Israel the start-up Nation, with 8 million residents only and number one in the world in the number of startup and money raised per capita.
Yes, this is the amazing country that I came from, that showed me many opportunities in the bitcoin and blockchain ecosystem.
When I received an invitation to the Vilnius Blockchain Week, I thought that I’ve already seen it all.
Little did I know that Lithuania has a crazy startup and tech scene in!
It didn’t took long to realized that Lithuania is not only a country with the most ICOs and money to be raised per capita through ICO but also an amazing gateway to Europe’s fintech market.
Lithuania’s central bank provides a sandbox plan for EU financial license designed for crypto companies and the country has a brilliant 29-year-old Minister of Economy who always reminds that they are a country of innovation, entrepreneurship and brilliant businessmen who are constantly achieving very impressive results.
On this read I am going to talk about my last journey in Vilnius Blockchain Week and what i’ve learned from that amazing experience.
Chapter 1: Experiencing the Vilnius Blockchain Week
I was able to enjoy the Vilnius Blockchain Week and participate in an amazing, action-packed event full of intriguing networking opportunities. The teams that brought us to the Vilnius Blockchain Week were the EC-funded projects Soft-Landing and Startup Lighthouse, both part of Startup Europe, as well as Civitta, a leading independent management consultancy.
I would also like to use this opportunity to thank the projects’ amazing and welcoming team of organizers: Andra Bagdonaite, Jone Vaituleviciute, Dorota Skusevičienė, Greta Grigalevičiūtė, Augustė Tamulytė and Ricardo Mendes da Silva.
Meeting the Vilnius Blockchain Week Participants
The mission participants at the Vilnius Blockchain Week were entrepreneurs, investors and ecosystem builders coming from all over the world. There were participants from Brazil, USA, Israel and many other countries in Europe.
The main goal of the mission was to help all the participants understand the Vilnius blockchain ecosystem and connect with the key stakeholders, paving the way for strong and long-lasting relationships. We quickly learned why Vilnius is the coolest place for blockchain and we could also communicate with leading accelerators, VCs, government officials and some of the best local entrepreneurs, opening the doors to numerous groundbreaking collaborations.
Networking for the Blockchain week participants hosted by transferGo
Chapter 2: Lithuanian Rising Startup and Blockchain Ecosystem
At the start of the mission in Vilnius, I had the pleasure of visiting the Vilnius Tech Park and Rise Vilnius, two innovative hubs for rising startups in Lithuania.
Visiting the Vilnius Tech Park
I had the most exhilarating experience visiting the Vilnius Tech Park, which is a hub that people refer to as the Silicon Valley of the Baltics. This inspiring 9000-ft² work environment boasts of 750 working spaces where you can find more than 60 organizations with nearly 800 innovative thinkers to collaborate with.
A map of Vilnius tech park
One of the speakers at the event was Mantas Kondratavičius, Ecosystem Development Manager at Startup Lithuania. During the Vilnius Tech Park visit, he informed us a bit more about the ecosystem of startups in Lithuania.
The Lithuanian startup ecosystem has 6 VC funds, more than 20 accelerators and incubators and more than 20 innovative co-working hubs. More than €260 million is available for investment in 2018 by 8 funds supported by the EU and the Lithuanian Government.
Over €150 million was raised in the country over the last decade, while €500 million was raised on ICOs (initial coin offerings) over the last 18 months, which speaks volumes about Lithuania’s successful startup ecosystem.
There are 480 more startups in the country than in 2007, 100 of which were funded this year. There are more than 120 fintech startups in the country, which the Bank of Lithuania supported by introducing a regulatory sandbox, which allows fintech startups to do their first year of business with no regulatory sanctions.
The most famous of the Lithuanian startups is Oberlo, the leading marketplace for entrepreneurs to find and sell products online. It was acquired by Shopify for $15 million. With $60.8 million funding, Vinted, the biggest second-hand clothing marketplace in Europe, is another big startup star, as well as the fast-growing transferGo, with $20.6 million in funding.
Lithuania started the Startup Visa plan, referring to the approved immigration law aimed to attract innovative startup founders from all around the world. Because of that, many immigrants, Ukrainians and Russians are coming to Lithuania for business opportunities.
