3.9 Start-up funding for young entrepreneurs
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The Ministry of Economics has developed “Regulations on Support of Organisation of Training and Seminars to Business Start-ups” that have been approved in the Cabinet of Ministers on 2 September 2014. The said regulations determine conditions for granting support for contact establishment and communication measures, training and seminars or their series (hereinafter referred to as the measures) for business start-ups organised by merchants, associations or foundations registered in the Republic of Latvia (hereinafter referred to as the organizer of a measure), as well as sectors and activities not to be supported, the procedures for granting support and requirements for cumulation of support. The above regulations do not set apart youth as a specific group.
There is no unified ecosystem in Latvia that is necessary for development of new business start-ups. Lack of information regarding options to attract private investments to business start-ups is often the determining factor that limits creation and development of new and potentially successful ideas. Also the amount of private investment in Latvia is not large, and the lack of information regarding potentially successful investment opportunities is often the most important factor that slows down the increase of private investments. Only at the beginning of 2016, the Internet platform Start-up Association was developed; start-up ideas are summarised there in order to show them to the world, represent the ideas and interests, as well as promote understanding of business start-ups in Latvia.
The Ministry of Economics in cooperation with other institutions and Start-up Association Latvia has developed Business Start-Up Support Law that has been sent off to Saeima; it will be a small step towards putting the business environment in order, taking into account current trends in the world and also in Latvia.
In recent years, separate programmes for new entrepreneurs in Latvia have been developed, for instance, “Startup Pirates Riga”, “Junior Achievement”, “ALTUM” and others that facilitate the development of youth business activity with the help of various programmes and support instruments.
Likewise, the following measure is implemented within the Youth Guarantee programme in Latvia:
Support for Starting Self-Employment or Entrepreneurship: counselling and financial support measures for starting self-employment or commercial activity that help young people to start business activity or self-employment and operate successfully in the selected field for not less than two years.
The instrument is developed for young people aged 18–29, and it is financed from the national budged, ESF and the Youth Employment Initiative funding.
On 29 September 2016, Business Start-Up Support Draft Law developed by the Ministry of Economics was approved; the aim of the draft law is to promote the development of fast growing technology enterprises or start-up enterprises in Latvia, thus facilitating the development of innovative business activity and research in the private sector, as well as the commercialisation of research.
The draft law provides for the definition of a business start-up and its features, business start-up support programmes, the procedures for application to the said support programmes, conditions for defining and attracting qualified risk capital investors, the procedures for supervision of business start-up support programmes, as well as the obligations of a business start-up.
It is envisaged that business start-ups will have access to several support programmes:
a fixed payment – final payment of the state social insurance monthly contribution that is made by employer on behalf of employee in the special budget of the state social insurance;
a support programme for attraction of highly qualified employees – where employee does not agree that a fixed payment is made for them;
in addition to certain provisions, a corporate income tax relief and personal income tax relief are planned.
It is planned that the law will come into force on and the said support to business start-ups will be available as of 1 January 2017.