Public-private collaboration and a more sophisticated tech ecosystem is finally making Georgia’s start-ups attractive to foreign investors.
Georgia has always been a meeting point of Europe and Central Asia. Even before the days of the ancient Silk Road it has been a melting pot of peoples and cultures. This past explains the present: the eclectic architecture of the capital Tbilisi, its wonderful food and wine – made here for thousands of years – even its hybrid taxis and a growing underground music scene. Not to mention its expatriate community, which quite literally consists of people from all over the world.
Citizens of more than 100 countries can enter Georgia visa free. Three international airports (Tbilisi, Kutaisi and Batumi) serve millions of passengers every year, many of whom are tourists, but also plenty of others who are looking to Georgia as a place to live, to do business, to invest.
The cost of living is cheap when compared to the more developed countries of the European Union or the US. It’s also incredibly easy to register a business in Georgia: it can be done in less than a single day. According to the World Bank, Georgia is the seventh easiest place in the word to do business, and second easiest in which to start a business.
Georgia has an incredibly simple tax code: there are just six types of tax, and for the IT sector things recently got even easier.
The latest update to the country’s tax code creates an even better environment for IT business: international companies will have their profit and income taxes reduced to five per cent. This opens the door for tech companies looking for a better locations for their business, something that might prove useful for start-ups that have to move their operations temporarily from Belarus.
There is also a lot of existing infrastructure that helps the tech scene flourish, such as new business centres and co-working spaces. Places like Fabrika and ImpactHub, or Spark – supported by Tbilisi City Hall, and TechPark. Another will open soon Kakheti.
Fixed and mobile internet connections are great: stable and comparatively cheap.
It’s no surprise then that the start-up scene is thriving.
There’s 500Georgia, a regional accelerator set up by Georgia’s Innovation and Technology Agency (GITA), Bank of Georgia, and 500 Startups with support from the World Bank. The programme is focused on early-stage start-ups from Georgia and Eastern Europe and earlier this autumn flew in mentors – many from the US – to train its first batch. 500Georgia currently has an open call for applications for its second batch, and GITA also just announced a new list of start-ups that each received 100,000 lari, equity-free.
Then there’s Techstars Startup Week Georgia – held just a couple of weeks ago – which brought together events like ProductTank, UG Startup Factory Pre-Acceleration Program, Fuckup Nights, Slack Platform Community Tbilisi Chapter Meetup, NASA Space Apps Challenge, and Seedstars Tbilisi.
Startup Touch meanwhile is a conference and bootcamp that aims showcase the start-up and investment potential of Georgia to global investors and, is inviting the entire Eastern Europe region to join them online. It is supported both by the public (GITA) and private (Bank of Georgia Business, one of the biggest telecom companies, Terminal co-working) sectors.
These communities, both local and chapters of global companies, together with university-based business incubators, are shaping the future infrastructure of a great ecosystem.
There’s no great evidence of that than the first international investment round closed by a Georgian start-up: Stack App, which is redefining the internet browsing experience. It has raised 850,000 US dollars from 500 Startups (USA) and Peak Capital (Netherlands) to expand globally.
There were previous investments in Georgian start-ups of course, made by Israeli, American, German and local investors. But these are at a bigger scale and will serve as an encouraging model for other entrepreneurs. Hopefully, this will be a good sign for foreign investors as well.
As business is yet well digitised in the country, SaaS B2B start-ups tend to be the most common.
Deep-tech and science-based projects are also frequent participants in pitch competition, although they find it more difficult to survive because of the lack of big financing required for these types of projects.
We have also seen some spin-offs from financial companies, banks and marketing agencies, as well as edtech and game development projects.
And, of course, travel industry start-ups might be worth a look, as Georgia is an attractive tourist destination. But the market is very fresh and – again – not digitised.
In general, the level of new tech companies in Georgia is much higher now than at any time, and founders have finally started thinking globally. Instead of focusing on solving only local problems, they want to take on the world. That is why we expect more VC funds from around the region to start visiting our pitch days and programmes. It’s time to find out what Georgia can offer.
Emerging Europe is a media partner of Startup Touch, which takes place on October 29-30. You can find out more here.
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