Annual innovation competitions in Georgia

Sources of financing

The country is interested in attracting foreign investment. Benefits of Georgia: stable banking system, low taxation, easy business registration and running, low level of corruption. Georgian startups can raise funding in several ways: through a specialized program, through a bank and through a venture investor/business angel. The first way to get funding is to apply for participation in one and specialized programs that are implemented jointly by the Georgian government and international organizations. Such programs identify worthy initiatives, help develop them, and provide funding for the most interesting and well-developed projects.

Here are the most important programs:

1. Startup Georgia program. Launched in June 2016 and has since helped hundreds of business ideas come to fruition. The initiators of the program are the Ministry of Economy and Sustainable Development of Georgia, the Agency for Innovations and Technologies of Georgia, the Partnership Fund of Georgia (a state investment fund whose purpose is to attract investments to the country). Initially, the fund for the program was $ 5,000, but it was planned that it will gradually increase. The program is very popular: from the beginning of its work until January 2019, 3000 applications were submitted for participation.

2. USAID Growth in Georgia Program. USAID Zrda in September 2019 promised to allocate $ 500,000 to Georgia for the implementation of innovative business ideas in Georgian villages near the borders with the self-proclaimed republics of South Ossetia and Abkhazia.

3. Produce in Georgia program. The country is dependent on imports, so the Georgian government is interested in developing local production. Under the program, enterprises can receive funding in the amount of $ 2800- $ 8000.

4. Georgia’s National Innovation Ecosystem Project GENIE, initiated by the World Bank and launched in November 2018. As a result, the authors of the 20 best startups out of 135 submitted applications received grants in the amount of $ 38,000 in equivalent.

The second way to raise money for a startup in Georgia is to participate in a bank financing program. Here are some of the programs.

Startuper from TBC bank

Within the framework of this program, startups can receive financial and non-financial services: loans, rent, training, meetings, seminars. The goal of the project is to stimulate young entrepreneurs to start their own business, so that, as a result, a developed startup ecosystem is formed in Georgia. Under the program, an innovative startup can receive up to 200,000 lari, which is $ 67,450 in equivalent. Repayment period – 7 years.

Bank of Georgia Female Start Upper

An innovative start-up program for women entrepreneurs, launched in December 2016. To take part in this project, the company must be registered as a legal entity, and it must be managed by a female director or partner.

Innovfin from Procredit Bank. Implemented in cooperation with the European Investment Bank Group. The program is eligible for “relatively large innovative projects”.

Smartex from Liberty bank

This bank was the first in Georgia to create a startup incubator. Initially, the main directions in the incubator were e-commerce, telecommunications, electronic payments. One of the projects that received funding under the program was the Swoop startup, which I wrote about above.

Finally, as far as venture investors are concerned, there are not many of them in Georgia. This is dictated by the small size of the country, as well as by the fact that the startup ecosystem here began to actively develop only in the current decade. So far, investment companies that operate in the country are investing in large multi-million dollar projects, as for start-ups, innovation, while local investors are only studying the prospects of this market. For example, the Georgian Co-Investment Fund is a company that provides investors with access to the fast-growing sectors of the Georgian economy. Now the fund manages assets in the amount of $ 2 billion. Key projects in which the fund invests relate to such areas as energy and infrastructure, hotel business and real estate, agriculture, logistics, manufacturing, and are implemented jointly with the state / other large investors.