Issue 2 2016. April-May



Georgian entrepreneurs are finding new ways to use modern technology for business and invention.

Matthew Miller

There is cautious optimism for Georgia's long-lagging innovation and technological industries.

From 2000 to 2013, Georgia saw the number of newly registered patents fall by more than 50 percent, according to data from the World Intellectual Property Organization.

The drop has been tied to low skill levels in the country's labor force. A 2013 World Bank study found that the lack of inventions was creating a disturbing pattern in the market: few employment incentives existed for people to acquire technological skills, so fewer innovative businesses emerged.

Georgia's first tech park

Filling the Void

For tech-oriented enterprises like Potters, a Tbilisi-based digital marketing firm, the lack of competition became an opportunity.

Potters's co-founder, David Khosroshvili, and his friends started their company four years ago by helping small businesses increase their online presence.

Over three years, Potters grew from its founding core to twenty-five employees as they began to service larger clients, such as ProCredit Bank.

"Basically, we looked at the marketing strategies of big companies and developed digital products that fit with their [plans]," Khosroshvili said.

Potters has also created other profitable ventures over the last year., one of Potters' subsidiaries, has become one of the premier Tbilisi sites for selling concert tickets and promoting events, while provides free WiFi to over 20 Tbilisi establishments, whose patrons view ads as a condition of using the establishments' wireless networks.

Potters is not the only company filling the void for technological marketing services.

Tbilisi Marketing, a local advertising and graphic design firm, has twelve employees and generated over $200,000 in 2015, primarily by providing their services to local businesses and government offices.

"We do have international clients. These are mostly companies that have offices in Georgia. Much of our business, though, comes from municipal offices, universities, and local businesses," said Giorgi Dolidze, Director of Tbilisi Marketing.

While some tech-oriented firms have thrived in an industry marked by its lack of competition, export-oriented tech companies have been a rarity in Georgia. An exception to this trend has been Tbilisi-based Lemondo Entertainment, whose mobile games are distributed worldwide on iTunes and Android to a clientele that CEO Levan Kiladze says is less than 1 percent Georgian.

"We, the founders, had been working for large enterprises and were a little bit bored," Kiladze said.

"We were keen to create products, where we could utilize our technical skills, creativity and mojo to create products that would be useful and/or fun for millions of smartphone customers," he added.

New Push for Future Generation of Innovation

PM Giorgi Kvirikashvili visits the country's first tech park

The 2015 Global Innovation Index, an annual publication co-published by INSEAD, Cornell University, and the World Intellectual Property Organization that ranks countries' innovative environments and innovative production, ranked Georgia 73rd out of the 141 countries surveyed.

The index cites "low capitalization, lack of training, low levels of patenting activity, and low levels of knowledge-intensive industries" as inhibiting factors that are "reflected in the [business sector's] low levels of intangible assets and a poor use of ICT, which severely hampers innovation capacity."

One U.S.-Georgian project hopes to change that. The $140-million Millennium Georgia Compact was signed in 2014 and aims to "to develop Georgia's human capital capacity for economic growth and reduce the country's poverty rate" over the next five years by investments in education - specifically in the STEM (Science Technology Engineering and Math) areas.

The newly founded San Diego State University program in Tbilisi is one part of the compact.

Still in its first academic year, the SDSU campus offers four bachelor of science tracks to its freshman class of 84 students, and it plans to add more in the coming years, according its Dean, Dr. Kenneth Walsh.

In addition to its academic offerings, SDSU-Georgia also maintains a mission of improving the infrastructure, with regard to both safety and technological capacity, of its local partnering universities.

"We have already rehabilitated 1,688 square meters of classrooms to provide students with the same type of labs as in San Diego," Dr. Walsh commented.

To date, 45 local SDSU-Georgia faculty members have visited the university's main campus in San Diego, according to Dr. Walsh.

"During these visits they work with our equipment and our faculty, so that we can involve them in teaching our courses - with the idea that they could teach these classes on their own in the future - as a part of our curriculum, with our methods of teaching and of assessing student learning," he added.

Another effort to bolster the tech and innovation sector in the country is the Ministry of Economy and Sustainable Development's Georgia's Innovation and Technology Agency (GITA), which was founded in 2013.

To tackle shortages in technologically skilled labor and innovative enterprises, GITA set ambitious goals, including creating 40,000 ICT export-oriented experts working in country and generating $1.1 billion in IT exports by 2020.

In an effort to jumpstart local entrepreneurship and innovation, GITA opened Georgia's first tech park this past December. Equipped with working spaces and state-of-the-art technology, which includes laser cutters, 3-D printers and 3-D scanners, the tech park offers important innovative infrastructure free of charge to its members.

"[The park] works on a one-stop-shop principle, where every interested person can transfer their creative and crazy ideas into business," said GITA's Head of International Relations, Mariam Lashkhi.

A Start-Up Incubator

In addition to providing infrastructure for its members, the tech park also serves as an incubator for eleven startups that were selected through a competitive application process, according to Lashkhi. The chosen teams have access to business training and consultation, provided by M Academy, as well as legal and financial guidance, provided by the international consulting firm Deloitte.

The projects range from the practical to the novel.

Sizex, one of the startups that the tech park hosts, is currently developing a mobile application that can take and store body measurements that will rectify incongruities in orders from online clothing retailers.

Another team, Colhica, consists of two brothers that specialize in watchmaking and woodwork. Their team will develop handcrafted wooden-faced timepieces made from a boxwood native to Georgia. In addition to promoting innovation, GITA also hopes to improve Georgia's technological readiness.

Under the guidance of the World Bank, the tech park will be the center of the Georgian National Innovative Ecosystem (GENIE), which GITA hopes will bring a broadband connection to more than 2,000 villages.

GITA is also hoping to use the expanded broadband connection to establish a "hub-and-spoke" network of innovation centers and hubs across the country, where beneficiaries will have access to equipment and services that are similar to what the tech park provides.

The World Bank has stated that the GENIE project will also include training components in e-commerce and digital literacy, which will be a step toward digitizing Georgia's economy and will train 3,000 people with the skills necessary for the work environments the project is trying to promote.

The successful implementation of this project would address important transitional needs, according to some Georgian experts.

"For technological industries to really be successful in Georgia, we need to [become] a knowledge-based economy," said Nino Nanitashvili, Head of Communications at the International School of Economics at Tbilisi State University and Founder of the Google Development Group chapter in Georgia.

"For this to happen, we need to get more people online," she added.