Located on the crossroads of Eastern Europe and Western Asia, Georgia is a country with a strategic geo-position, steadily climbing the ladder of sustainable economic growth. After implementing comprehensive reforms more than a decade ago, the development of the private sector has exponentially grown, definitely registering an entrepreneurial pulse within the last years.
Curious to learn more about the emerging startup ecosystem in Georgia, we sit down with our local business centre partner from Tbilisi – Guga Abashidze, Director SIGMA Group, who takes us on an insider’s journey through the current entrepreneurial climate of the country, its obstacles as well as its benefits.
eOffice :: What makes SIGMA different from other centres in your area?
Guga Abashidze: SIGMA Group was established in 2015 by a team of professionals with more than 35 years in various business fields. The Company offers its Clients combined business services (administrative, legal, accountancy / tax, marketing, shared office / meeting room spaces) in packages, customised to their specific needs. The concept is innovative on the Georgian Market. There are many competitors, who are offering specific services, but dealing with one sole company reduces Clients’ financial and time resources, as well as professional risks.
Besides that, SIGMA Group is actively developing in various directions:
- Startup Accelerator: SIGMA Group Startup Accelerator is involved in Startup Ecosystem development in Georgia. We are constantly working with various Educational Organisations from where we are generating business ideas. On next stage, we are working with the applicants and creating business plans, which later on are presented to our Investment Board.
- Business Lab: SIGMA Business Lab is assisting start-ups and international organisations, who are willing to develop their business on our Market. We are providing the mentioned with all kinds of standard business services plus physical facilities and startup management consultancy.
- Business Consulting: Our Team is working with several leading Companies in Georgia on Management Contracts for their specific projects or business lines.
eOffice: How would you describe the startup climate in Georgia?
Guga Abashidze: Georgia’s previous Government, which changed in 2012 had a strategy of simplifying business establishment. Still it all led only to statistical figures. Georgia has reached several high international rankings in Ease of Doing Business, but there is still much to do on Legislative and Financial levels.
Anyone can establish a legal entity within 1-3 days with as low fee as USD 75, but the main challenges are coming afterwards. There is no financial institution in Georgia, which finances startup projects and no institutional startup labs. Current Government has established a TechnoPark, which is specialised in Technological Startups. Also, there are two Governmental Funds, who are co-financing high-scale projects. Still there is no room for development for small startup projects.
Since end of last year, Georgia has a new Prime Minister, who emphasised startup ecosystem development as his highest priority. In 2016 we are expecting significant changes in this area from both legislative and financing perspectives. Based on that, many foreign Venture Capital Management Companies will have an opportunity to develop their business together with local partners.
eOffice: How has SIGMA become part of the startup Ecosystem in Georgia? Do you have any plans to increase collaboration?
Guga Abashidze: The idea of Startup Accelerator and Business Lab was born based on our Team’s previous experience. In past, we have successfully established several Companies, which were sold and are currently operating under different ownership. Our Team Members have gone through the most challenging startup management path several times and know very well the difficulties associated. Based on that, we decided to ease this process for entrepreneurs and established the mentioned business lines.
Currently, we are working closely with several local investors and Governmental entities, as well as international experts in the field on development of the Startup Accelerator. We are planning to set up a large scale Startup Lab by the mid 2016 with respective premises and extended Investment Board. In future, we are going to create a Venture Fund and Crowdfunding web-site and promote significantly the investment and entrepreneurial thinking.
eOffice: Which are the most popular cities with entrepreneurial spirit?
Guga Abashidze: Mostly, the entrepreneurial spirit is centralised in Tbilisi, the Capital of Georgia. Still there are other cities (Batumi, the sea resort of Georgia, Kutaisi, the industrial city, etc.) where there is high potential of perspective business ideas. Also, there are many regions in our Country, where various industries (Agriculture, Tourism, etc.) are developing at quite high pace, but due to the lack of Startup Infrastructure, new projects are very rare.
SIGMA Group is planning to develop regional offices outside Tbilisi by the end of 2016, which will be definitely equipped with Startup Accelerator facilities as well.
eOffice: How is the country supporting growing businesses?
Guga Abashidze: Currently, there are not much regulations and assistance for the growing business. Still, as mentioned above, the new Government has prioritised the SME and Startups, which gives us commitment that in nearest future many legislative changes will be made. These changes must target two groups: (1) Investors, which must be supported and stimulated in many ways; and (2) Entrepreneurs, for whom strong support instruments must be created and promoted. Also, the Government is planning to introduce taxation allowances for startups, which will play a crucial role in Ecosystem development.
eOffice: What are the main factors affecting the current entrepreneurial status of the country?
Guga Abashidze: Historically, Georgia had very strong Educational and Technological base in various fields, thus introducing many inventions. After the Soviet Union the mentioned base was destructed and many things changed from Economic and Social standpoints. Still, the young generation has a very entrepreneurial mindset and there is quite high potential to identify clever business ideas and executive teams / individuals. Additionally, many areas of business are not as developed as in other Countries, which gives us room for local startup projects’ development.
eOffice: Does Georgia attract any international investments?
Guga Abashidze: The level of International Investments were growing steadily from 2003 – 2008, but were significantly reduced due to the Military Actions in Georgia and the Global Financial Crisis. Currently, the investment climate has returned back to normal and the financial inflows are increasing again. Still, most of the foreign investments are directed to the large-scale projects (Hotels, Infrastructure Projects, Real Estate Development, etc.).
eOffice: Which business sectors and industries are most familiar amongst Georgian startups.
Guga Abashidze: According to our experience, there are several areas of business where the Georgian Startups fall. The most popular is the IT business, where internet products are becoming more and more popular. I would also outline the agriculture and food processing, where Regions are more active. Also, service industry is booming in startups with the businesses with low investment requirements, which mostly stand on the professional skills of the owners.