro businesses, Altum also offers micro loans — small loans for companies with up to 10 employees. The term is 5 years, and it’s offered with a fixed annual interest rate of 5–8%. To secure the loan, the business owner has to invest at least 10% if the total amount exceeds €7'200.

💶 Type of funding available: loan (to start a business — up to €150'000; microloan — up to €25'000)

🌠 Success story: Custom 3D is a startup that prints industrial parts for manufacturing companies, electronics manufacturers, etc. The initial capital came from the founders, later the company took a loan from Altum to accelerate their growth and competitiveness of the business.

✔️ Application guidelines: Use the Altum loan calculator to determine your monthly payments on a loan. On the next step, fill out the application form and Altum will get in touch with you.

📌 More info:

🔹 Loan to start a business

🔹 Micro loan

⚙️ Part II: Grow

There’s nothing wrong with being small. But if you’re want to swim between the big fishes, here’s the support you can receive to get there.

6. Venture capital programs

Venture capital (VC) is a long-term equity investment in companies with high growth potential. In exchange for an equity stake, investors provide startups with capital to help them boost their growth and expansion. VC programs that collaborate with Altum include Expansion Capital AIFP, ZGI Capital, and FlyCap Mezzanine Fund II, as well as the Baltic Innovation Fund.

💶 Type of funding available: investment (up to €3.75 million)

🌠 Success story: Vendon provides remote analytics and management for vending and coffee machines. In 2012, Vendon attracted €500'000 risk capital investment from BaltCap with the aim to expand in Europe.

✔️ Application guidelines: find the VC fund that’s relevant to your business. Then, contact the chosen VC fund or follow the application process explained on their website:

🔹 Expansion Capital AIFP

🔹 ZGI Capital

🔹 FlyCap Mezzanine Fund II

🔹 Baltic Innovation Fund

📌 More info (in Latvian)

7. Parallel loan

A parallel loan is an additional loan, provided by Altum, that serves as an entrepreneur’s co-financing for a bank loan in case the bank requires bigger participation than the entrepreneur is able to provide.

💶 Type of funding available: parallel (mezaine) loan (€50'000 — €5 million; cannot exceed 45% of total project costs)

🌠 Success story: Madara Cosmetics, also known as MÁDARA, is a Latvian brand that makes organic skin care, hair care, and baby care products. As the company was growing at 30% YOY, they were looking for a bigger manufacturing facility. With the help of Altum’s parallel loan, the company was able to buy its current manufacturing center in Marupe, Latvia.

✔️ Application guidelines: First, the company applies for a loan in a bank. If the bank requires more co-financing, the company and bank together submit the needed documents to receive the Altum’s parallel loan.

📌 More info (in Latvian)

8. Credit guarantee

The Altum credit guarantee is provided if your current security is not enough to secure a bank loan. The guarantee amount cannot exceed €5 million and 80% of the principal amount of financing.

💶 Type of funding available: n/a

🌠 Success story: Apply creates custom AI solutions across a broad spectrum of industries, including media, healthcare, and other. The start capital came from the founders, but later as the company developed and changed, they had to look for additional funding. With the help of the Altum credit guarantee, Apply was able to get a loan and further grow their business.

✔️ Application guidelines: contact your bank for the possibility to use the credit guarantee by Altum.

📌 More info

9. Startup law benefits

Companies that according to the Startup Law meet the criteria of a ‘’startup’’ can qualify for the following support: fixed social tax rate for startup employees + 0% individual income tax, or 45% co-financing of highly qualified employees. Startups are allowed to apply for different forms of support to different employees.

💶 Type of funding available: co-financing of highly qualified employees (45%)

🌠 Success story: Nordigen is a fintech startup that provides banks and lenders with analytics to help them improve the speed and accuracy of their credit decisions. Nordigen has received co-financing for attracting high-skilled workers.

✔️ Application guidelines: a step-by-step guide available here.

📌 More info

10. Mini-MBA

The mini-MBA is one of the available choices of support for startups under the innovation motivation program, implemented by LIAA. The mini-MBA is training for startup founders, top-level managers, and senior-level employees to help them improve their management skills and grow their companies faster. The training is lead by experienced lecturers and mentors with academic and hands-on international experience.

💶 Type of funding available: n/a

🌠 Success story: Catchbox is the ‘’world’s first soft throwable microphone’’ or in other words — a soft cube with a built-in microphone, used in conferences, seminars, meetings, etc. In 2019, the company’s CFO graduated the mini-MBA course.

✔️ Application guidelines: To apply for the mini-MBA, fill out the necessary documents that are available for download here. Then, sign them with an e-signature and send to monta.martini@liaa.gov.lv. Alternatively, you can take the signed documents directly to the LIAA office at Perses 2 (1st floor), Riga.

📌 More info (in Latvian)

11. Vouchers

The LIAA innovation vouchers program provides support to merchants that develop new products and technologies. Merchants can apply for introduction or classical vouchers, where:

🔹 The introduction voucher is for research, prototyping, industrial design development, and more.

🔹 The classical voucher for research, prototyping, certification and testing services, the attraction of highly qualified employees, and more.

