Development of Georgias Startup Ecosystem: Growth of Green Innovations, Competitiveness of Business Models, and Implementation and Development of Green Technologies

Merab Gejua  Irma Dikhaminjia  Levan kikilashvili

Journal number 1 ∘ Merab Gejua ∘ Irma Dikhaminjia ∘ Levan kikilashvili ∘
Development of Georgias Startup Ecosystem: Growth of Green Innovations, Competitiveness of Business Models, and Implementation and Development of Green Technologies

journal N1 2025

Introduction

Over the past decade, the world has significantly changed towards the development of startup ecosystems and the pursuit of innovations. This process has garnered particular attention from countries striving to direct their economic growth following the demands of international markets. One such country is Georgia, which, considering its geographical location, resources, and developing economic model, plays a crucial role in the South Caucasus region.

Georgia’s startup ecosystem is developing rapidly, yet alignment with the global sustainable development agenda becomes increasingly important in this process. In light of international trends, implementing green innovations and technologies for Georgian startups is a critical factor directly linked to global sustainability goals and the country’s economic development. These trends include reliance on renewable energy sources, the optimal use of resources, and reducing environmental impact.

The success of startup development requires the competitiveness of business models, which is associated with innovative approaches, sustainable technologies, and meeting global market demands. Therefore, this article aims to analyze the processes of developing Georgia’s startup ecosystem, the significance of green innovation growth, aspects of business model competitiveness, and the challenges and opportunities related to implementing green technologies.

Development and Formation of Georgia's Startup Ecosystem

The development of the startup ecosystem in Georgia is a relatively new phenomenon, yet it already plays a significant role in the country’s economic growth. The development of startups is focused on creating innovative products and services, which strengthens the local economy and integrates the country into the global financial network. In this regard, the active involvement of the state and the private sector in supporting the startup ecosystem is of critical importance.

The government of Georgia actively promotes the development of innovation and technology. State support, which includes attracting investments, allocating grants, and providing financial resources for startups, is crucial for startups aiming to enter the market and strengthen competition. The Georgian Innovation and Technology Agency (GITA) is a key force in this direction, providing resources and infrastructure for the country’s startups.

The government’s support plays a significant role in the development of startups. GITA offers financial support to startups, which includes grants and subsidies for implementing innovative ideas. Green startups are involved in grant programs allocated by GITA in 2023, contributing to strengthening the country’s startup ecosystem. These grants financially assist small and medium-sized enterprises in entering international markets and implementing innovations, as well as forming global scale-up models.

The "scale-up" refers to the process where a small or medium business, especially a startup, expands internationally and reaches global markets. This involves not only selling products or services on an international level but also expanding business operations globally and attracting new market participants. The scale-up model is an important strategy for startups seeking global expansion and increasing competitiveness. Implementing such a model requires:

Attracting sufficient financial resources: Expansion to international markets requires investments that allow operations to comply with global standards.
Market analysis: Businesses need a thorough analysis of global markets to select regions best suited to their products or services.
Integration of innovations and technologies: Global expansion requires innovations and technologies that ensure competitiveness at an international level.

The main challenges of scaling up include:

Adapting products to new markets.
Understanding international laws and regulations.
Properly tailoring marketing strategies.

Georgia is seen as a future-oriented country for startups, forming part of the global ecosystem. Like developed countries worldwide, Georgia seeks to direct its economic model toward an innovation-based economy. With the support of the IDE model, GITA implements the IDE model's integration in Georgia. GITA’s programs promote the funding of innovative startups and support the growth potential of technological companies. GITA provides grants, subsidies, and support in areas such as:

Financial support: small grants and other financial aid packages for innovative startups.
Training and mentoring: developing the necessary knowledge and skills for startups.
Infrastructure provision: providing the resources needed for the development of innovative technologies.

One of GITA's goals, with the help of the IDE model, is to ensure that startups can fully realize and commercialize their innovative ideas on both local and global levels. The main directions for the development of startups in the country include energy, agriculture, ecology, and innovative technologies, among others.

Statistical data shows that in 2023, the number of startups in Georgia significantly increased, boosting the growth rate of the startup ecosystem by 15%. This is a very positive factor in strengthening the country's economy. (Geostat.ge, 2023). This trend has made it possible to create innovative products and services in Georgia, which also help to alleviate employment problems through innovative startups.

