good, but not enough money and brains

At the forefront of the national economic breakthrough

Over the past decade, 620 million investments have been attracted to Latvia through start-ups – new enterprises, Minister of Economy Viktors Valainis (Union of Greens and Farmers) indicated in a message to the government. The country’s startup ecosystem consists of at least 626 enterprises, of which 447 are registered in the database of the Latvian Startup Association, of which more than 50% work in the field of information and communication services, and more than 20% in manufacturing.

Interest in risky investments in new sectors of the economy is demonstrated by the participation of hundreds of investors and business consultants in thematic startup events; the Latvian Investment and Development Agency conducts master classes. Thematic prizes are “Newcomer”, “Fastest Breakthrough”, “Startup with the Best Social Impact”. Portfolio investors meet on contact exchanges, and the Latvian Startap Awards are presented personally by President Edgars Rinkēvičs. There are caring mentors, business breakfasts, and everything else that should, in theory, facilitate the creation and functioning of new enterprises.

However, if we speak in absolute numbers, we immediately give up: for the period until 2026, the Ministry of Economy allocates 400,000 euros per year under the priority (!) expenditure item “Development of Startups”. Specifically, Riga Technical University, for example, receives 40,000 euros per year. If anything, the university’s budget for 2024 amounted to 103 million euros, that is, the Ministry of Economy supports the country’s largest technical university by 0.04%.

That is why the activity of startups cannot be considered high. Thus, last year only 29 enterprises took part in the investment sections of the association of business angels – LatBAN, of which 11 were from other countries. The total investment for the year amounted to 1.7 million euros.

Return to semiconductors

Well, to what extent can startups be experienced in reality? The Latvian Investment and Development Agency, reporting to the Ministry of Economy, recently released a report on semiconductor production in the Republic of Latvia. This industry in the country has historically developed since the early 1960s, the pinnacle was the famous “Alpha”, but even now the industry does not stand still.

The document notes that the value chain includes highly complex end products such as network routers that require high-end intelligence. The strengths of Latvian educational institutions in the semiconductor creation chain are fundamental materials science, advanced optoelectronics, and testing capabilities.

Developments of new resistors, capacitors, and integrated circuit components are used in final products – smartphones, tablets, automated control modules.

In Latvia, the properties of new materials are being studied – for example, gallium arsenide (GaAs), which is characterized by high electron mobility; zinc oxide (ZnO), which has photocatalytic properties; zinc carbide (SiC), popular in wireless technologies. Taken together, this refers to photonics, a discipline concerned with the transfer of light energy and its conversion into signals for transmission and data processing.

The work is being carried out in a number of departments of the University of Latvia – the Institute of Atomic Physics and Spectrography; Institute of Numerical Modeling; Institute of Solid State Physics; Quantum Optics Laboratories; Laboratory of Organic Materials; Thin Card Laboratories. Separately – Laboratory of Discrete Signal Processing.

Riga Technical University is involved in this area through: the Institute of Applied Chemistry; Institute of Engineering Knowledge of Biomedicine and Nanotechnology; Institute of Microwave Engineering and Electronics; Institute of Telecommunications; Institute of Technical Physics.

The developments of Latvian scientists are reflected in the international scientometric databases SCOPUS, Web of Science, arXiv.org, ResearchGate. By topic, the largest number of publications is devoted to semiconductors (45), organic materials (21), and silicon (21). Latvia has registered a number of international patents – for example, LEDs based on rare earth metals or thin polymer cards, fiber optic systems, nonlinear polymer materials.

Diagnosis: brain drain

However, in fact, our country is doing its best to train qualified personnel… for highly developed countries, even those that are not members of the EU, but located beyond the seas and oceans.

A document posted on the website of the Latvian Investment and Development Agency states that “there is an insufficient number of qualified specialists who, after training, choose to continue working in the Baltic region, preferring to work or study abroad. Statistics show that more than half of Latvian youth are considering the possibility of studying abroad. Most of them will be willing to study in English-speaking countries.”

The development of knowledge-intensive industries in the Republic of Lithuania is also hampered by “threats from external influences, such as fluctuations in funding, regulatory changes and global competition.”

“Unstable funding may result in a lack of resources needed to provide equipment or qualified personnel. Regulatory changes may limit the overall cost of research conducted, for example when environmental safety and environmental regulations come into force. International regulations may affect the availability of raw materials or opportunities for cooperation with foreign institutions.”

Regarding the latter, it is worth noting that some patents in the semiconductor field, of which Latvian scientists are proud, are marked with the RU index, i.e., they were carried out through scientific cooperation with colleagues from the Russian Federation.

SCIENTIFIC DEGREES

According to statistics, about 10 master’s theses in the field of semiconductors and three doctoral dissertations are defended annually in Latvia.

DEADLINE

A startup is a commercial project based on an idea and requiring funding for development. This is an extremely risky business: it is indicated that only 1% of startups achieve high sales volumes and provide investors with a high return on investment.