START-UP GEORGIA: GOVERNMENT FUNDING INNOVATION
Over 700 entrepreneurs and investors from around the country - and abroad - competed for government financing and the chance to present their ideas to investors from Silicon Valley.
From a new take on old-fashioned toys to inexpensive prosthetics, Georgian investors are pushing the envelope on science, art and innovation in a bid to win the support of Silicon Valley investors.
The "Georgian Ministry of Economy and Sustainable Development's Innovation and Technology Agency, together with the state-funded Partnership Fund, has launched a campaign to help aspiring entrepreneurs gain access to start-up capital and use it to finance new innovations, according to Irakli Kashibadze, the Head of the Innovation and Technology Agency.
The program received 11 million lari in financing from the Partnership Fund, plus an additional 24 million lari from the government, he said.
Over a six-week period this summer, 726 ideas were submitted, including 56 from Georgians residing abroad. A special commission, which included a panel made up of prominent IT companies from Silicon Valley, selected 50 finalists.
The group went through five days of training with experts from organizations and companies like MDI & Associates, NSI, Bay Area, FutureLab Consulting, and Next Generation Ventures. The finalists presented their projects to venture investors from Silicon Valley on August 24-26, and the top 20 were selected to continue to the next stage.
The 20 teams have each been paired up with a mentor, a foreign expert with experience who will help the team prepare to present their projects to investors in Silicon Valley.
Archil Sakuvarishvili, 21, a physics student, is one of the finalists. He heads a team of five students who created the Helping Hand project.
"The aim of the project is to create a high tech and inexpensive upper-extremity prosthesis. Our team is improving the project to pass to a new stage and present it to investors in Silicon Valley," he said.
"One upper-extremity prosthesis unit costs us $1,200. At the present time, there are several companies selling such prostheses on the Georgian market. They cost a minimum of $3,000. Some companies import the upper-extremity prosthesis made with the technologies used by our team, but we are the first in the South Caucasus to make them."
The team has received 100,000 lari from the startup fund to work on their project and Sakuvarishvili said they plan to manufacture a test model "in the near future."
New Form of Funding
Natia Turnava, a Deputy Executive Director of the Georgian Partnership Fund, told Investor.ge the program has provided a way for the government to fund start-ups, which are normally seen as a risky investment.
She noted that because the fund usually works with large companies, they created StartUp Georgia to implement this funding program.
Funding for the program's projects varies from 15,000 to 100,000 lari.
The funding mechanism also allows for private investors to help finance startups, and includes a contribution from a given idea's authors.
"A maximum sum for the participation of the author of a project is 10 percent of the project's total cost. The author of a project has a right to purchase his or her share in the project on preferential terms in the future. The maximum payback period is up to ten years," she said.
Vazha Menabde, the director of the company StartUp Georgia, noted that funding is particularly problematic for start-ups, since they are seen as being too risky for commercial banks.
He said that this funding program has already encouraged more Georgian start-ups. "We have begun holding free-of-charge seminars for creators of start-ups. Local experts will hold trainings to discuss financial issues, marketing, and how to develop business plans."
From Agriculture to Parking
Submissions included ideas for agriculture and the production of chemical fertilizers, in addition to IT innovations, the Innovation and Technology Agency's Kashibadze said.
There were proposals for manufacturing apple chips, a device to help park cars, and toys for children with special needs, to name a few.
Innovation is taking hold in Georgia, he said - and the trend is already making a difference in how Georgia is viewed internationally.
"Georgia has gained nine places and ranks the 64th in the Global Innovation Index. This is a very good fact, as Georgia has entered a list of countries that are rapidly developing in the sphere of innovations," he said.
"The current report considers innovative policies oriented toward economic growth and development. These are indexes for 2015, and I am sure the 2016 index will show will show Georgia has made considerable progress."