During the visit, we met with Alexandre Pinot, Head of AML & MLRO at Simplex, an Israeli blockchain startup, a success story for the Startup Visa plan and a regulatory sandbox that makes Lithuania the gateway for startups in Europe.
Simplex worked with Invest Lithuania to open a branch in Vilnius and they helped the company in all the aspects. Invest Lithuania is a non-profit organization owned by the Ministry of Economy of the Republic of Lithuania. The organization provides consultancy services to foreign investors looking to relocate or expand their business in Lithuania.
Simplex specializes in fraud prevention and mitigation. With over 70 employees, the blockchain startup is already growing at a fast pace, mainly thanks to the Bank of Lithuania and its regulatory sandbox.
Companies operating in the sandbox are able to offer innovative financial products and test business solutions in the commercial marketplace, with customers pre-approved by the Bank of Lithuania. There will be a bit more information about the positive regulation later on, so read on.
Visiting Rise Vilnius
Rise Vilnius is a co-working space and fintech hub that connects startups and experts and enables them to solve various challenges regarding financial services and insurance market. Powered by the Barclays bank, Rise has 3 or 4 blockchain startups and offices in 7 locations: London, Manchester, New York, Vilnius, Cape Town, Tel Aviv and Mumbai.
Soft landing and startup lighthouse missions participants at Rise Vilnius
I had the pleasure of hearing about some great blockchain startups with Lithuanian founders, such as BitDegree and Debitum Network. Danielius Stasiulis, the co-founder at BitDegree, talked about this online education platform based on blockchain. He said that BitDegree is the first fully compliant ICO incorporated in Lithuania, with 27 employees and 310,973 courses started by their students. With the help of crowdfunding only and without a pre sell, the company received 32000 ETH from 12,000 contributors.
Debitum Network is built as a hybrid platform all transactions are processed through the Ethereum Blockchain, making Debitum Network a secure and incorruptible infrastructure. It’s made up of an Ethereum-based family of smart contracts, facilitated by one internal means of payment. The members of the Debitum Network helps business and investors to verify the loan, do a risk assessment and insure their investment.
Chapter 3: Positive Regulation to Blockchain and ICO
The positive regulation is one of the keys making Lithuania the gateway for startups in Europe. We’ve met with the COBALT Law Firm and the Bank of Lithuania, both of which helped us understand what is the positive regulation.
Meeting with COBALT Law Firm, Vilnius
Evaldas Petraitis, an associate at COBALT, talked about ICOs and cryptocurrency regulations in Lithuania. He started by explaining which activities are regulated and which are not.
Regulated activities include issuance of security tokens, collective investment activities, investment services, secondary trading of security tokens, crowdfunding platform operation, establishing a bank (Bankera ICO) and electronic money institution. Activities that are not regulated include issuance of utility tokens.
There are specific requirements and licensing if particular ICOs and crypto activities fall under public offering rules. If you fall under any of the aforementioned regulated activities, then you are considered as the financial market participant (FMP). FMPs can execute their activity only after being approved by the Bank of Lithuania.
Security tokens are like securities in Lithuania, that is, an obligation of an issuer (ICO company) to provide something to a token (security) holder. The features that qualify token as a security include the right to receive interest, profit or income, an obligation of the issuer to redeem the token, the right to convert the token into the shares of the issuer, the right to have influence over the management of the issuer and the token price being backed by the asset value.
If your token is a security, public offering rules come into effect, which means that your token has to be issued in accordance with the securities laws. Also, it has to be registered within the securities manager (a brokerage firm or a bank licensed by the Bank of Lithuania) and depository (CSD).
To create a liquid security token is not easy thing to do, because not only does every token holder must be registered in a bank or brokerage firm, but they also have to inform the bank about when and to whom they want to sell their token.
In order to solve that difficulty COBALT, together with the central bank, examines a solution that can be a specific exchange to security tokens. Such security token exchanges don’t exist yet, but they are in an advanced approval process in the central bank of Lithuania.
If you make a public offering, you need to prepare a prospectus, which the Bank of Lithuania needs to approve.