The Role and Development of Green Innovations in Georgia's Startup Ecosystem

Green innovations represent a transformative direction of the modern global economy. Considering today’s environmental crisis, companies strive to develop innovative technologies that reduce environmental impact and use resources efficiently. Green innovations include technologies used in renewable energy, waste management, ecological architecture, and green transportation.

In Georgia, green innovations are actively developing in the energy, agriculture, and tourism sectors. For example, in the energy sector, the use of solar and hydropower is a significant direction that promotes the country's energy independence and reduces environmental impact. Startups play a crucial role in developing new technologies and incorporating them into everyday use (Bocken & Geradts, 2020).

The Role of Innovative Platforms

The implementation of green innovations in Georgia's startup ecosystem occurs through innovative platforms and business models. A very good example is the startup "Memotsigngebi," one of the success stories in the Caucasus. It ensures the accumulation of competencies and skills through daily work, ensuring the long-term personal and professional development of each individual. This platform integrates the use of green technologies in various services, such as event planning and service provision.

The main advantage of these platforms is their ability to quickly adapt to market demands and provide innovative services that increase customer loyalty. Additionally, by using green technologies, they reduce environmental impact, which aligns with today’s global market demands (Elkington, 2019).

Competitiveness of Business Models for Green Startups and the Development of Sustainable Business Models

Business models for green startups are of particular importance. Global competition in modern markets requires the development of models that not only ensure financial success but also contribute to achieving sustainability goals. This includes factors such as energy efficiency, optimal use of resources, environmental responsibility, and meeting customer needs.

For the sustainability of business models, it is important to implement strategies that ensure companies’ competitiveness in global markets. For green startups, this includes integrating innovative technologies, constantly developing products and services, and adapting to market demands. For example, startups in Georgia using solar energy today offer customers environmentally friendly and efficient energy solutions that meet international standards (Geels & Schot, 2020).

Energy and Ecological Innovations

In Georgia, strengthening the use of solar and hydropower in the energy sector increases the country’s energy independence. Hydropower startups are attempting to optimize the use of the country’s resources, which creates great opportunities for long-term sustainable development. For example, the use of solar panels in the country promotes reliance on renewable energy sources, connecting Georgia to global sustainability goals (World Bank, 2023).

In Georgia, green innovations also encompass the agriculture and tourism sectors, where ecological technologies enhance the development of eco-friendly products and services.

Competitiveness of Business Models for Green Startups

In Georgia, the development of business models is directed not only at the financial success of startups but also at achieving sustainability goals. For green startups, energy efficiency and optimal use of resources are the main principles ensuring the success of business models.

For the sustainability of business models, startups need continuous adaptation to global market demands. This includes factors such as the integration of green technologies, constant development of services, and ensuring ecological responsibility. For example, agricultural startups in Georgia successfully use innovative technologies to ensure environmentally clean production and the maximum optimization of resources (Asian Development Bank).

Conditions of Competition and Market Entry Strategies

One of the main factors in the competitiveness of business models is market entry strategies. For green startups, obtaining appropriate financial support, attracting investments, and involving local and international partners are essential for entering global markets. These processes require strategic planning and optimal resource management.

One of the challenges for green startups in Georgia is market stability and the difficulties of entering global markets. Attracting investments relies heavily on the role of the state and international organizations that support technological innovations and the development of green startups (Markman & Krause, 2019).

Integration of Green Technologies, Challenges, Lack of Technological Resources, and Its Impact

The integration of green technologies in Georgia’s startup ecosystem is associated with certain challenges, the main problem being the lack of technological resources. Despite the growing demand for renewable energy sources and ecological technologies in Georgia, innovation development is often hindered by the lack of resources and the imperfection of technological infrastructure.

The Role of the State and Support Mechanisms

The role of the state in integrating green technologies and supporting startups is critical. State programs aimed at promoting green innovation, such as subsidies, grants, and other forms of financial assistance, play a significant role. The involvement of the state in these processes ensures opportunities for technological development for startups and supports their market entry.

