During the 2019 Global Entrepreneurship Congress, the World Bank and the Global Entrepreneurship Network hosted the V Startup Nations Ministerial with delegations from 32 different economies, led by cabinet-level officials, ministers and government agency directors.
At the occasion, Lasha Mikava represented Georgia as Deputy Minister of Economy and Sustainable Development. In his interventions, the Deputy Minister highlighted the establishment of Georgia’s Innovation & Technology Agency (GITA) as his country's strongest policy signal in favor of an entrepreneurial economy. We interviewed him about that journey.
INTERVIEW WITH LASHA MIKAVA
What drove the creation of a specialized agency within the Ministry of Economy and Sustainable Development?
Mikava: In 2014, as a part of its vision to promote an innovation-driven economy, the Government of Georgia decided to institutionalize support to innovation by establishing GITA, with the following mandates:
- To design a legal framework for the development of innovational activities.
- To build a knowledge-based economy, by raising awareness and developing the skills for entrepreneurship and IT (trainings, seminars, workshops, hackathons, etc.).
- To help build an infrastructure for innovation, with business incubators and accelerators, technology parks, FabLabs, Innovation Laboratories (iLabs), high-speed fiber optic internet (BroadBand for All), etc.
- To provide access to finance for innovation and startup programs.
- To facilitate R&D commercialization.
What are the results so far?
Mikava: GITA has already achieved results across every dimension.
In terms of improving the regulatory framework, GITA elaborated the Law on Innovation, while also promoting the amendment of existing laws. The Georgian Tax Code and the Law on Grants now enable the government and other institutions to introduce new funding instruments in the form of grants to support early-stage startups with innovative ideas, which have had very restricted access to the early-stage funding.
One key initiative has been startup community building. Prior to any infrastructure or financing programs, GITA carried out a number of awareness raising and capacity development initiatives to raise the appetite to innovation.
Programs to improve access to finance then followed, providing grants to early-stage, pre-seed and seed-stage startups, sharing the risk and raising the capacity of the startups to raise further funds from investors. Basically, the government addressed the market failure in ecosystem development for early-stage ventures. The scheme of financing is unique, removing the state from the decision-making process. With this program, GITA reached more than 300 beneficiaries, high-growth potential and globally scalable innovative startups.
For the financing programs, GITA mobilized international experts from around the globe, who are assessing the startup’s potential and are helping with the selection process. The grants to entrepreneurs range from 2 000 USD for prototyping to 100 000 USD for pre/seed-stage startups, and to 250 000 USD for scalable startups with MVPs and market traction, or for spin-offs.
An innovation infrastructure is also in place, with three TechnoParks currently operating as regional hubs, five innovation centers across the country, and 23 FabLabs based across universities and technology parks. These components of our ecosystem provide free access to high-tech equipment, co-working space, business incubation/acceleration, and training to help transform ideas into globally scalable businesses.
In 2016, the Government of Georgia signed a loan agreement with the World Bank aiming at promoting Georgia’s National Innovation Ecosystem (GENIE), and providing access to additional financing (up to 40 million USD), as well to expertise, knowledge and standards.
Can you please tell us about a barrier GITA has found along the process and how it is addressing it?
Mikava: We are aware that to successfully develop the startup and innovation ecosystem, our approach must involve the whole value chain. There is a role for the government and for the private sector. Currently, Georgia is still seeing low levels of private sector involvement. The wealthy part of the country is still very adverse to risk investments, and as such, the ecosystem does not offer the necessary further rounds of financing through, for example, angel investment networks and venture capital funds.
To eliminate this barrier and promote private sector involvement, the Government of Georgia elaborated the “Startup Friendly” program. Through this project, every private sector representative that provides free or discounted, special offers to the startups will be treated as Startup Friendly and the government create publicity of these companies.
In addition, the Government recently introduced a 250 000 USD matching grants program, with a 50% of co-financing requirement, which is the dollar to dollar incentive provision for the private sector representatives, VCs and angels.
In terms of cross-sector involvement, it's important to highlight that in 2016 the Government of Georgia created a Research and Innovation Council, which is chaired by Prime Minister of Georgia, and includes Cabinet-level Ministers, private and academic sector representatives.
How much did you have to coordinate with other levels of government to enact policy on entrepreneurship?
Mikava: For smaller countries like Georgia, coordination among municipalities is relatively easy once the more difficult task of securing high-level political will and support.
GITA is partnering with local governments and continues to organize common projects, such as:
- The opening of a TechPark in Tbilisi and later in Zugdid in 2016. These units are operating as a one-stop-shops, supporting startups, innovators, and scientists to transfer their ideas into products and developing business plans.
- Three innovation centers are operating out regional libraries (Tchoporti, Baghdati, Kharagauli). These offer business incubation and acceleration programs. GITA is scaling up this project to cover the entire country and provide access to infrastructure, knowledge, internet and entrepreneurial opportunities across the regions.
- Innovation and fabrication laboratories (iLabs & FabLabs) were established at 500 Universities via public, private and academia partnership, where demand-oriented products are being created. Currently, there are 22 FabLabs (including TechPark FabLab) operating in Georgia.
- As part of the World Bank-supported GENIE project, the government opened an Innovation Hub in Telavi, and Innovation Centers in Akhmeta and Rukhi in 2018.