2020 February-March Analysis

A look back at 2019 with the Georgian Innovation and Technology Agency

The Georgian Innovation and Technology Agency has grown considerably since its inception in 2014. Just five years later, the agency helped dozens of startups get off the ground in 2019. With a substantially increased budget for 2020, the agency hopes to continue to drive innovation in the country and turn Georgia into a regional startup hub.

2019 was a big year for Georgian startups and innovative entrepreneurship.

For the first time in history, Georgia was listed as one of the top 50 countries in the Global Innovations Index rankings, coming in 48th: a full 11-point improvement over the previous year.

Indicative of the uptick in attention to and recognition of the importance of the sector was the Georgian Innovation and Technology Agency’s (GITA) budget increase from 15,000,000 GEL to 26,000,000 GEL, allowing them to give grants to over 50 startups and implement a number of new initiatives.

“2019 was indeed a turning point in the field of innovation development”, the new chairman of the Georgian Innovation and Technology Agency (GITA) Avtandil Kasradze says, noting the field is gradually expanding to encompass IT and AI in addition to the more traditional fields for Georgian startups of tourism and biotech.

Some of the most interesting projects funded by GITA in 2019 included:

Qvevry – a project which aims to produce Georgian traditional wine vessels with the use of modern 3D printing technologies.

RED – a cloud-linked fire alarm capable of sensing smoke, carbon monoxide and other harmful gasses

VTOL – Aerial vehicle – a project to develop an innovative, multifunctional VTOL (vertical take off and landing) manned or unmanned aerial vehicle, which will be fully electric and release zero emissions capable of lifting 100 kg of non-vehicular weight.

In the coming year, the agency plans to fund 40 more startups with 100,000 GEL ($35,000), and another eight to 10 with 650,000 GEL ($225,000).

Putting Tbilisi on the startup map…

One of the biggest events of the year was Startup Grind Tbilisi in early November.

Startup Grind Tbilisi, organized with the support of the GITA, was the third-largest gathering of start-up companies in 2019 within the Startup Grind network after Silicon Valley and London, and provided a space for Georgian and regional companies and startups to establish new relationships and share their experiences.

The summit hosted a number of international and local speakers, reviewed programs and events implemented for startups over the course of the year and featured a number of Georgian startups that had brought in more than 1,000,000 GEL in investments in 2019.

Increased financing was indeed a major part of the year on the Georgian startup scene, Startup Grind Tbilisi chapter head and AmCham member Colin Donohue says:

“2019 saw more seed investment, with a few million dollars in private seed funding. More companies started going outside of Georgia, including Pulsar AI who set up an office in San Francisco with their CEO and hired a Silicon Valley salesman to grow their company. Now that companies are starting to get some traction, we’re working more on lining up investment. 2020 will be more about fueling growth for companies who are showing promise’

And the rest of Georgia, too.

GITA’s activities and initiatives were not just limited to the capital, as they sought to bring the Georgian regions into the fold of the innovation conversation as well.

Part of this mission was achieved with the opening up of techparks and innovation centers across the country, which offer the use of incubators, training centers, laboratories, as well as offices, general work and recreational spaces.

Adding to the already existing spaces in Telavi, Tbilisi and Zugdidi, two innovation centres were opened in Akhmeta and Rukhi in the beginning of 2019, and another techpark is expected to open later this year in Batumi.

The Georgian Ministry of Infrastructure plans to build two more techparks in Kaspi and Gurjaani.

“It is very important that more people be included in the development of Georgia’s innovative ecosystem,” says Kasradze.

GITA also traveled to 11 regions in 2019, including a number of small towns, where the organization held information sessions about ICT (information communication technology), and where young people could learn about studies in STEM fields. GITA also organized a seven-day summer camp focusing on technological engineering and mathematics, which was supported by the World Bank.

The year ahead

Plans for the upcoming year include changing the legal definition and status of startups.

“We want to do away with the public perception that startups can only be a small business or a fledgling company, since startups have other important characteristics, so we’re going to decide who to award that status to and grant tax benefits to high-tech and innovative startups,” says Kasradze, explaining an amendment will be added to the existing innovation legislation about how small businesses attain startup status.

In addition to a larger budget for 2020, GITA received a €1 million grant from the European Union to commercialize scientific developments.

The agency plans to create a technology transfer pilot program to promote the commercialization of research projects that meet the requirements and challenges of the global market. This project will be implemented by GITA, in cooperation with the World Bank and with funding from the EU.

As part of the program, research institutes in Georgian universities have submitted applications and GITA has selected projects with the most commercialization potential, from universities and individual researchers who they deemed most ready to work with investors. They reviewed 72 projects and selected 13. Another exciting project in 2019 includes the launch of a multimillion-dollar partnership between Silicon Valley, Tbilisi, and the Israeli Techub in Georgia, which led to the creation of the Global Startup Fund, whose purpose it will be to “open access to Georgian startups with multimillion-dollar investments under the Silicon Valley Partnership between Tbilisi and Israel…and to support the process of formulating Georgia’s entrepreneurial ecosystem, discovering innovative startups and promoting their commercialization on the international market.”

One successful project to benefit from this partnership includes Echolize, an international platform for ‘influencer marketing – a form of marketing in which focus is placed on specific key individuals (or types of individuals) rather than the target market as a whole, Echolize’s site reads.

50% of the funding came from a 650,000 GEL GITA grant, and the other 50% was supplied by David Zera of the Global Startup Foundation.

The project is still in beta, but is expected to launch in the first half of 2020.

One of the first projects to be funded by the Global Startup Fund was Pulsar AI, which received $1,200,000. They also received a $650,000 grant from GITA.

The company develops technology such as computer language processing, artificial speech, facial and object recognition technology, voice recognition in Georgian, analysis of customer emotion, and talk-to-text technology.