International and Regional Context

The development of Georgia's startup ecosystem is directly linked to the country's geographical and strategic location. As a bridge between EU and Asian markets, Georgia actively utilizes this advantage for the development of innovative businesses. The EU's "Horizon" program serves as one of the main financial sources supporting innovative startups. Within the EU programs, Georgian companies receive grants to develop new products and implement green innovations (ITU).

Regional Partnership

International organizations such as the United Nations (UN) and the Asian Development Bank (ADB) actively collaborate with the Georgian government in the process of startup development. ADB research shows that the technological development of startups in Georgia increased by 20% in 2023, a result of international support and the expansion of partnership networks (Asian Development Bank).

Conclusion

The development of Georgia’s startup ecosystem in terms of green innovations, technologies, and the competitiveness of business models presents significant opportunities on a global scale. The sustainability of business models, the integration of technological innovations, and the consideration of global market demands are the foundation for the long-term success of Georgian startups.

The development of green startups requires both local and international support, attracting investments, and active involvement of the state. Considering global sustainability trends and using innovative approaches will allow Georgian startups to successfully compete in international markets and contribute to the country’s economic growth.

Bibliography:

Kuratko, D. F., 2021. Entrepreneurship: Theory, Process, and Practice. 10th ed. Cengage Learning.
OECD, 2019. SMEs and Entrepreneurship Outlook 2019. OECD Publishing. Available at: https://www.oecd.org/publications/sme-and-entrepreneurship-outlook-2019-34907e9f-en.htm [Accessed 5 Sept. 2024].
Bocken, N. M. P. and Geradts, T. H., 2020. Barriers and Drivers to Sustainable Business Model Innovation: Organization Design and Dynamic Capabilities. Long Range Planning, 53(4), p.101950. Available at: https://doi.org/10.1016/j.lrp.2019.101950 [Accessed 5 Sept. 2024].
Boons, F. and Lüdeke-Freund, F., 2018. Sustainable Innovation and Business Models: State-of-the-Art and Research Challenges. Journal of Cleaner Production, 176, pp.463-472. Available at: https://doi.org/10.1016/j.jclepro.2017.12.091 [Accessed 5 Sept. 2024].
Elkington, J., 2019. Green Swans: The Coming Boom in Regenerative Capitalism. 1st ed. Fast Company Press.
Freeman, R. E. and Dmytriyev, S., 2017. Corporate Social Responsibility and Stakeholder Theory: Learning from Each Other. Symphony. Emerging Issues in Management, (2), pp.7-15. Available at: https://doi.org/10.4468/2017.2.02freeman.dmytriyev [Accessed 5 Sept. 2024].
Geels, F. W. and Schot, J., 2020. The Dynamics of Transitions: A Socio-Technical Perspective. Research Policy, 39(4), pp.399-416. Available at: https://doi.org/10.1016/j.respol.2010.01.022 [Accessed 5 Sept. 2024].
Hall, J., Daneke, G. A. and Lenox, M. J., 2018. Sustainable Development and Entrepreneurship: Past Contributions and Future Directions. Journal of Business Venturing, 25(5), pp.439-448. Available at: https://doi.org/10.1016/j.jbusvent.2009.09.003 [Accessed 5 Sept. 2024].
Schaltegger, S. and Wagner, M., 2017. Managing the Business Case for Sustainability: The Integration of Social, Environmental, and Economic Performance. Journal of Corporate Social Responsibility, 36(3), pp.39-55. Available at: https://doi.org/10.1002/bse.1921 [Accessed 5 Sept. 2024].
Markman, G. D. and Krause, D., 2019. Green Innovation, Competitive Advantage, and Sustainable Development: Exploring Emerging Trends. Journal of Management Studies, 56(1), pp.1-14. Available at: https://doi.org/10.1111/joms.12408 [Accessed 5 Sept. 2024].
National Statistics Office of Georgia (Geostat). 2023. "Economic Growth and Startup Statistics". Available at: https://www.geostat.ge [Accessed 5 Sept. 2024].
World Bank. 2023. "Sustainable Development in Georgia". Available at: https://www.worldbank.org [Accessed 5 Sept. 2024].
Asian Development Bank (ADB). 2023. "Georgia’s Emerging Ecosystem for Technology Startups". Available at: https://www.adb.org [Accessed 5 Sept. 2024].

