When we think of start-up hubs, we might think of bustling world cities such as London, New York, Melbourne and Hong Kong as leaders of the pack. The Baltic states may be overlooked, but countries like Latvia, Lithuania and Estonia are increasingly gaining prominence as innovation hotspots.
A recent study by the World Economic Forum showed that Latvia had more early-stage entrepreneurial activity than anywhere in Europe. But why?
Normund Kvilis, CEO of new Latvian start-up DigiPulse, thinks the answers lie in the country’s unique response to economic hardship.
“Before the financial crisis in 2008, Latvia, along with the other two ‘Baltic Tiger’ states, had been through years of booming success. However, we then experienced one of the sharpest initial economic contractions in the world and were slow to recover.”
“In one year, unemployment jumped from 7 per cent to 22.8 per cent and numerous businesses went bankrupt – as a result many Latvian people didn’t want to rely on an employer to provide for them anymore. Collectively, we turned to start-ups.
“The Latvian government has recognised and embraced this, and has created an environment for start-ups and microbusinesses which is among the most competitive in the EU. In 2017 it has gone even further and implemented an act which grants enterprise tax reductions of up to 100 per cent.”
DigiPulse, the company Kvilis co-founded with Dmitry Dementyev-Dedelis, provides the world’s first digital ‘vault’, which can be used to store digital assets such as files and cryptocurrencies, and passes these on to a loved one if the owner passes away.
DigiPulse is currently hosting a token sale which has passed the equivalent of $1million of funding – arguably the first firm in Latvia to do so.
“The idea behind DigiPulse is that we are addressing one of the major flaws that cryptocurrencies themselves have, namely that losing access to your digital wallet will lead to you losing your assets,” says Kvilis.
“Cryptocurrency wallets consist of a public address and a password. If you lose either one of them, your assets are stuck in internet limbo. We offer, firstly, a way for you to pass your assets on, with an inheritance service, and secondly, a failsafe solution – in case your PC gets lost or your house burns down. You can still access everything that you have stored.”
The system is based on smart contracts on the Ethereum blockchain, which are put together on top of DigiPulse’s own blockchain, which encrypts and stores the data in small chunks so it is practically impossible to hack.
“We are seeing a great deal of support from the crypto community because they are in need of a product like this. As people begin to use cryptocurrencies for a broader range of applications and hold significant crypto assets for investment, we must ensure that their families receive their belongings if the worst does happen.” If the customer chooses to remain anonymous, there is no requirement for them to share their details and the system can work by tracking activity of their digital wallet.
The DigiPulse team is largely based in Riga, Latvia, with connections around the globe. DigiPulse is just one in over 20 Latvian fintech start-ups on the rise, including BitFury, Nordigen, Mintos and more. Watch this space as we profile more Baltic tigers.