💶 Type of funding available: co-financing (introduction voucher — up to €5'000 with 85–100% intensity or classical voucher — up to €25'000 with 45–85% intensity)

🌠 Success story: Sonarworks is software for sound calibration on headphones and speakers for music creators. In 2019, Sonarworks signed an agreement on receiving a €25'000 voucher for the attraction of a highly qualified employee for creating an innovative Development Kit algorithm.

✔️ Application guidelines: If you qualify for support (check here — in Latvian), prepare the necessary documents — find them here (for the introduction voucher) or here (for the classical voucher). Once the application documents are ready, submit them as e-docs via email liaa@liaa.gov.lv, or take them directly to the LIAA office in Perses 2, Riga.

📌 More info (in Latvian)

12. Business incubators

LIAA has created 15 business incubators to help early-stage companies to speed up their growth. The LIAA Incubation programme, besides other things, includes co-financing of services like testing, prototyping, market research, as well as expert consultations. Startups are also provided with office space, the chance to participate in local exhibitions and apply for a grant. The total incubation period can’t exceed 4 years.

💶 Type of funding available: co-financing (up to €200'000)

🌠 Success story: Grafomap is an online store that allows you to create custom map posters of a place of your choosing. As a member of LIAA business incubator, Grafomap was provided with an office space, as well as received co-financing for marketing activities.

✔️ Application guidelines: Make sure you qualify. Then find your closest business incubator in this map, fill out your application (available here) and submit it to your chosen incubator.

📌 More info

13. Social entrepreneurship program

Implemented by the Ministry of Welfare and in cooperation with Altum, companies that conduct social entrepreneurship have the chance to receive a grant for the development and promotion of their businesses. To qualify for the grant, your company must obtain social business status.

💶 Type of funding available: grant (up to €20'000)

🌠 Success story: BlindArt is a social business platform that sells artwork created by blind and visually impaired people. In 2018, Blindart received a €20'000 grant, which has helped the company grow and further integrate people with visual impairments into the labor market.

✔️ Application guidelines: First, apply for social business status. Then, fill out the application documents for Altum and submit them via mans.altum.lv.

📌 More info

⚙️ Part III: Expand

World domination is written in your business plan? Good. We’ll help you get your business’ — and Latvia’s — name out there.

14. Promoting international competitiveness

Promoting international competitiveness is a support program for a wide range of merchants, including startups. Companies are provided with support for participation in international exhibitions, trade missions, conferences, and seminars, as well as for conformity assessment of production sites and products.

💶 Type of funding available: co-financing (with 25–50% intensity)

🌠 Success story: STROPS Technologies produces mobile video surveillance systems. With the LIAA support, the company attended several security industry conferences, including IFSEC London and Security Essen, and came home with new contacts and leads, as well as got coverage in international press.

✔️ Application guidelines: Prepare your application (guidelines here — in Latvian), as well as other required documents. Your application will be evaluated and once the decision is made, you’ll be invited to sign an agreement (available for download here).

📌 More info (in Latvian)

15. Explore the globe

Also known as “aid for the participation in exhibitions, conferences and direct visits abroad’’, this type of support is specifically created for startups — companies developing innovative products. Every year, 100 businesses are offered co-funding to participate in international events, as well as to visit investors and partners abroad. Expenses that are covered include flight tickets, accommodation, daily allowance, event tickets, and other business trip expenses.

💶 Type of funding available: co-financing (with 70% intensity, max. €4'000)

🌠 Success story: Overly creates custom augmented reality solutions for businesses and events. The company has entered into an agreement with LIAA for receiving aid for the participation in exhibitions, conferences and direct visits abroad.

✔️ Application guidelines: a step-by-step guide available here.

📌 More info (in Latvian)

16. Enterprise Europe Network

The Enterprise Europe Network (EEN) is a network of over 3000 local experts and 600 member organizations across 60 countries that provides support for small and medium-sized enterprises (SMEs). Some of the services EEN provides include helping businesses find partners abroad, consulting on regulations and legislation, informing on available funding possibilities, and helping with market research.

💶 Type of funding available: n/a

🌠 Success story: SIA Zekants produces crunchy bean snacks under the brand name Pupuchi. The company was looking for a roasting machine manufacturer which ended up being a bigger challenge than expected. Luckily, with the help of EEN, the company was able to find a reliable partner.

✔️ Application guidelines: Get in touch with EEN about the possibility to use their database of partnering opportunities. Also, follow the news in the “Events’’ (‘’Pasākumi’’) section on the website — there, you’ll find the latest news on events like exhibitions, trade shows, etc. as well as information on the application process.

📌 More info

17. Export credit guarantee

An export credit guarantee enables exporters to secure themselves against insolvency or long-term payment delays by foreign customers. An export credit guarantee covers commercial risks (up to 90% risk coverage), as well as political risks (up to 95% risk coverage).

💶 Type of funding available: n/a

🌠 Success story: SAF Tehnika is a point-to-point microwave data transmission equipment manufacturer that deploys products in more than 130 countries worldwide. SAF Tehnika has secured their business with the Altum’s export credit guarantee.

✔️ Application guidelines: Start with getting in touch with an Altum export credit guarantee expert — find their contact information here. You can also use this calculator to find out your guarantee premium.

📌 More info

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