EKONOMISTI The international scientific and analytical, reviewed, printing and electronic journal of Paata Gugushvili Institute of Economics of Ivane Javakhishvili Tbilisi State University

DOI: 10.36172/EKONOMISTI E ISSN 2346-8432 Print ISSN 1987-6890	Journal number 1 ∘ Merab Gejua ∘ Irma Dikhaminjia ∘ Levan kikilashvili ∘ Development of Georgias Startup Ecosystem: Growth of Green Innovations, Competitiveness of Business Models, and Implementation and Development of Green Technologies journal N1 2025 Introduction Over the past decade, the world has significantly changed towards the development of startup ecosystems and the pursuit of innovations. This process has garnered particular attention from countries striving to direct their economic growth following the demands of international markets. One such country is Georgia, which, considering its geographical location, resources, and developing economic model, plays a crucial role in the South Caucasus region. Georgia’s startup ecosystem is developing rapidly, yet alignment with the global sustainable development agenda becomes increasingly important in this process. In light of international trends, implementing green innovations and technologies for Georgian startups is a critical factor directly linked to global sustainability goals and the country’s economic development. These trends include reliance on renewable energy sources, the optimal use of resources, and reducing environmental impact. The success of startup development requires the competitiveness of business models, which is associated with innovative approaches, sustainable technologies, and meeting global market demands. Therefore, this article aims to analyze the processes of developing Georgia’s startup ecosystem, the significance of green innovation growth, aspects of business model competitiveness, and the challenges and opportunities related to implementing green technologies. Development and Formation of Georgia's Startup Ecosystem The development of the startup ecosystem in Georgia is a relatively new phenomenon, yet it already plays a significant role in the country’s economic growth. The development of startups is focused on creating innovative products and services, which strengthens the local economy and integrates the country into the global financial network. In this regard, the active involvement of the state and the private sector in supporting the startup ecosystem is of critical importance. The government of Georgia actively promotes the development of innovation and technology. State support, which includes attracting investments, allocating grants, and providing financial resources for startups, is crucial for startups aiming to enter the market and strengthen competition. The Georgian Innovation and Technology Agency (GITA) is a key force in this direction, providing resources and infrastructure for the country’s startups. The government’s support plays a significant role in the development of startups. GITA offers financial support to startups, which includes grants and subsidies for implementing innovative ideas. Green startups are involved in grant programs allocated by GITA in 2023, contributing to strengthening the country’s startup ecosystem. These grants financially assist small and medium-sized enterprises in entering international markets and implementing innovations, as well as forming global scale-up models. The "scale-up" refers to the process where a small or medium business, especially a startup, expands internationally and reaches global markets. This involves not only selling products or services on an international level but also expanding business operations globally and attracting new market participants. The scale-up model is an important strategy for startups seeking global expansion and increasing competitiveness. Implementing such a model requires: Attracting sufficient financial resources: Expansion to international markets requires investments that allow operations to comply with global standards. Market analysis: Businesses need a thorough analysis of global markets to select regions best suited to their products or services. Integration of innovations and technologies: Global expansion requires innovations and technologies that ensure competitiveness at an international level. The main challenges of scaling up include: Adapting products to new markets. Understanding international laws and regulations. Properly tailoring marketing strategies. Georgia is seen as a future-oriented country for startups, forming part of the global ecosystem. Like developed countries worldwide, Georgia seeks to direct its economic model toward an innovation-based economy. With the support of the IDE model, GITA implements the IDE model's integration in Georgia. GITA’s programs promote the funding of innovative startups and support the growth potential of technological companies. GITA provides grants, subsidies, and support in areas such as: Financial support: small grants and other financial aid packages for innovative startups. Training and mentoring: developing the necessary knowledge and skills for startups. Infrastructure provision: providing the resources needed for the development of innovative technologies. One of GITA's goals, with the help of the IDE model, is to ensure that startups can