Azerbaijani startups: The main driver of economic growth
By Sabina Alizade
In recent years, Azerbaijan has been actively developing its startup ecosystem, giving young entrepreneurs the opportunity to turn their ideas into successful business projects. One of the main participants in this process is the Startup Azerbaijan project, which aims to improve the investment environment in the information and communication technology (ICT) sector and support innovative ideas.
One of the key components of Startup Azerbaijan is the expert evaluation of startups participating in competitions. This allows us to highlight the most promising projects and provide them with additional support and funding. The project also helps startups attract investment and create successful business models.
One of the main tools for supporting startups in Azerbaijan is the Startup Certificate, which exempts projects from profit tax or income tax for innovative activities for a period of three years. This significantly reduces financial barriers for young entrepreneurs and allows them to focus on developing their projects.
Startup Azerbaijan is actively working to create opportunities for startups to meet potential investors and receive financial support. This includes organizing startup meetings, discussions, and other events aimed at creating a favorable investment environment.
Overall, Startup Azerbaijan plays a crucial role in the development of the startup ecosystem in the country, providing young entrepreneurs with the necessary tools and resources to successfully launch and develop their projects. Thanks to state support and the active work of the project team, Azerbaijani startups have every opportunity to implement their ideas and turn them into successful businesses.
In an interview with News.Az, Doctor of Economics, Professor Elshad Mammadov stated that approximately 90% of economic growth, according to expert estimates, comes from the application of innovations. Innovative investments are the main driver of economic growth, and in many cases, these innovations originate from startups.
The expert noted that the practical application of startups in economic processes is extremely important. "However, there is also the point that, according to global experience and statistics, about 10% of initiatives and ideas at the startup level result in practical business plans. Of these, approximately 10% ultimately reflect in the economy. That is, roughly 1% of initiatives at the idea level result in economic growth in the form of innovation. Therefore, this is a very important and simultaneously risky field," he said.
Elshad Mammadov emphasized that the development of this field, namely the startup segment, cannot be effective without appropriate state support. "If we look at global experience, we see that when states create the necessary conditions for startups and business incubators, it leads to more innovations being applied in the economy compared to cases where the state's participation in these processes is minimal," he noted.
"From this perspective, I believe that state support in monetary, credit and fiscal policy is absolutely necessary in processes related to the implementation of innovations and startups," the expert added.
He stressed that the state must have mechanisms to mitigate these risks. Otherwise, simply creating laboratories for startups and allocating places in higher education institutions or other organizations will not yield sustainable positive effects. "Although providing relevant places and creating conditions and laboratories can have an impact, more comprehensive and fundamental state support is needed to ensure that startups have a sustainable and effective positive impact on the economy," he pointed out.
The recent successes of Azerbaijani startups indicate significant progress in this field and the support the state provides to young entrepreneurs.
Another bright example is the Unibroad educational platform, founded by Azerbaijani youth and recognized as one of the world's best educational startups in London. Its success confirms the high potential of Azerbaijani projects in the education sector.
Another example is the Recipe startup, a platform for digitizing paper receipts. This project represented our country at the Annual Investment Meeting (AIM Congress) in Abu Dhabi, attracting the attention of investors and becoming a favorite among the jury. This is another example of the successful expansion of Azerbaijani startups worldwide.
One of the main factors behind the success of these projects is state support for their development. Four of the abovementioned projects received the Startup certificate under the support of the Small and Medium Business Development Agency (KOBIA), which exempts them from profit tax or income tax for innovative activities for three years. This allows them to use the profits obtained for further development.
The Doctor Agro project received 16,000 manats in financial support as the winner of the fourth grant competition organized by KOBIA. This is another successful example of state support for young entrepreneurs and their projects.
With the support of KOBIA, 145 Startup certificates have been issued, and more than 1 million manats of grant funds have been allocated for the financing of 58 projects, including startup projects. These figures demonstrate the significant efforts of the government to support the development of the startup scene in Azerbaijan.
The achievements of Azerbaijani startups over the past few months confirm not only their potential but also the importance of state support for their development. With this support and the efforts of young entrepreneurs, Azerbaijani startups have every opportunity to realize their ideas and turn them into successful businesses.
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