How to Attract Start-Ups to Boost National Economies: A German-Georgian Comparison and Case Study

Abstract

According to the World Economic Forum, the value that start-ups create globally is nearly on par with the GDP of a G7 country. In 2021, start-up funding exceeded USD 600 billion and the number of unicorns (start-ups with a valuation in excess of USD 1 billion) is above 1000 (Jurgens, How start-ups drive economic recovery while growing responsibly, 2022). Well-known start-up hubs are the Silicon Valley, Berlin, or London. The ranking and attractiveness of such hubs is changing constantly. Therefore, it is natural that responsible persons of potential future hubs ask themselves, how a portion of start-ups and young companies can be attracted. This chapter provides an overview of the importance of start-ups for the global economy. Then, the role of start-ups for the German economy and the key success factors for developing an attractive and prospering start-up hub are outlined, with a focus on Berlin as the major German start-up hub in the 2020s. In addition to the macroeconomic view, a case study of a cleantech start-up is presented from the idea creation to funding and bringing a viable product to market. The analysis of the German start-up cosmos and the findings from the case study together with an analysis of the current environment in Georgia—including the results of a survey showing how the Georgian start-up cosmos is seen by international investors—is then used to draw conclusions: What does it take to make Georgia an attractive international start-up hub and what is the outlook for the Georgian start-up economy.