Business environment in Armenia: challenges and hopes
Business in Armenia with the aim of creating start-ups remains the most attractive as the South Caucasian republic has every chance of becoming a world-renown technological centered. Many reasons reinforce this like:
1- Government policies aimed at instrumental support for development ideas and scientific breakthroughs.
2- Strong pool of highly skilled workforce, as well as a stable basis for the revival of the technology sector which was historically strong since the Soviet era.
3- Tax incentives are conceived for doing business in Armenia in the form of start-ups — 0% income tax for the first three years of activity, provided that the registered company has less than 30 employees and was not formed as a result of the reorganization of a legal entity or an individual.
4- Representative offices of many world technology corporations — Mentor Graphics, Microsoft, National Instruments, IBM, Synopsys, etc.
5- Armenia’s high ranking in terms of Ease of Doing Business (7th in the ranking, according to the World Bank Doing Business assessment) is particularly due to robust steps towards eliminating corruption and bureaucracy. Today it is possible to register a company in Armenia remotely in 1–3 working days.
Founders including small local companies need to focus on new products that could be of interest to larger-scale organizations, to ensure consistent and lasting impact in the market. Additionally, it is important to have a well-versed business plan to support its development and keep the quality considerations of the new product.
How can Government support and develop start-ups?
Once starting a business in Armenia by registration of a new start-up, foreign investors and businessmen are guaranteed to receive full investment protection at the state level. Additionally, the opportunities for international cooperation in science and technology parks are expanding: venture funds and business angels are expanding in Armenia.
The Armenian technology sector is considered an ideal platform for research and innovation. As a result, Indonesia has already praised the small Caucasian republic in the field of technology, in 2019, an agreement was signed between Yerevan and Jakarta on the interaction of science and technology parks of the two countries aiming to establish new and expand existing business incubators.
Within the framework of the UMEX / SimTEX 2020 exhibition, the Minister of High-tech Industry of Armenia, Mr. Hakob Arshakyan visited the UAE and discussed issues of cooperation in the field of navigation systems based on artificial intelligence. Also, Armenia presented the “Soldier of the Future” project to the UAE authorities, aiming to combine the efforts of the two countries for introducing high technologies in the sphere of defense and military industry. Besides, the government’s agenda includes a package of regulations for the crypto and blockchain industry.
Research laboratories- the cornerstone of the equation
According to Armenian PM Nikol Pashinyan, it is necessary to take urgent anti-crisis measures with the implementation of development and reform programs in all sectors, including social security. Reforming the economy will clearly require innovation to ensure the competitiveness of the state at the global level, which provides increased opportunities for future and existing start-ups.
In this regard, Armenia benefits from the presence of research laboratories. It is notable that the country’s potential is recognized by a number of European countries and the United States, which willingly extend support to this South Caucasian country. For example, the SMEDA project, funded by Germany (Federal Ministry for Economic Cooperation and Development) and the EU, supported the establishment of a start-up academy, which became the cradle and a solid foundation for many businesspeople.
Funding of Armenian start-ups
Latterly, a range of projects was launched in the country, they aim to detect and support, especially financially. Armenian government supports start-uppers. A cooperative program between the Ministry of Economy and the U.S. Civilian Research & Development Foundation, named STEP (Science & Technology Entrepreneurship Program), was created in 2006 to help entrepreneurs and scientists create innovative products and promote them. Being sponsored by STEP, enterprises can not only receive consulting assistance but also financial help worth 6000$.
There are few venture funds in Armenia, but Armenian start-ups are created for the global market which eases the attraction of investments.
It is the first venture capital firm in Armenia. It was established in 2013. Its offices are located in Yerevan, London and Singapore. Among the most famous projects of the fund are Menu Group, ggTaxi and News Deeply which specializes in creating and maintaining websites that are dedicated to one specific problem.
