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If you’re thinking of starting a new business quickly, Tbilisi might not be the first place that springs to mind. Nevertheless, the capital of the former Soviet republic of Georgia is attracting entrepreneurs who appreciate the absence of red tape and the ease of doing business in a country that has worked hard to draw investment.

Georgia comes in at a surprising seventh place in the World Bank’s latest Doing Business ranking of 190 countries. And it comes in second place for the ease of starting a business. It scores in the top 10 in three of the ranking’s 10 categories, including registering property and protecting minority investors; it’s in the top 20 in three others. “Entrepreneurs in Georgia can, for example, transfer a property title within one day and at no cost,” says Valeria Perotti, the programme manager at the World Bank’s Doing Business unit. “Georgia started reforming in 2004 and went ahead of many of its peers.”

Its competition for the title of best nation for start-ups? That would be New Zealand, which came top in the overall rankings for the ease of doing business as well as number one for start-ups. It’s another country that might not top many conventional lists for aspiring entrepreneurs. There’s a good chance, however, that an English-speaking country roughly the size of the UK or Japan but with only five million inhabitants could have more appeal than some of the other top 10 countries in the World Bank ranking.

So what do these two countries have in common? “New Zealand and Georgia share sound business regulations and a high degree of transparency,” says Perotti. “New Zealand scores 15 of 15 on the building quality control index, for example.” Another promising metric? New Zealand is the easiest place in the world to get credit – a critical step for any budding business.

The World Bank warns that the ranking is not an investment guide. “The objective of Doing Business is to measure the simplicity, efficiency and accessibility of the regulatory environment,” says Perotti. Other entrepreneurship rankings are more conventional and take things such as access to a labour force and capital into account. London, for example, typically ranks highly for capital – and for the sheer number of entrepreneurs on the ground. Switzerland is a promising place to go for plentiful skilled labour at the heart of Europe.

The US News 2020 Best Countries ranking produces a sub-ranking for entrepreneurship that lists Germany, Japan and the US as the top three – many with experience of German bureaucracy will tell you a different story. New Zealand comes in only at 18th place while Georgia doesn’t even appear on the list of 73 countries.

The World Bank’s Perotti readily concedes the limitations of her institution’s ranking. “Doing Business does not, for example, capture aspects of macroeconomic stability, development of the financial system, market size, bribery and corruption, or the quality of the labour force,” she says. And yet, its ranking can serve as a powerful incentive, influencing not only investment decisions but also encouraging countries to improve their regulatory environment and rise up the list.

This is explicitly part of the bank’s goal, as it encourages countries to adapt regulation – really to deregulate – according to its benchmarks. Georgia, for instance, is getting a reward for ticking off the boxes in the World Bank categories. The bank’s economists count 51 reforms made by the country over the past 17 annual reports, including widespread use of electronic platforms for doing business. Georgia also sits at a geopolitical crossroads, which allows companies to export to Turkey, the EU and the former Soviet republics; it is seeking a similar free-trade accord with the US. These go beyond the scope of the World Bank ranking but are another plus for entrepreneurs seeking a good base.

New Zealand, by contrast, has remained consistently strong in the rankings over the years rather than requiring significant reforms; it’s a far-away country that nevertheless could be a promising place to launch your enterprise. However, it is probably a good idea for would-be entrepreneurs to take the World Bank at its word – and supplement the Doing Business ranking with research on other factors before plunking down an investment.


19 /100

Georgia

Why start your business here?

“Registering your company takes less than an hour and little is required besides a personal ID card and a desire to do so. Not many forms of businesses are regulated, which makes it even easier, and registration fees are peanuts.”

 

devi kituashvili

Co-founder, Multiverse Architecture

 

“I have lived in the US, UK and Switzerland, and can attest that establishing and operating a business is administratively easier and financially more efficient in Georgia. However, any new business requires support for developing business strategy – such support mechanisms need to be better developed.”

 

george shakarishvili

Founder, Institute of Global Health

 

“Local government supports start-ups and enterprises. Georgia’s Innovation and Technology Agency gives matching grants up to $250,000 to new technology companies to run their business. Enterprise Georgia promotes and supports the development of new enterprises by providing financial resources.”

 

koba tsertsvadze

Co-founder, Cnick (maker of digital rings)

The rankings

  1. Starting a business Second in the world in the ease of starting a business.
  2. Doing business Seventh in the world in the overall ease of doing business in the country.
  3. Best improver Three straight years in the top 10 list of countries improving the environment for business.

20 /100

New Zealand

Or would it be better here?

“One factor is the distance New Zealand is from the rest of the world so freight costs are high. All exporters here are in the same boat, however, so there are a lot of individuals and organisations you can work with to manage this, such as industry leaders and exportnz.org.nz.”

 

melissa woods

Co-founder, Salt of the Earth Packaging

 

“By having my collections made in New Zealand, I’m able to see what the conditions are like for my manufacturers. I’m also able to source my materials locally, form strong relationships across my supply chain and minimise my carbon footprint.”

matthew webb

Founder of MAJW, a men’s fashion start-up

 

“Government organisations may support you with grants, which really helps. The government also has an investment arm, NZGCP, focused on technology start-ups. There is also an evolving angel investment market to get funding if needed.”

brendan roberts

Co-founder of Aider, a digital assistant aimed at businesses

The rankings

  1. Doing business First in the world in the overall ease of doing business in the country.
  2. Starting a business First in the world in the ease of starting a business.
  3. Getting credit First in the world when it comes to ease of getting access to bank loans.
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