The only exceptional way to do a security token without the bank approval is only if your token is offered up to 150 investors and that the total consideration of the offer in EU is not higher than €5 million.
Evaldas Petraitis, an associate at COBALT
If you want to explore more information regarding ICO in Lithuania, read Lithuania’s ICO Guidelines.
Lukas Pultaražinskas, another associate at COBALT, talked about taxation for different tokens. There are taxes for security tokens, utility tokens, and payment tokens. Lithuania has tax incentives for startups, which include an indefinite Tax Loss Carryforward, 5% CIT for small companies with the first year exemption of 0% CIT and share options free of social security taxation.
According to CoinMarketCap, 5.5 billion US dollars were raised for 343 ICOs in 2017, while 7 billion US dollars were raised in 2018 for 271 ICOs and it’s estimated that $14 billion will be raised by the end of the year.
Meeting with the Bank of Lithuania
The speaker representing the Bank of Lithuania was Jekaterina Govina, Adviser to Board Member and fintech strategy coordinator.
The Bank of Lithuania applies the financial market law for security tokens, while utility tokens don’t need to be regulated. It takes 3 months to get a payment institution license for security tokens and a one-year sandbox regulation is applied, after which you can operate your business all across Europe.
The sandbox regulation will enable the companies accepted on the program to have access to much more simplified incorporation and licensing procedures, which the bank will help them with. The companies operating in the sandbox will be able to offer financial products to customers who are pre-approved by the Bank of Lithuania, and they will be able to test their business solutions in the marketplace.
Jekaterina Govina, Adviser to Board Member and fintech strategy coordinator
Lithuania’s central bank is about to issue the world’s first digital collector coin dubbed LBCoin powered by a blockchain sandbox platform, LBChain, aimed at helping Lithuanian and international fintech companies based on blockchain to set up their business in Lithuania.
The platform will significantly improve the conditions in Lithuania regarding the development of fintech companies and innovative regulations. It will also greatly help Lithuania’s central bank with staying in touch with innovative technologies that transform various activities of financial institutions.
LBChain will help those companies conduct blockchain technology research and adapt and test their blockchain-based services in the activities of financial institutions. The platform will serve as a technical one, where the users can receive consultations on all applicable regulations.
Chapter 4: The Advantages of Lithuania
During the visit of the Blockchain Centre Vilnius, we had the opportunity to meet with government officials, entrepreneurs and the speakers of the international Block Forum conference. Some of the people who arrived were Jeff Burton, a co-founder of Electronic Arts, and Miko Matsumura, the founder of Evercoin Exchange.
Apart from networking with some of the most brilliant minds in the blockchain industry, the visit included lectures and panels with the same industry executives.
The Blockchain Centre Vilnius helps blockchain-based startups reach their business goals by connecting them to investors, providing mentorship, training programs and advice regarding marketing, tech, tax and legal issues, initiating blockchain startups, organizing events for blockchain professionals and helping establish business connections in Europe, Asia, and Australia.
Apart from Vilnius, the Blockchain Centre has locations in Shanghai and Melbourne. The mission of the Blockchain Centre is to become a catalyst for the adoption of blockchain technology and empower individuals and institutions by creating a stable work environment for tech developers and end users.
Similarly, the startup ecosystem is one of the priorities of the Lithuanian Government. The Ministry of Economy is making efforts to implement measures for the startup ecosystem promotion, one of which is providing financial support for research and development to startups with operations based on blockchain.
For all the panelists, especially investors and entrepreneurs, the most important thing when it comes to choosing a country to do ICO is precisely the clarity of regulation. The second most important thing is the possibility of opening a bank account.
Panel at the Vilnius Blockchain center. from left to right: Matt Tuzzalo, Miko Matsumura the founder of Evercoin Exchange, Danielius Stasiulis, the co-founder at BitDegree, Matt Tuzzolo, Blockchain.com CTO, Sigitas Mitkus Director of Financial Markets Policy Department of the Lithuania’s Ministry of Finance
At the panel about the advantages of Lithuania, I had the pleasure of listening to Sigitas Mitkus, Director of Financial Markets Policy Department of the Lithuania’s Ministry of Finance, who talked about the regulations for ICOs, including AML, taxation, accounting and fighting terrorist financing, and about a creating a certainty regarding law and regulations that do not exist anywhere else in the world.
