The FINANCIAL -- Georgia’s Innovation and Technology Agency’s (GITA) business incubator project has been running for several years. Hundreds of start-uppers apply for the program, and the select few are chosen, which are later on assisted in getting their business started.
The program centers around demo-day- after 6 months of engaging into the program, the young entrepreneurs have the opportunity to present their product to hundreds of investors.
Business incubator is largely operated in Technopark, one of GITA’s main projects. Its expenses, according to the information obtained from an official letter from GITA, are as follows- Technopark’s yearly operational costs are in the region of GEL 750,000, which is spent not only on operating the business incubator, but also on the conference hall, training spaces and manufacturing innovations lab, according to George Laliashvili, Strategic Development Specialist of Startup Environment in Georgia.
According to the same sources, training of each wave of business incubator participants lasts for 6 months and has a budget of GEL 180,000, which is spent mostly on training programs & related events. Additionally, each start-up can apply for GEL 5000 grant. GITA permanently employs one person, whose salary amounts to yearly GEL 18,000.
Information on income of participants of business incubator program in 2017 was not received, albeit our request. Their sales, to this point, are in the region of GEL 432,000.
If we were to consider cost-efficiency of business incubator program of GITA, we would have to include not only the costs that GITA has to sideline for these projects, but also the money the start-uppers spend, raise from investors and loan from banks.
Assessing the efficiency of business incubators, in general, is further complicated by the fact that it is hard to put an exact number on the value of their services. For example, it could just as well be that a start-up would succeed even without assistance, or it could provide the necessary edge for the next successful business to pop up.
In 2017, 16 projects participated in the program (, out of which 5 have abandoned the project, 9 have customers, 5 already have sales (Tamashobana, Wingo.ge, Donna, GoTrip, Gustav), totaling 432,000 Lari and 4 have received funding from outside the incubation project. One of the 2017 business incubator participants has gone international- GoTrip, which operates in Vietnam.
Donna-App is one of the projects that participated in the business incubator project in 2017. The app provides a service fitted to cities with parking spot problem- food spots which are engaged within the program offer the service of delivering the desired food straight to the car of the customer. The system is regulated in a way restaurants infer the time of arrival of the customers based on situation on the roads, therefore the location of the user is not revealed.
“Business incubator courses helped me understand the differences between a startup and a regular, fully-going business”, Nika Abashidze, the co-founder of Donna-App told The FINANCIAL.
“It became clear where we were standing, gave us more realistic expectations and vision of how successful startup develops throughout time. Initial lectures also helped us understand what we should do in the initial stages of the project, be it in resources or directions in which we work on,” he said.
“They recorded an advertising video for us and provided some marketing support”.
George Toria, founder of CloudCEO, is another start-upper who won the competition to participate in the business incubator program 2017. George’s startup recently raised $500,000 seed investment and is creating business intelligence platform for executives, with a mission to help business leaders make better decisions. “The program consists of 4-5 months of intense training, followed up with around a month-long preparation for Demo-Day – where the participants are given chance to present their idea to investors. My team was not able to attend this meeting, due to another, even better opportunity coming up”, said George.
“Trainings themselves cover a wide array of subjects, including investor relations, project management, finances, marketing and etc. Each tutor has an extensive, successful experience in their fields and attendants are given an opportunity to ask them questions. I especially liked the investor relation courses and would recommend them to start even earlier into the program.”
“If I were to give recommendations for business incubator, I would suggest making more demo-days throughout the project. Generally, the one that happens is not that efficient, as it is rather rare for the participants to find those interested in investing in their projects. So, maybe with more investor days happening, we would have easier time finding suitors.”
MARD N3 participated in the business incubator in 2015. Back then, the program lasted for an year, instead of the current 6 months. MARD deciphers as Motion Augmented Reality Device- it was a game on mobile platform, which involved feature recognition program and a tool to play a game with.
“We already had a basic platform developed for our game, as well as a “weapon” with which one can play it. Next step was to find investors to fund the initial stages of our project. However, the amount we needed to adequately jumpstart the project was too high and we were unable to raise it, therefore, 9 months into the business incubator program, we had to abandon our project”- said Temur Babutsidze, one of the co-founders of MARD N3.
“I wouldn’t say that our time in business incubator was a waste, though. The theoretical information we acquired in the project in the initial stages was crucial for us to have any chance in making a success story out of MARD N3”.
“I would point out business model development lectures as hugely beneficial. Finances, taxes and sales management are usually bane of a lot of startups. Without a decent financial model, which is especially difficult to create in a startup stage, when you do not have any milestones and most of the numbers should be theoretical, it is difficult to sell an idea to an investor. Then these were followed up with classes in HR & Marketing, again, with lecturers proficient and successful in the field”, Mr Babutsidze continued.
“It would be better if even during the selection process, business incubator could provide start uppers with their review on how relevant the startup would be and how difficult would it be to launch. Grounded approach is key to successful business. For example, every entrepreneur should be warned about the relative difficulty of making a successful international business, compared to the one focused on the local market.”
“Even though our startup failed, MARD N3 team received so much knowledge and experience from the program that it is safe to say that if we are to start working on a new project, we would have much higher chances of success than we had before attending the program.”
“On the final note, Technopark seems to have encouraged development of similar working spaces in the country. With growing interest, private-owned business incubators could pop up and raise the quality bar.”