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Rocket DAO ecosystem
To understand how Georgia changed in the last 50–10 years, it is enough to have a look at the photos of Tbilisi and Batumi at the beginning of the 2000s and compare them to the ways these cities look now. Many new buildings with interesting architecture, hundreds of initiatives that are turned into reality or are up to be brought to life. Georgia started a new life — as well as in the entrepreneurship industry. In this article, I will tell how the startup ecosystem of Georgia looks like.
We talk to startups and investors, you get the value.
In Georgia, still, there are not that many startups that are known worldwide. However, there is an initiative — both from the entrepreneurship side and from the side of the government and non-governmental organisations. Thanks to this, many projects have reached success on the markets of Georgia, on the markets of the whole region and even world markets. Here are some facts about how innovative entrepreneurship develops there.
A special governmental agent — Georgia’s Innovation and Technology Agency (GITA), a project of the Ministry of Economy and Sustainable Development of Georgia. This agency serves as the main executor of informational and technological policies of the state, it manages trainings on the mobile and web-development in 9 thematic fields.
A special state economic strategy “Georgia 2020” with a subsection devoted to innovations and technologies has been developed and is being implemented.
A few years ago, there were opened two technological parks in Tbilisi and Zugdidi. Also, in recent years, a few innovative centres and laboratories have appeared in the country as well as more than twenty Fab-Labs.
Georgia has good positions in world entrepreneurship ratings. So, in the ranking of the ease of doing business of the World Bank Doing Business for 2019, Georgia occupies the 6th position. In 2019, Georgia ranked 16th in the ranking of the best countries for business, compiled by the European Chamber.
In The Global Information Technology Report (GITR), Georgia increased by 29 positions from 2011 to 2016 — from 88th to 59th, and 140 countries participated in the ranking. According to the data for 2018, Georgia occupies 66th position in this rating.
In The Global Information Technology Report (GITR), Georgia increased by 40 positions from 2011 to 2016: from 98th to 58th.
In the Global Innovation Index, Georgia was ranked 69th out of 129 countries in 2017. In 2019, Georgia is ranked 48th in the same ranking.
The most popular startup vectors in Georgia are fintech, social media, SaaS. I made a compilation of the most interesting startups that are already being implemented and are making themselves known on the market.
An E-commerce startup — a service that is launched on the Georgian market and presents a resource that collects interesting information for consumers about discounts, great offers, promotions in such areas as food, leisure and entertainment, personal care, sports, appliances, furniture, travel.
A multifunctional ring that serves as a pass and contains personal data about the owner (blood type, previous diseases, allergic reactions). Now it is sold on Amazon, the product is popular in the USA (60% of all sales) and in Asia (40% of sales).
The startup was created by students of the Free University of Tbilisi. The data in the ring is entered and updated through the application on Android. The project received funding from the “Startup Georgia” program.
A service for detecting fires in woods at early stages. With the help of an application, any person with a smartphone and Internet can warn about the oncoming natural disaster. The information along with the geolocation is automatically transmitted to the local emergency response service.
An online p2p-marketplace for buying and selling used cars. This startup is launched in the US and has already attracted $110 000 000.
The service promises customers to deliver their chosen car for a test drive to their residential area, ensures that all the cars on its website are strictly selected according to their technical condition, it also promises assistance with processing documents and financing options if the client doesn’t have enough money.
The service promises to sellers promptly — within a few minutes — to give the market value of the car as well as to help with paperwork.
Total Traffic Management Group (TTM Group) startup creates innovative equipment to limit the vehicle speed on highways. The project received $35 000 from Georgia’s Innovation, Technology Agency and the World Bank.
A technology of secured and simple authentication, when access-keys are stored in the e-tattoo. This technology allows to complete payments, gives access, exchanges information or unlock the PC in one gesture.
The startup is one of the winners of the GENIE program which provides financing to the best projects.
An online platform that is dedicated to the auto import service. The service is available in three languages: Georgian, English and Russian. In addition to the catalogue of cars, services for checking car data by VIN number and consultations, there is a blog on the startup’s website dedicated to the topic of importing automobiles.
The state is interested in attracting foreign investments. The upsides of Georgia: stable banking system, low level of taxation, simple procedure of business registration, low level of corruption.
Georgian startups can attract funding in several ways: via specialized programs, through banks and with the help of venture investors or business angels.
The first way to attract funding is to apply to one of the specialized programs that are realized in collaboration with the Georgian government and international organisations. Such programs detect worthy initiatives, help to develop them and provide funding to the most interesting and developed projects.
Here are the most important programs:
The program is launched in 2016 and it helped to realize hundreds of business ideas since then. Program initiators are the Ministry of Economy and Sustainable Development of Georgia, Georgia’s Innovation and Technology Agency (GITA), Partner’s fund of Georgia (a governmental investment fund, its aim is to attract investments into the state). Primarily, the program’s fund was $5 000. However, the initial plan was that it would scale up.
