Financing start-up projects and analyzing the financing mechanism
Doston Turgunov
1
, Sherqulov Shokhruh
1
, Ganiev Bakhtiyor
1
and Suvpo’latov Ozod
1
1
Tashkent State University of Economics, Islom Karimov Str. 49, Tashkent 100066,
(d.turgunov@tsue.uz, sherkulovshokhrukh@gmail.com, baxtiyor.ganiyev@bk.ru,
https://doi.org/10.5281/zenodo.10467696
Keywords:
innovation economy, industries, startup projects, efficiency, reforms, financial support.
Abstract:
The article examines new opportunities and prospects in innovation activities. The number of start-up projects
over the past five years. Analyzed the development of start-up projects in the Republic of Uzbekistan and the
main sectors for sustainability and development of innovative technologies. Analyzed modern and scientific
practical literature. Influence of innovation on economic factors was studied. Also the basic criteria in the
development of innovative economy were studied..
1 INTRODUCTION
The Republic of Uzbekistan is a landlocked state
located in Central Asia with an Atlas-estimated GNI
per capita in current prices of $2,040 in 2018. It had
a population of 33.2 million as of January 1, 2019,
with an area of 447,000 square kilometers. GDP
growth in 2018 was 5.4%. The economic outlook for
Uzbekistan remains positive with projected growth of
5.6 percent in 2019 and high rates by 2025 based on
strong investment growth and a deepening reform
program. Up until now, the republic has relied heavily
on natural resources, mainly energy and water, which
raises concerns about their long-term sustainability.
Uzbekistan's exports of food, textiles, other
manufacturing products and services are expected to
increase in the coming years, while gas and mineral
exports are likely to decline given rising domestic
demand and falling world commodity prices.
Uzbekistan also faces another development challenge
related to the creation of new jobs due to its rapidly
growing labor force. This will require, among other
things, an accelerated transition from a state-
dominated economy to a market economy dominated
by the private sector. The public sector will not be
able to create the large number of jobs required to
meet the needs of a rapidly growing labor force,
which is projected to continue to grow through 2040.
Thus, private sector development and investment are
critical to job creation. As we know, extensive
structural reforms began in Uzbekistan in 2017. They
included, among others, unification of the som
exchange rate, liberalization of the foreign exchange
market and visa regime, strengthening the
independence of the Central Bank, assessment of the
sustainability of the banking sector, implementation
of financial recovery plans in key state-owned
enterprises, price liberalization, resumption of the
WTO accession process in December 2018,
significant tax cuts from January 2019, and new
legislative provisions to promote competition and
public-private partnerships. Authorities are still
committed to their goal of achieving high-middle
income per capita status by 2030 by increasing the
competitiveness of the economy, improving the
business environment, and developing infrastructure
to support rapid job creation. In connection with the
above-mentioned data we can say that the chosen
topic is considered relevant
2.
METHODS OF MODELING
SOLAR BATTERY
In the modern scientific and practical literature,
the main emphasis in many studies of "start-up is on
the problems of management, development of new
biofuel models, and motivation of people. Among
such literature are E. Ris "Business from scratch: The
Lean Startup Model in Checking Ideas and Choosing
Business Models", S.Weitz and Bafiy Freud "Startup
Opportunities: Know When to Quit Your Permanent
Job", S.Blank "Startup: A Workbook" and Yu
Appelo, D.S Rouse, E.Brigman, S.Fisher or N.Duane,
T.Hogan and K.Broadbent.
We can give an example of Kawasaki's books [1].
In many publications, including scientific literature,
at scientific conferences the topic of startups is
rapidly discussed. And the fact that new sources of
development and funding are appearing confirms that
this direction is promising. But not all authors
succeed. Only those who are unconventional in start-
up projects, offering solutions for themselves, will
receive this honor.