Sigitas also said that there are already three universities with fintech programs and more positive legislation will soon be established for fintech startups.
That is exactly what Danielius of BitDegree talked about, saying that the country has two most important things for crypto businesses – regulation clarity and bank solutions. He said that he stays in Lithuania precisely because the Bank of Lithuania and the government are very proactive and significantly help these businesses.
Seems like Lituania as one of the leading crypto regulators in the world!
Chapter 5: Block Forum
The last day of the Vilnius Blockchain Week was dedicated to Block Forum, a two-day conference that connects the leaders of the blockchain industry. More than 30 speakers during 4 social events met with 350 participants and talked about blockchain insights and the best blockchain projects.
Block Forum, Main hall
Virginijus Sinkevičius, the Minister of Economy of Lithuania, opened the conference by saying: “Companies in blockchain have raised more than $500 million here, more than we have raised so far in the history of the country. We promote innovation and entrepreneurship and encourage our entrepreneurs not to be afraid of failures, to work until they succeed, without giving up. In 2050, we want to be just about green energy.”
He continued: “In the last 6 months, 4 startups of local blockchain have succeeded here. Our central bank was crazy and bold enough to provide the one-year sandbox in which a business could be examined without being punished. This year we opened a blockchain center which already has 50 companies from all over the world”.
Virginijus Sinkevičius, the Minister of Economy of Lithuania
He ended the speech by announcing that the government, business banks, and investors are all united by the positive approach for ICO and blockchain. Blockchain businesses, entrepreneurs, and investors benefit from the positive approach of the country for ICO and blockchain.
Then comes the money time, Top 20 ICOs were selected to pitch.
ICO projects from Nordics, CEE and CIS were invited to enter the pitch competition at the Block Forum for the unique opportunity to be recognized in the North/East Europe and present their ideas to potential partners and investors.
The winner of the pitch competition was RAWG, a blockchain startup providing a video game discovery platform with the aim to become the IMDb of video games. The platform utilizes crypto and blockchain technology to power its blockchain token.
the pitch competition participants
Sergey Ulankin, Editor-in-Chief at RAWG, said: “We are building RAWG as an international project with the clear goal of creating a global community around gamers. So, we’re always searching for a way to make RAWG known all over the world.”
RAWG’s COO, Dasha Lyalin, spoke about the Block Forum in Vilnius, saying: “International conferences are an essential part of business development in the cryptoworld. Block Forum in Vilnius was very important to us in regards to our expansion in Europe. The event was organized with the help of Startup Europe from European Commission so we expected a number of prominent startup incubators and investors.”
In a Final note
What Vilnius Blockchain Week has made me realize is that Lithuania is the best gate to enter the European blockchain and fintech market. It has very good regulations and incredible cooperation with the central bank and the government. Most of the people I spoke to in Vilnius are talented and savvy regarding cryptocurrencies and blockchain. Vilnius is a highly-developed city with modern hubs for startups and the country’s ecosystem attracts tech leaders from all around the world.
As an ambassador at the Bitcoin embassy in Israel and consultant to a variety of Bitcoin and Blockchain related companies in the field of product development and community events for developers, it was exciting for me to take part in the event that exposed me to ecosystem of amazing organizations and individuals, the management and organization of the week and the mission were at the highest levels.
Being exposed to the amazing Blockchain ecosystem of Vilnius, completely opened my mind and thought me a lesson about how to improve our own local community
Taking notes from that event, I am working on the International Hackton of Amsterdam, sponsored by dx.exchange and advising for one of the biggest Crypto companies in Israel, Bits of Gold.
Contact me if you want to participate or contribute to this event and build with me the future of blockchain products and communities.
Networking for the Blockchain week participants hosted by transferGo. from left to right: Florian Maier a Security Strategy & Risk Consultant at Accenture, Tuna Acar a IT Manager at Accenture, Yours truly and Romain Cochard a Startup Manager at Wilco accelerator.