The program is well regarded: from the beginning of its work till January, 2019 there were registered 3000 applications.
2. USAID program “Growth in Georgia” (USAID Zrda) in September 2019 promised to dole out $500 000 to Georgia for realization innovative business ideas in Georgian villages that are located near the borders with self-proclaimed republics of South Ossetia and Abkhazia.
3. “Produce in Georgia” program
The country is dependant on the import, so Georgian government is interested in the development of local manufacture. In the program framework, enterprises may receive funding in the range of $2800-$8000.
4. A project of the National innovation ecosystem of Georgia GENIE is initiated by the World Bank and launched in November 2018. In the end, authors of the best 20 startups out of the 135 applications, received grants equal to the amount of $38 000.
The second way to attract money for a startup in Georgia is to participate in bank funding programs. Here are some of them:
In the framework of this program, startups can receive financial and non-financial services: loans, rent, training, meetups, seminars. The aim of the project is to stimuli young entrepreneurs to start their businesses, so at the end of the day Georgia would have a formed startup ecosystem. Under the program, an innovative startup can receive up to 200,000 GEL, which is $ 67,450 in equivalent. The repayment period is 7 years.
An innovative startup program for women entrepreneurs. It was launched in December 2016. The company must be registered as a legal entity and it must be managed by a woman director or partner to take part in this project,.
Innovfin from Procredit Bank. It is implemented in collaboration with the European Investment Bank Group. The program may be attended by “relatively large innovative projects”.
This bank was first creator of a startup incubator in Georgia. Primarily, the main vectors in the incubator were e-commerce, telecommunications and e-payments. One of the projects that received the funding in the program framework was Swoop startup which I’ve mentioned above.
Finally, regarding venture investors, there are few of them in Georgia. This is due to the small size of the country as well as the fact that the startup ecosystem here began to develop actively only in the current decade. So far, investment companies that are operating in the country, are investing in large multi-million dollar projects, but when it comes to startups, the sphere of innovation, local investors are only exploring the prospects of this market.
For example, the Georgian Co-Investment Fund is a company that provides investors with access to rapidly growing sectors of the Georgian economy. Now the fund manages assets of $2 billion. The key projects that the fund invests in have relation to such areas as energy and infrastructure, hospitality and real estate, agriculture, logistics, manufacturing, and are implemented jointly with the state/other large investors.
The startup ecosystem of Georgia is just being formed, however, in the country, and especially in its capital — Tbilisi — there are many platforms where you can work on your project.
Spark platform is a hub for people who have business ideas but do not have access to resources. The platform gives a space for startups, helps startuppers to count risks while developing a business plan, provides financial, marketologistic and analytics consultancy. It works with such directions as tourism, professional and higher education, medical business, sports and healthcare, IT, innovative business ideas or energy-efficient technologies. You need to register on the project’s website to become a participant.
A program of acceleration and co-working space — Startup Factory by Georgian University. The platform and an electronics and engineering laboratory are opened 24/7, the Mobile Application Development Center, and a stylishly designed space that can accommodate up to 40 people are available for startups.
A few incubators in Georgia function on the basis of universities — in the Free University, in the Ilia State University and in the Georgian Technical University.
Batumi Business incubator works since 2009, a project of the UN development program which is funded by the governments of Romania, Finland and Autonomous Republic of Adjara (Batumi is the administrative centre of the Adjara republic, a Georgian autonomy). In the framework of the incubation program, startups can get a free consultation in the spheres of international trade, accounting, taxation, business management in a startup, financing and logistics.
Silicon Valley Tbilisi (based on Business and Technology University) — the first private hi-tech centre in Georgia that combines a university, business incubator and an accelerator, an IT-academy and a media centre.
FasterCapital — an international incubator and accelerator, its portfolio includes 20 certified startups, 69 startups in the incubation and 285 startups on the acceleration. It helps startups not only work out their business idea and get funding, but it also offers startups to become their technical co-venturer. There are 3 Georgian startups who are now on the FasterCapital acceleration.
Startup Grind Tbilisi. A branch of the largest world independent startup community that unites 2 000 000 entrepreneurs. A general sponsor of “Google for startups” organisation. On the platform of Startup Grind Tbilisi, there are held events where successful world-class startups share their experience. Also, Startup Grind is a possibility to find new contacts, investors and partners.
The startup ecosystem of Georgia is being actively formed for the last decade. During this time, many support programs have been launched and are being implemented in the country, which helps young entrepreneurs to develop their innovative ideas, launch projects and attract financing for them.
There are no world-famous startups in Georgia yet, however, many initiatives have already been able to attract money and managed to realize their innovative product both in Georgian and foreign markets.
In the country, mainly state programs are invested in startups — winners of competitive programs can count on financing, and some banks also act as investors.
You can develop your startup in Georgia based on incubators that work at some universities as well as on special startup sites that provide entrepreneurs and innovators with workspace, mentoring assistance and the opportunity to participate in thematic events.