Theorist and scholar-practitioner E.Ris says that
the problems in start-ups are the old management
vision and the lack of financial support. A lot of bad
luck will be a hindrance to any success: products are
removed from the shelves in a couple of weeks. The
author suggests using the "cost-effective startup"
method (The Lean Startup) in finding a solution to the
problem. According to him, creating a short-term
product offers a method that does not require a lot of
initial funding, based on its verification.
Startups refer to organizations that arise with high
maneuverability in terms of adapting to changes in
the market, as well as flexibility and dynamism
supported by technological tools that have
revolutionized business forms, product concepts and,
mainly in the provision of these services [2].
I also propose this approach to start-up: a start-up
is an innovation that has not existed before, or has
been rediscovered, or otherwise has a unique change
that is unlike its predecessors, differs by at least 50%
and has high efficiency in that direction.
3.
Results
The research on financing trends of start-up
projects is based on the main sectors of the start-
up economy and the volume of their financing.
There is no doubt that start-up projects began to
form and participate in these types of innovative
developments. It has been only a year since the
Ministry of Innovative Development of the
Republic of Uzbekistan created the Department of
start-up projects within its structure [3].
If we trace the history of announcements issued
for start-up projects, based on data from the
Ministry of Innovative Development, there was
one competition for start-up projects in November
2018. By 2019, the number of competitions for
start-up projects reached 2 announcements. In
2020 there were 3 start-up competitions, in 2021
there were also 3 start-up competitions. In the
period up to May 2022 the number of competitions
for start-up projects reached 7. We can see a graph
of competitions held on start-up projects in
Diagram 1.
Analyzing this indicator, we see that in 2022
the number of competitions held increased
compared to 2018 - by 7 times, compared to 2019
- by 2.5 times, compared to 2020 and 2021 - by 2.3
times.
If we look at the funds allocated to start-up
projects [4], in 2021, 56 start-ups were
recommended for financing projects in their local
and international competition for a total amount of
41.4 billion sum.
The proportion of proposed start-up projects by
sector and section of the economy is 15 billion sum
in the agricultural sector, 9 billion sum in the
health sector, 12 billion sum in the information
technology sector, 8 billion sum in the transport
and energy sectors, 3 billion sum in the food sector
and 9 billion sum as a result of implementation of
these projects it is planned to create 685 new jobs
in total.
Diagram 1. Number of startup competitions
announced by the Ministry of Innovative
Development
Source: Innovation was compiled by the author
on the basis of data from the Ministry of
Development
In 2021, more than 1,600 projects worth 407.1
billion sum were financed under the project of
initiative budgeting. The largest number of
proposals from citizens was on repair of internal
roads (408) and educational institutions (367),
construction of drinking water supply, sewerage
and irrigation systems (131), street lighting (115).
0
2
4
6
8
2018
2019
2020
2021
2022
Number of startup competitions announced
by the Ministry of Innovative Development
In February-March 2022 in the process of
active participation of citizens on the platform of
initiative budget 69.7 thousand proposals were
received, most of which account for repair or
construction of internal roads - 17.2 thousand
(25% of all initiatives), schools - 10.1 thousand
(15%), pre-school educational organizations - 4.4
thousand (6%). Citizens also sent proposals related
to repair or installation of lighting systems,
drinking water supply, playgrounds, repair of
mahalla buildings, gas and electricity supply
sphere, and others (Fig. 1).
Fig. 1. Proposals received by sphere
Source: https://openbudget.uz/ru/boards/4
DISCUSSIONS
Currently there are a number of works on the
development of start-ups in Uzbekistan. In order to
form a start-up culture and create new jobs in
innovative spheres, on April 5, 2021 a competition
was announced on the topic "start-up projects
aimed at solving problems in innovative spheres".