fully realize and commercialize their innovative ideas on both local and global levels. The main directions for the development of startups in the country include energy, agriculture, ecology, and innovative technologies, among others. Statistical data shows that in 2023, the number of startups in Georgia significantly increased, boosting the growth rate of the startup ecosystem by 15%. This is a very positive factor in strengthening the country's economy. (Geostat.ge, 2023). This trend has made it possible to create innovative products and services in Georgia, which also help to alleviate employment problems through innovative startups. The Role and Development of Green Innovations in Georgia's Startup Ecosystem Green innovations represent a transformative direction of the modern global economy. Considering today’s environmental crisis, companies strive to develop innovative technologies that reduce environmental impact and use resources efficiently. Green innovations include technologies used in renewable energy, waste management, ecological architecture, and green transportation. In Georgia, green innovations are actively developing in the energy, agriculture, and tourism sectors. For example, in the energy sector, the use of solar and hydropower is a significant direction that promotes the country's energy independence and reduces environmental impact. Startups play a crucial role in developing new technologies and incorporating them into everyday use (Bocken & Geradts, 2020). The Role of Innovative Platforms The implementation of green innovations in Georgia's startup ecosystem occurs through innovative platforms and business models. A very good example is the startup "Memotsigngebi," one of the success stories in the Caucasus. It ensures the accumulation of competencies and skills through daily work, ensuring the long-term personal and professional development of each individual. This platform integrates the use of green technologies in various services, such as event planning and service provision. The main advantage of these platforms is their ability to quickly adapt to market demands and provide innovative services that increase customer loyalty. Additionally, by using green technologies, they reduce environmental impact, which aligns with today’s global market demands (Elkington, 2019). Competitiveness of Business Models for Green Startups and the Development of Sustainable Business Models Business models for green startups are of particular importance. Global competition in modern markets requires the development of models that not only ensure financial success but also contribute to achieving sustainability goals. This includes factors such as energy efficiency, optimal use of resources, environmental responsibility, and meeting customer needs. For the sustainability of business models, it is important to implement strategies that ensure companies’ competitiveness in global markets. For green startups, this includes integrating innovative technologies, constantly developing products and services, and adapting to market demands. For example, startups in Georgia using solar energy today offer customers environmentally friendly and efficient energy solutions that meet international standards (Geels & Schot, 2020). Energy and Ecological Innovations In Georgia, strengthening the use of solar and hydropower in the energy sector increases the country’s energy independence. Hydropower startups are attempting to optimize the use of the country’s resources, which creates great opportunities for long-term sustainable development. For example, the use of solar panels in the country promotes reliance on renewable energy sources, connecting Georgia to global sustainability goals (World Bank, 2023). In Georgia, green innovations also encompass the agriculture and tourism sectors, where ecological technologies enhance the development of eco-friendly products and services. Competitiveness of Business Models for Green Startups In Georgia, the development of business models is directed not only at the financial success of startups but also at achieving sustainability goals. For green startups, energy efficiency and optimal use of resources are the main principles ensuring the success of business models. For the sustainability of business models, startups need continuous adaptation to global market demands. This includes factors such as the integration of green technologies, constant development of services, and ensuring ecological responsibility. For example, agricultural startups in Georgia successfully use innovative technologies to ensure environmentally clean production and the maximum optimization of resources (Asian Development Bank). Conditions of Competition and Market Entry Strategies One of the main factors in the competitiveness of business models is market entry strategies. For green startups, obtaining appropriate financial support, attracting investments, and involving local and international partners are essential for entering global markets. These processes require strategic planning and optimal resource management. One of the challenges for green startups in Georgia is market stability and the difficulties of entering global markets. Attracting investments relies heavily on the role of the state and international organizations