Startup law had initially been created in 2017 to ease the financial burden and help startups grow fast. However, in a total of four years, only five companies have qualified to the criteria that the law had initially stated. Based on research that was conducted in 2019, only 14% of startups could qualify for support. After a long period of discussions with entrepreneurs and stakeholders of the industry, amendments to the startup law had been approved by Saeima on September 3rd, 2020. [1]

Previously it was possible to apply for the support one time, however, now that has been changed. If a company that has previously been accepted in the program wish to apply for the second time, they are allowed to do so. The age of eligible companies has been extended to seven years, taking in consideration that some business development processes can exceed the initially stated five years.

A significant aspect of the startup field is innovation that is lead by top talents. However, based on research conducted by the Ministry of Economics, many businesses are unable to attract the top talent in the early stage. The new amendments have decreased the requirement from 70% to 50% of the employees to have a Master’s degree. Another characteristic that entrepreneurs have adapted is to create subsidiaries abroad to obtain venture capital investments and qualify for acceleration programs. Until now, the law did not support these type of enterprises, however, now the amendments have been altered to allow subsidiaries abroad if they have been created for the sole purpose of attracting funding from venture capital or acceleration programs. [1]

To sum up, the changes made:

  • Startups can apply more than once if they can prove that the initial investment is not enough and the scalability can be improved with additional funding
  • Startups with subsidiaries or parent companies abroad will be able to qualify for startup law
  • The age limit for startups, that previously required startups not to be older than 5 years, is now changed to 7 years
  • The restriction on the income of entrepreneurs in the first two years has been removed, based on the fact that many startups experience rapid growth in the first years and support is needed later
  • The requirement for 70% of employees to have a master’s degree is changed to 50%

The amendments have been created in collaboration with Latvian Startup Association “StartinLV” and TechHub Riga foundation.

[1] https://konservativie.lv/2020/09/03/plasakas-atbalsta-iespejas-start-up-nozarei-latvija/?fbclid=IwAR3AXgP6MLZh-Eo5-gbfrnIueCPiHX__dX4ZS5-blx9m_28rS5lx0hdnnkA

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Uniting Latvian startup ecosystem around common values. We promote Latvian startup scene, connect it to the World & represent its interests! www.startin.lv

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