Crowd funding or state support: what happens faster to the potential of Latvian startups? – Work, career

In order to receive support or attract investment funds, startups must reach a certain level of growth. Different platforms or apps have to reach a certain number of users before they can qualify for support, so a good idea is often not enough. You also need a strong team that is able to explain the idea, promoting public interest. So-called crowd funding, attracting many small investors – private individuals, can serve as a stepping stone for Latvian start-ups to reach the next stage of development.

If we analyze startups based on the idea of ​​an app, it should be emphasized that investment funds get involved when the product is already ready, “launched” and has reached a certain number of users. Each fund may have different requirements – 10,000 users or even 30,000, which is normal because funds receive a lot of ideas every day. Accordingly, the question arises – how do founders of startups get to the relevant level? Here it is worth remembering that strength often lies in the ability to unite for a common goal, so the solution can also be the attraction of many small investors – co-owners. We are a Latvian company with more than 100 co-owners – people can buy capital shares and these funds are invested in the company. We have made sure that people in Latvia are ready to believe in good ideas and to create great things with joint efforts. Our country has creative and talented people who are able to create ideas with very high potential and added value, and also people who are able to see it. At the moment, there is a lot of interest in various apps, including the relationship app “Matchful”, but we are still open to new co-owners, offering to buy from ten equity shares.

The challenge is attracting funding from venture capital funds

When analyzing the Latvian start-up ecosystem as a whole, it should be emphasized that attracting funding can be a very challenging process. A study done a couple of years ago¹ about start-ups in Latvia confirmed that one of the biggest challenges is attracting financing from venture capital funds. The greater the number of ideas and projects, the fiercer the competition, and investors cannot objectively address all of them. An alternative solution, especially at the development stage, is crowdfunding, but here too there are several nuances. I encourage startups to analyze the terms of various crowdfunding platforms very carefully. In our case, after such research, we came to the conclusion that instead of choosing an existing platform, we should develop our own, which we did and have already tested in practice by attracting co-owners.

Impact of global competition

Although at first it might seem that the main thing is to have a good idea, then there will be funding, it should be taken into account that at the moment, when the start-up environment is becoming more and more international, investors have a lot of choices – where to invest. Startups from Latvia compete in the global market, where very different situations can arise. For example, if the authors of the idea present their idea without experience, there is a risk that the investors will steal the idea. Also, there may be situations when a very successful idea is made unprofitable by the implementation of investor rules. The more experience, the easier it is to find ways to mitigate risks and attract investors. At the moment, we have raised almost 250,000 euros through the sale of capital shares, and the plan is to raise another 100,000 euros in this way. The amounts are large enough for the app to start operating, and with each investment we raise, we also improve our knowledge in this field.

Not only the idea is important, but also the team

Referring to the above about the importance of the idea, it should be emphasized that it is of course important, but the team is equally important. Ideally, the team should include both creative and technology minds, as well as people with a business mindset and strong sales skills. For example, our team includes representatives from the financial technology industry, programmers, advertising and sales specialists. It is unlikely that such experience and knowledge could be combined in one person, so the team and the ability to work together are of great importance. And we also need someone with experience in project and team management – that’s my task.

The impact of the macroeconomic environment

Startups, like business in general, are affected by various factors. Analyzing the trends in the society and purposefully discussing the direction of the new business, we concluded that many people are disappointed with the usual partner applications, so the idea of ​​an app was born, in which a person can find another person with the help of an artificial intelligence algorithm. In addition, this is not a story about a classic dating app, we focus more on opportunities to find a business partner, a new colleague, a mentor, an investor or, for example, a reliable partner with whom to travel or play sports. If you are looking for a colleague, the app will offer you people who are looking for new career challenges, if you are looking for a business partner, the app will again find the most suitable person, and in addition, personality psychotypes, etc. are also taken into account. aspects that are very important when thinking about long-term cooperation.

We are proud to call ourselves a Latvian start-up, but we are also actively looking towards foreign markets – both in terms of attracting users and investments. One of the primary target markets, in addition to Latvia, is Great Britain. I think that anyone who has managed to successfully develop a startup will agree that the first steps are the most difficult, and so are the first target markets. With each subsequent one, it is a little easier, as the number of users, as well as experience and knowledge, grows.

1 https://civitta.com/articles/the-baltic-startup-scene-today-s-realities-tomorrow-s-possibilities

Vilnis Priedītis, founder & chairman of the board of the relationship application “Matchful”.