The FINANCIAL -- The number of businesses registered in Georgia in cooperation with US citizens amounted to 154 units during January-October 2015, up from 69 from the same period of the prior year. The easy bureaucracy, considerably low sum of investments required, and free niches in various fields are the main factors encouraging US citizens to start up business in Georgia.
“If American companies or investors are looking for something economically friendly, Georgia is it. Keeping in mind they do not overpay or exploit the base margins. And obviously, more professionals will only build up this country - hopefully, for a better and a stronger Georgia,” Nikol Burton, founder of Mr. Traveller Ltd and You Studio, told The FINANCIAL.
“We hear a lot about the political uncertainty. For us, it has not affected our decision to relocate our family of four, as the pros outweigh the cons. However, it may play into the decision of a large investment which would depend on several years to recover,” said Burton.
Nikol Burton, together with her husband, is developing two small companies in Georgia. One is in the fitness industry - You Studio, and the other in tourism - Mr. Traveller Ltd. In total the couple has invested approximately EUR 50,000.
“Georgia is developing. There are many opportunities in a wide range of sectors. As in other developing countries, having a foreign mind and experience works in our favour towards the execution of such projects. What we liked about Georgia is the efficiency and seemingly easy bureaucracy when it comes to starting up a business. Also, depending on what you are doing, the investment is considerably lower to that of a developed country. Employment salaries are low and literacy is high. Trainable,” Burton said.
As Burton said, in their particular sectors, the fitness business will be the most challenging. “There is a very low fitness culture in Georgia. Though hopefully through education and a handful of fun events, we can begin to educate the importance of being physically healthy. Tourism is developing. Language and being foreign may slow us down here, but thanks to the very open culture we are experiencing and exploring many beautiful options to share with the world.”
Burton and her partner have over 20 years of entrepreneur experience in developing countries. She described themselves as young, educated, and motivated. Burton’s experience lies in the fitness sector, whereas her husband’s is in logistics and tourism.
“I was one of ten of the first CrossFit instructors in Europe and the first to operate an affiliated CrossFit fitness centre. I worked closely with both CrossFit HQ and Reebok in training and promoting the CrossFit brand. I also worked in the collaboration of several sport related competition and obstacle races (Spartan) with Reebok. I hope to use that knowledge base/contacts and create something fun and exciting in Georgia,” said Burton.
Her husband’s background lies in internet business and commerce. Combined with his love of travel and adventure he is developing a tourism package for Europe to introduce Georgia. Through his logistic experience he will manage up to 50 Georgian employees in transport, rural tourism, and a small hotel resort.
Burton strongly encourages their co-citizens to start up business in Georgia, however there is one ‘if’. “If it supports the culture and can aid in creating a better Georgia - then good. But, if it is to invest and take advantage of the natural resources for their own benefit without the intention of maintaining the ‘rawness’ of Georgia, then please no. Factories and such would destroy this country.”
The main message Burton has for their co-citizens is: “Invest to invest in a well preserved culture. Do not invest to exploit or destroy the beauty of what Georgia is as we know it today.”
William Ipsen, together with his partner Andro Dzneladze, has formed Georgia Pacific Partnership as an investment vehicle to take advantage of prospective investment opportunities in Georgia, most specifically within the field of medicine.
Currently the founders have issued just over USD 100,000 in their initial opportunity, and have several more opportunities they are actively pursuing which could total another USD 200,000 to USD 1,000,000 if all options are exercised over the next 24 months.
“The opportunity in which we are currently engaged in Georgia had both the need for and, more importantly, the addition of well-qualified Georgian partners to allow us maximum opportunity to succeed,” said Ipsen.
Ipsen has spent 40+ years in the medical field, both in hospital administration and in the commercial business of medical imaging equipment. For the last 20 years he was co-owner of a medical ultrasound business based in the USA, with a satellite office located in Tbilisi for some 5+ years, of which he was actively involved and knowledgeable regarding the Georgian market for imaging systems.
Following his retirement in December 2014, his former Georgian partner in Tbilisi contacted him regarding other business opportunities. They are now engaged in one such opportunity.
