It’s a known fact that very early-stage capital is not widely accessible in Latvia, therefore, the work that the three accelerators supported by the Development Finance Institution Altum and EU Structural and Cohesion Funds do matters even more. We checked in with Matiss Neimanis, Managing Partner and CEO of BuildIt, Kaspars Vjaters– Associate Acceleration Program Coordinator of Commercialization Reactor and Arta Abasina who is the Investment and Operations Director at Overkill Ventures to hear their take on the successes and challenges of the past 12 months.
Matiss points out that despite having very early-stage companies, none has gone bankrupt yet. The situation is actually quite the opposite – after last year’s accelerator graduation the companies have altogether attracted around 1 million EUR of additional investment.
Arta highlights two Overkill companies–success stories that have made particularly significant progress since graduating. First, Axdraft, a startup helping companies, including other startups, draft legal documents, has raised an additional 1,1 million USD round after graduating Y Combinator. Second, Fabcontrol aims to make open-system 3D printing accessible to the next generation of innovators and has since raised an additional 160 000 EUR.
Accelerators are rather satisfied with the ratio of local to founders from abroad that, for example, translates to half of all teams at BuildIt. Furthermore, the competition for all applicants shows to the great demand for early-stage acceleration programs – Overkill Ventures’ acceptance rate has continuously been under 2% meaning only the most promising startups get a chance of joining their batch.
As the main challenge all accelerators name attracting startups with a unique and competitive business idea and working solution. Arta also mentions the lack of local investment as a common issue for the overall ecosystem, causing startups to relocate and face higher living costs. Moreover, Commercialization Reactor is facing an ongoing challenge of changing the perception in the STEM community to commercialize their innovations. That being said, at the two Ignition events they’ve had in 2019, a total of 18 new deep-tech teams have been created.
When it comes to the startups, the legal side of establishing their business from abroad is still a common issue. The time and paperwork it takes to open a bank account create a bottleneck, making the alternative banking options such as Revolut and Transferwise more appealing which ultimately causes risks when reporting to the State Revenue Service.
Matiss points out that the competition among the accelerators available in the market has grown rapidly, but it might not be for much longer as there is no replacement for the existing Altum-backed accelerator program ending in mid-2021 in making yet. Despite that, BuildIt’s plans to continue supporting hardware entrepreneurs have not changed and they expect to launch an IoT and hardware-focused fund in 2-3 years’ time.
When it comes to the future plans, Overkill is determined to remain based in Latvia to continue their work in the region also after the end of the program in 2021, with that promoting Latvia as a great place to start a company. They expect positive outcomes not only from the already known companies but also from the very early ones that might still be in the idea-generating stage. Accelerators are hopeful they will become a commonly known steppingstone in all disruptors’ journeys.