According to the competition, a total of 131 start-
up projects were submitted by the ministry [5] for
consideration and funding. In particular, 14 from
Nukus district of Karakalpakstan, 12 from Bashi
Andijan regional district, 5 from Romiton district
of Bukhara region, 9 from Altyarik district of
Fergana region, 13 from Friendship district of
Djizak region, 19 from Gurlan district of Khorezm
region, 5 from Chust district of Namangan region,
2 from Karman district of Navoi region, 1 from
Nishan district of Kashkadarya region, 14 projects
were submitted, 3 from Altynsoy district of
Surkhandarya region, 19 from Melonaron district
of Tashkent region. As a result of the contest, 29
start-up projects worth 20 billion sum were
recommended for financing. Particularly, sum 3
billion from Nukus district of Karakalpakstan, sum
0.8 billion from Romiton district of Bukhara
region, sum 1.9 billion from Ferghana region, sum
1.6 billion from Friendship district of Djizak
region, sum 2 billion from Gurlan district of
Khorezm region. Sum, 3 units worth 3.4 billion
sum from Chust district, 3 units worth 1.1 billion
sum from Syrdarya district of Syrdarya region and
2 units worth 1.3 billion sum from Altynsoy
district of Surhandarya region. As a result of
consideration in the competition, 4 projects worth
4 billion sum from Ahangran district of Tashkent
region were recommended for financing.
In order to further develop the wine sector in
our country, July 10, 2021, according to the results
of the contest of start-up projects on the theme
"Innovative ceramic and leather ware for
production and packaging of wine products", 1
start-up project worth 0.3 billion sum was
recommended for financing.
In order to increase the share of start-up
development in the areas of copper industry,
viticulture
[6],
silk
and
wool
industry,
biotechnology and medicine, renewable energy,
agriculture, information technology in our country,
a "contest of start-up projects in new promising
areas" was announced on November 1, 2021.
According to the contest, a total of 132 start-up
projects were submitted by the ministry for
consideration and funding.
CONCLUSION
Uzbekistan managed to promptly take the
necessary measures to overcome economic
difficulties in 2022, but next year will bring even
greater challenges, which must be reckoned with
and responded to, without resorting to the old tools
that have ensured strong growth in the past. The
slowdown of the economy. In 2022, Uzbekistan
was benefiting from the current situation, but next
year it will have to face the negative effects. For
example, recession in the Russian economy will
negatively affect Uzbekistan through foreign
trade, investment and migration flows. If we take
into account the fact that Russia is the main foreign
trade partner of Uzbekistan in 2021 and for the first
11 months of this year, the deterioration of the
economic situation in Russia will not bypass our
country. In 2023 the ratio of the total fiscal deficit
to GDP may reach about 4-4.5%. In 2024, there
will be grounds for forming this ratio near 3.5-4%,
while in 2025 it will be near 3%. Under this
scenario, consumer demand in the economy will
be at a lower level compared to the main scenario,
and the inflation rate, taking into account the other
factors mentioned above, is projected to be about
7-8% next year. If this scenario is implemented,
the Central Bank will maintain "moderately tight"
monetary conditions until the end of the forecast
period to ensure a balance between price stability
in the economy and support of economic activity.
The formation of positive real interest rates at the
money market will create opportunities to reduce
the pressure of external risks on the exchange rate.
At the same time, given the likelihood of a
decrease in foreign exchange flows and pressure
on the exchange rate of the national currency,
proposals are being prepared and measures will be
taken to reduce the effect of the exchange rate
changes transfer on prices within this scenario.
REFERENCES
[1]
1. Ries, E. Business from scratch: Lean Startup
method for quick testing of ideas and business model
selection / E. Ries - M.: Alpina Publisher, 2020. - 255
с.
[2]
Kim, 2005; Spender et al., 2017
[3]
https://invest.gov.uz/wp-content/uploads/Perspektivnye-
proekty-2020.pdf
[4]
https://www.spot.uz/ru/2022/12/31/economy/
[5]
Appelo, Ju. Startup, scaleup, screwup / Ju. Appelo. -Wiley,
2019. - 240 p.
[6]
Appelo, Ju. Startup, scaleup, screwup / Ju. Appelo. -Wiley,
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