According to Ipsen, Georgia offers some very interesting opportunities for foreign investment. In his words, the people are friendly and local business infrastructure mostly available at reasonable cost. “That said, any foreign investment should not be undertaken without proper vetting and, more specifically, I recommend if at all possible having partnership in some form with local investors / operators experienced in the local business climate for your specific offering. One should also speak with financial people early in the beginning of the due diligence process if Georgian financing is important.”
“The main challenge we faced, and likely that of other prospective investors in Georgia, was securing financing through Georgian financial institutions. The length of the process is one that may persuade other investors to look outside Georgia for opportunity,” Ipsen said.
Giorgi Dalakishvili founded Rectus Development in Georgia. The company is involved in the construction and development fields. As a developing country, the market in Georgia is not saturated yet, therefore it is full of opportunities. This is why Dalakishvili decided to try his hand in Georgia.
“The bureaucracy is on a minimum level. No corruption, no criminals, great location. Now is the greatest time to make investments here, because in the nearest future this market may also become very saturated and the competition will become very tough as well,” Dalakishvili said.
Dalakishvili previously worked in the agricultural business. He has worked for most of the leading agricultural companies in the country. In addition to this, he managed to establish his own company, which is one of the most successful right now. He founded it as a very interesting and challenging business. Nevertheless, Dalakishvili thinks he has already achieved everything he could in this field. “I have almost fully used all my resources and it is time to change the field. That is one of the reasons I am switching to the construction business.”
Dalakishvili recommends everyone to make investments in Georgia. “My main suggestion is to use the moment which the country is in right now. Georgia is at a level where from a developing country it will become a developed country very soon. This is a wave, which should definitely be caught. Such opportunities do not appear that often.”
The main challenges Dalakishvili and his partners have faced in Georgia are making the decision about choosing the location for construction. “There were a lot of interesting alternatives and we had to think carefully to select the best one. As we have only just begun our business, we will have much bigger challenges in the future.”
The main field of operation of the company Go Services is implementing technology, specifically in the transportation industry.
The current project of Go Services is GoTaxi.ge, which is a mobile platform for hailing a cab.
“We provide technology to connect customers to the service providers directly without a middle man, while making it convenient, engaging and a pleasant experience. We are currently undergoing Beta testing, with second iteration available on Android platform, and in production for iOS, and will be fully functional by the end of January, available in all major cities throughout Georgia by the summer of 2016,” said Zaza Zhvania, founder of Go Services.
From the first draft of the business plan, till the final Beta product, which Go Services has recently pushed out to its customers and employees (Android & iOS Platforms), its team of highly experienced staff have always kept an eye on one thing: growing the capital, and doing so quickly. “Our company platform in Tbilisi, Georgia, was launched this year with investments in the tens of thousands and I am happy to report that we have been well received among our demographics, with high levels of interaction and interest.”
From a business perspective, investing in a business in Georgia was a no-brainer for Zhvania. “Georgia is a very interesting market, mobile services space is not as saturated as in other countries therefore there are tons of opportunities to grow and develop. The low amount of regulations on businesses like transportation, and low investment needed for start-ups, are also a big factor. But from a personal perspective, besides the fact that I was born and raised in Georgia, I’ve worked and collaborated with businessmen and the creative minds of my peers within Georgia and had wonderful experiences in the past.”
Zhvania graduated with a bachelor’s degree in International Business Administration, and started up a few companies early in his career. Other than GoTaxi in Georgia, he is currently a partner at LV Tech Inc, in the US, and works for the New York State Department of Finance.
The biggest hurdle for Zhvania was to find qualified and competitive software engineers, as their company relies heavily on software developers to bring products to life, it was definitely the biggest challenge. “The next big challenge was adapting to a marketing state of mind, which is very unique and specific to the Georgian market. For foreigners it is a big challenge to understand it so that the product can be properly presented, and positioned for success.”
According to Zhvania, Georgia is such a lucrative market that he would imagine it to be a great place to invest, although the political situation is very volatile, it would seem that this is the best time to invest long term foreign capital in Georgia. “The Dollar to Lari ratio is high, and it will not remain so high for long. Also given the fact that foreign investments are in dollars it gives higher capital in the local currency, and an advantage over local investors,” Zhvania told The FINANCIAL.