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Georgia - a strange place for a good Fintech opportunity

The Republic of Georgia is a small country that can never fully agree whether it is located in Europe or in Asia. It is a young democracy that has only been around for about 30 years and it is a growing economy that has a large number of struggling individuals in it. So why is it that the country is all of a sudden becoming a hub to some of the most innovative Fintech solutions? How is it that a country as small in economy and size as Georgia has managed to become one of the largest centres in the world for cryptocurrency investment and mining and why is it that some Fintech companies, are opening offices, or at least looking into opening offices in the area? 

These questions come naturally to the person who knows little about the country. It is hard to see the potential that the country offers to the world of Fintech, especially judging by how a significant chunk of the country’s existence is dedicated to resisting either the government, Russia or some other foe. The latest political trouble should be reason enough to question involvement with the country. But it seems like political turmoil is not enough for Fintech companies to simply give up on the small chunk of land. So what makes Georgia so attractive? 

A small country a lot of markets to access

One of the strangest things that investors into Georgia tend to find out about the area is that despite being relatively unknown to the world, the country has access to a large international market. Surrounded by Turkey, Russia and the Black Sea, while also having direct access to China and unrestricted access to Europe, the country is located at a sort of a crossroads, presenting it one of the greatest trading opportunities in the world. Still, despite having an opportunity such as this, the country has yet to manage to fully utilize the potential of the surrounding markets. This is where investors might be seeing the true value of the area. 

As the country develops and steps into the new age of trade with a confident step, it is getting more trade deals with some of the largest economies in the world. Europe is allowing certain types of trade between the country and the union to become freer.  China is investing a lot of money into the local infrastructure to make it more capable of working with the transports coming from the country. The most recent Anaklia project will allow the eastern shores of the Black Sea to become easily accessible to some of the largest tankers in the world, creating a more direct route for trade with Europe and even the US. 

All of these developments are increasing the value of the country as a good location for investment. But, Georgia being on the way to becoming a transportation hub means that it is not as attractive to manufacturers. On the other hand, the service industry might find itself much better off in such an area. This is where the Fintech companies find their foothold and start seeing the potential. There are already certain Fintech developments that have started operating within the country successfully. There are still those that are seeing the opportunity and are considering the move. 

The companies that are already there

The industry might seem a little empty at the moment, but that assumption would be a smitake. The country already houses some of the more interesting FinTech developments in the world. The most obvious of these is, of course, Bitfury, the Bitcoin mining company that has been operating all of its mines within the country. The company has purchased several old warehouses and factories across the the country and has invested a large amount of money into transforming them into Bitcoin farms. The relatively cheap electricity within the country is making the entire operation incredibly cheap and incredibly viable. 

So much so, that the country has managed to become one of the largest Bitcoin mining counties in the world. Second only to China, which, at the moment, is in the process of banning any kind of Bitcoin mining. This means that Georgia will be becoming the leader for mining Bitcoin. The mining hub being as large as it is, it has been attracting individual Bitcoin traders to the country already. There are those who come to the country in order to either invest in the company or to purchase Bitcoin and move the Bitcoin elsewhere in the world to make a profit. While individual traders are in the process of doing so, there are already certain crypto companies considering moving some of their operations to the country. A crypto exchange that has access to freshly mined Bitcoin might find itself getting profit easier, as long as they can offer the world a cheap way to trade. 

But established companies are not the only ones looking at the markets. The country is seeing the seedlings of a start-up culture that might grow into one that can rival the biggest tech hubs of the world. One of these startups is Space Bank, which is the first fully online bank in the country. This means that the bank does not have any offices or branches and is operated entirely online. The application was downloaded 90 000 times within three months of its release and has managed to keep growing over the past years. Space Bank is fully operational within the country and is the first of such startups. But it is not the only one. The country is in the process of attempting to foster a much more active and involved startup culture, which is driving further interest within the growing Georgian economy.

Encouraging development through local investment

The leadership of the country and some of the largest institutions are seeing value in encouraging development and investment into new technological service fields. This is why the government has several investment projects running in Georgia. These investment projects try to work both with large companies and ones that are just appearing on the markets by providing them with finances required to kickstart projects. This has been having quite the positive effect on the economy but has not been the only driving force of investment.

There are a number of programs run by independent funds supported by the govenrnment, dedicated specifically to startups that operate within the country. Startupper, Startup Georgia, and a number of others are all dedicated to helping small companies and small ideas become larger through their investment. These initiatives are a combination of governmental and private investment into the fields. Although, some of the most significant investment into the start-up scene is, at the moment, being made by private companies. 

The two of the largest banks in the country TBC and Bank of Georgia are both in the thick of the action. While BoG is currently concentrating on smaller projects that it can grow, TBC is the main investor into the Fintech industry. Space Bank, the online banking solution that we mentioned earlier, is a product that was entirely invested into by them and has since been pushed to become more and more successful by this bank. This type of involvement and encouragement to new and smaller companies, even if they are competing directly with the product offered by the large companies, allows for the growth of the Fintech industry that is encouraging to see. 

Potential for development, hindered by obscurity

Despite the fact that there is evidence for the potential of the country to service a large market, high investment rates and the obvious examples of the presence of high investment into the industry, the country has yet to see any kind of significant rise in new companies and startups streaming into the area. There is room for companies to grow, and the obviousness of this is further enhanced by the fact that there is a local workforce willing and ready to work in the industry, as long as it is given a chance to do so. A significant chunk of the local population speaks at least one language other than Georgian, allowing them to be a relatively international community that can be employed by international companies. The high rates of Fintech investment are also proving that the country is prepared to accept some of the more advanced and interesting projects into their midst. Yet, the development seems to be slow.

It is hard to reconcile the potential seen in the country with the facts that it is developing so slow, but it is possible. One of the main reasons for the slowness could be the relative obscurity of the country. When the name Georgia is heard, everybody first assumes that the conversation is going on about the state. When they are corrected, a significant part of the Western and Eastern populations seem to be unaware of the country still. It seems that the country’s history as a Post Soviet State and the small size of it have left it in a place where it is not seen by the world, neither in history nor in the current happenings. Combine this with the conflict that the country has with Russia and you will have the perfect cocktail for why the country is slow to develop. The only solution would be for the country to differentiate itself and make itself unique, but how does Georgia go about doing that? A hard question to answer. Maybe, all that needs to be done is providing a little more education regarding the country online. 

But one thing remains true - Georgia is one of the more interesting and specific opportunities for startups looking for cheap areas to work in. The private investment, availability of an educated but cheap workforce, as well as access to international markets,  would be perfect for a Fintech company looking for a potential place to develop their business. It would be an exaggeration to call the country a diamond in the rough, but it is definitely an opportunity waiting to be utilized.




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Konstantin Rabin

Konstantin Rabin

Head of Marketing


Member since

18 Aug 2015



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