In an effort to break down the barriers that inhibit the success of entrepreneurs in Georgia, GEN Georgia organized a policy hack – the first startup policy event of its kind in the country. In order to make the hack a success, GEN Georgia implemented the Startup Nations Policy Hack model, following the playbook offered by the Startup Nations Secretariat.
The goal of hosting a national edition of the hack in Georgia was to improve communication and create links between the government, the private sector and civil-sector representatives. By doing so, the hack helped build collaborations in order to create innovative solutions that remove barriers for entrepreneurs.
In the first phase of the initiative, 21 participants went online to brainstorm ideas for policies that can help unleash entrepreneurship. As a next step, GEN Georgia consulted with a policy expert from the Ministry of Economy in partnership with Georgia’s Innovation and Technology Agency – in order to select the working topics for the participants, among them:
- Startup legislation: Georgia currently lacks a formal definition for a ‘startup’ entity, which causes a lot of miscommunication, and creates programs and policies that are too broad. To make matters worse, different organizations have different definitions for a ‘startup’ entity. Some organizations consider a startup as any type of organization starting operations, which is not the right approach when addressing policy roadblocks that stand in the way to new business ventures with a potential to scale. Ideally, a startup should refer to a business which has an innovative and scalable business model, and has the goal of developing fast and going global.
- Angel Investing in Georgia: Georgia struggles with defining the roles and benefits of Angel Investors in the ecosystem. There are a lot of potential angel investors in Georgia, but they are not active because they are afraid to invest in high risk startups. However, the government, private companies and not-for-profit sector representatives can work together in order to design and implement some benefits for potential angel investors. For example, one idea which the government is considering is to insure between 50 and 70 percent of an angel investor’s investment in an innovative startups. The hope is that this insurance will reduce the risks and motivate more investments.
- Startup Visas: Georgia does not do enough to attract foreign startup talent. A number of countries have already implemented startup visas that attract innovative entrepreneurs who become engines of development, but Georgia’s program is still lacking. The country is looking at ways to attract talent that could potentially bring millions to the local economy. It’s a proven method of development. For example, in the United States if a foreign entrepreneur finds a U.S. investor who is ready to invest $300,000 USD in his or her startup, the government will issue the entrepreneur a startup visa which they can use to legally establishing a new business, live and work in U.S. for a period of two years.
- Attracting Venture Capital Funds to Georgia: Up until now, the main source of funding for startups in Georgia is the government with little funding coming from VCs. Despite their interest, most VCs do not seek funding due to the bureaucratic hurdles many face in finalizing an investment. The government, private actors and the not-for-profit sector can work together to create solutions that motivate foreign VC funds or stimulate the creation of local funds.
The third phase of the policy hack process was to invite the participants to co-develop policy ideas that address the four working topics. Two finalist teams were selected from this stage of the hack and invited to pitch their solutions in front of the panel of mentors and judges.
Alexandre Shermadini was the team leader for one of the teams. Hi team’s proposal was to stimulate the globalization of Georgian startups via a new online platform, which will connect startups with foreign stakeholders, partners and investors.
Nikoloz Gogiashvili was the team leader for the other team. His team’s proposal was to create a specific accreditation system for startups and entrepreneurs, such that it can serve as a starting point for startup policy development in Georgia. This ‘Accreditation Center of Entrepreneurs’ will maintain a constantly updated startup and entrepreneurs database, identifying their capacity-level, level of activity and more. Based on this information, startups and entrepreneurs can receive specific advantages, such as tax reductions or training programs.
After the pitching session, Nikoloz Gogiashvili was selected as the winner. Gogiashvili will continue to refine his solution before joining team members and mentors from around the world at the global edition of the Startup Nations Policy Hack, which takes place during the annual Startup Nations Summit.
Until then, GEN Georgia will continue facilitating meetings with a different policy experts and institutions in the global GEN community in order to help Mr. Gogiashvili develop his policy concept further.