that support technological innovations and the development of green startups (Markman & Krause, 2019). Integration of Green Technologies, Challenges, Lack of Technological Resources, and Its Impact The integration of green technologies in Georgia’s startup ecosystem is associated with certain challenges, the main problem being the lack of technological resources. Despite the growing demand for renewable energy sources and ecological technologies in Georgia, innovation development is often hindered by the lack of resources and the imperfection of technological infrastructure. The Role of the State and Support Mechanisms The role of the state in integrating green technologies and supporting startups is critical. State programs aimed at promoting green innovation, such as subsidies, grants, and other forms of financial assistance, play a significant role. The involvement of the state in these processes ensures opportunities for technological development for startups and supports their market entry. International and Regional Context The development of Georgia's startup ecosystem is directly linked to the country's geographical and strategic location. As a bridge between EU and Asian markets, Georgia actively utilizes this advantage for the development of innovative businesses. The EU's "Horizon" program serves as one of the main financial sources supporting innovative startups. Within the EU programs, Georgian companies receive grants to develop new products and implement green innovations (ITU). Regional Partnership International organizations such as the United Nations (UN) and the Asian Development Bank (ADB) actively collaborate with the Georgian government in the process of startup development. ADB research shows that the technological development of startups in Georgia increased by 20% in 2023, a result of international support and the expansion of partnership networks (Asian Development Bank). Conclusion The development of Georgia’s startup ecosystem in terms of green innovations, technologies, and the competitiveness of business models presents significant opportunities on a global scale. The sustainability of business models, the integration of technological innovations, and the consideration of global market demands are the foundation for the long-term success of Georgian startups. The development of green startups requires both local and international support, attracting investments, and active involvement of the state. Considering global sustainability trends and using innovative approaches will allow Georgian startups to successfully compete in international markets and contribute to the country’s economic growth. Bibliography: Kuratko, D. F., 2021. Entrepreneurship: Theory, Process, and Practice. 10th ed. Cengage Learning. OECD, 2019. SMEs and Entrepreneurship Outlook 2019. OECD Publishing. Available at: https://www.oecd.org/publications/sme-and-entrepreneurship-outlook-2019-34907e9f-en.htm [Accessed 5 Sept. 2024]. Bocken, N. M. P. and Geradts, T. H., 2020. Barriers and Drivers to Sustainable Business Model Innovation: Organization Design and Dynamic Capabilities. Long Range Planning, 53(4), p.101950. Available at: https://doi.org/10.1016/j.lrp.2019.101950 [Accessed 5 Sept. 2024]. Boons, F. and Lüdeke-Freund, F., 2018. Sustainable Innovation and Business Models: State-of-the-Art and Research Challenges. Journal of Cleaner Production, 176, pp.463-472. Available at: https://doi.org/10.1016/j.jclepro.2017.12.091 [Accessed 5 Sept. 2024]. Elkington, J., 2019. Green Swans: The Coming Boom in Regenerative Capitalism. 1st ed. Fast Company Press. Freeman, R. E. and Dmytriyev, S., 2017. Corporate Social Responsibility and Stakeholder Theory: Learning from Each Other. Symphony. Emerging Issues in Management, (2), pp.7-15. Available at: https://doi.org/10.4468/2017.2.02freeman.dmytriyev [Accessed 5 Sept. 2024]. Geels, F. W. and Schot, J., 2020. The Dynamics of Transitions: A Socio-Technical Perspective. Research Policy, 39(4), pp.399-416. Available at: https://doi.org/10.1016/j.respol.2010.01.022 [Accessed 5 Sept. 2024]. Hall, J., Daneke, G. A. and Lenox, M. J., 2018. Sustainable Development and Entrepreneurship: Past Contributions and Future Directions. Journal of Business Venturing, 25(5), pp.439-448. Available at: https://doi.org/10.1016/j.jbusvent.2009.09.003 [Accessed 5 Sept. 2024]. Schaltegger, S. and Wagner, M., 2017. Managing the Business Case for Sustainability: The Integration of Social, Environmental, and Economic Performance. Journal of Corporate Social Responsibility, 36(3), pp.39-55. Available at: https://doi.org/10.1002/bse.1921 [Accessed 5 Sept. 2024]. Markman, G. D. and Krause, D., 2019. Green Innovation, Competitive Advantage, and Sustainable Development: Exploring Emerging Trends. Journal of Management Studies, 56(1), pp.1-14. Available at: https://doi.org/10.1111/joms.12408 [Accessed 5 Sept. 2024]. National Statistics Office of Georgia (Geostat). 2023. "Economic Growth and Startup Statistics". Available at: https://www.geostat.ge [Accessed 5 Sept. 2024]. World Bank. 2023. "Sustainable Development in Georgia". Available at: https://www.worldbank.org [Accessed 5 Sept. 2024]. Asian Development Bank (ADB). 2023. "Georgia’s Emerging Ecosystem for Technology Startups". Available at: https://www.adb.org [Accessed 5 Sept. 2024].