This fund was established in 2014, in California, the US. The founders of which are Armenians, It doesn’t only provide financing but also helps with mentoring from the lead professionals from Silicon Valley. You have to be a technological start-up from Armenia to receive support from the fund. Examples of the most interesting projects, which are financed by the fund are Gecko Robotics, which offers solutions for the industrial area. Discotech — an application, in which you can get information about all of the events and parties in the city, book a table in a nightclub, get a discount, or even a free entrance to a party.
SmartGateVC is a Silicon Valley pre-seed venture capital fund backed by Tim Draper and a network of entrepreneurs and professionals from the US, Europe, and MENA. It focuses on deep tech: Artificial Intelligence (AI), Security, Internet of Things (IoT) and emerging Computational Biotech, Quantum Computing, and Blockchain across California, Massachusetts, NYC, Armenia, and wider Eastern Europe. The Armenian branch of the fund was created in 2017 on the initiative of Ashot Arzumanyan, Hambardzum Kaghketsyan and Vazgen Hakobjanyan.
Incubators and accelerators
They help start-uppers to launch and develop their projects. Some of them support entrepreneurs by mentoring and coaching, and others offer financial aid or help to find financing.
The center was co-founded in 2011 by USAID, Microsoft Corporation and one of the major business incubators of Armenia — the Enterprise Incubator Foundation. It targets projects and events that include educational programs for innovative start-ups.
There is a program of start-up acceleration for those who think about creating their own start-ups. Entrepreneurs are helped on how to form an idea and evaluate how feasible it is; promote a product on the local and global markets, they are also given a possibility to find financing for a project through venture capital funds and investors.
The accelerator is created and works supported by the United Nations Development Programme. It is interested in projects related to agriculture and recycling food waste, in start-ups whose final product will improve the quality of life in the region like the green economy, innovative start-ups concerned with govtech, edutech, fintech and projects that will help to the at-risk population groups.
It was founded in 2012 within the World Bank Enterprise Incubator project. Projects of the incubator cover all the important IT-industry aspects. On the company level, the incubator strives to detect sustainable business ideas and turn them into functional start-ups. On the government level, the incubator promotes the idea of e-governance and helps to form the national brand of Armenia as an IT-state. The incubator is a partner of a range of international companies and organizations.
It is an incubator of the American University in Armenia (AUA), helping students, alumni and other entrepreneurs to develop and promote their projects from an idea to functional products. The center offers a co-working space, specialized programs and events, communication with coaches, consultants and mentors.
It specializes in technological entrepreneurship and has masterminded Al Incubator — a 26-week incubation program, in the framework of which, the representatives of technical companies work with students of leading universities. Projects are dedicated to such topics as cryptocurrency, robot technics, marketing automation, cyber-security, quantum calculations, media and computational biology.
Armenia Start-up Academy is one of the Catalyst Foundation’s initiatives, it is a game-changing entrepreneurship and startup education program, which aims to prepare startups to raise their pre-seed rounds and expand to global markets through its Pre-acceleration and Traction programs. The Academy launched in October 2017 with the support of the “Support to SME Development in Armenia” (EU-SMEDA) Project within the EU4Business initiative.
Hero House is another initiative from the Catalyst Foundation, It is basically an innovation hub in Yerevan, Armenia, aims to enable more heroes to spread freedom, progress, and change in Armenia and the world through a creative environment to keep the entrepreneurial spirit of hero teams burning.
Hero House in Southern California is an expansion. It is an entrepreneurship hub in Glendale, CA that combines the scientific potential of local leading universities with the expertise and network of business leaders in entertainment, aerospace, bioscience, and advanced transportation located in the Los Angeles area.
A Yerevan branch of the world’s largest independent start-up that is sponsored globally by Google. It unites more than 2, 000, 000 entrepreneurs.
It was created in April 2018 by the initiative of the largest TV-broadcasting company in the state — a Closed Joint-Stock Company (CJSC) “VEON Armenia” (Beeline trademark). It helps Armenian start-ups with trainers, mentors and investors that work in the digital industry. Plans specialized events for innovative entrepreneurs like workshops, learning courses and etc.
Originally published at https://www.linkedin.com.