Over the last year, numerous investors have mentioned Armenia as a place to watch, particularly for European startups looking for advice on how to scale to North America.
With a population of around 3 million (less than the population of Berlin), the smaller domestic market leads many startups to expand into the US to support their growth quickly.
What's more, if you dig beneath the surface, you find an innovation-fostering ecosystem of collaboration where early-stage founders can often draw on the advice of later-stage, successful business leaders as part of the community.
A culture of collaboration
I spoke with Alex Pavlov, Partner at early-stage tech VC, RTP Global.
He shared with me how many large companies with Armenian founders — such as Picsart and ServiceTitan are fuelling the next generation of Armenian startups:
"The culture of sharing and helping is extremely strong in Armenia., Even when the people are leaving Armenia, they always come back, they share."
The founders have created the rails. And those rails are used by the companies that follow to launch their businesses in the US.
Everything from 'how do I start a company, who are my advisors, who are my investors, who will support me on the legal side?'"
From 2020 to 2022, investments in Armenian startups reached $48 million. Last year’s investments were $21 million.
Some of Armenia's most successful startups
ServiceTitan is a scaleup founded in 2012 that developed a platform to streamline operations, improve customer service, and drive growth for customers with plumbing, HVAC, and electrical services businesses.
It's raised $1.1 billion in funding and achieved unicorn status — Armenia's other unicorn is the online photo and video editing app company Picsart, which reached a valuation of over $1 billion after its most recent funding round in 2021.
Krisp is an AI-powered software solution that removes background noise through noise, voice, and echo Cancellation. Headquartered in California, the company has raised $17.5 million in funding.
Podcastle is an AI-powered audio content creation hub. It empowers podcasters, bloggers, journalists, educators, and content marketers to transform text into audio, edit seamlessly, and achieve professional-grade sound in seconds.
Founded in 2020, it has over 10,000 users and has raised $8.8 million.
CodeSignal is a technical interview and assessment solution that helps companies identify the right candidates with the right skills—even if they don't have the "right" profile. Instead of resumes, applicants take a test as part of the interview that is later processed through AI technology and evaluated.
The company has raised $87.5 million in funding and is valued at $500 million.
SoloLearn is a free learning platform that helps millions of people worldwide learn to code. The company has raised $30.9 million in funding.
Return entrepreneurs become investors
Further, entrepreneurs who initially ventured abroad to establish businesses return to Armenia to embark on new entrepreneurial endeavours.
"They want the nation to succeed. They want to help and prosper."
There's also a concentration of investors dedicated to US and Armenian companies.
For example, SmartGate VC is a US-Armenian venture capital company focused on Pre-Seed investments in AI. The company has invested in over 18 companies since 2018. Other local investment companies include Hive Ventures and Granatus Ventures.
Startup-supportive infrastructure and international relations
In Armenia, the government is proactive in supporting tech entrepreneurship, with tech startups receiving attractive tax incentives (0 percent income tax, 10 percent flat payroll tax).
The country has a strong history of scientific innovation. The city of Yerevan was one of the five top scientific research centres in the former USSR.
"And what is now called AI, which was called machine learning. Before that was called statistical modelling, which was something that people were actively doing there in the 1960s." shared Pavlov, noting:
"Combine a scientific foundation with a startup culture, and you have something outstanding."
The migration path between Armenia talent and the US is highly advantageous for trade relations.
For example, in 2018, Armenian Deputy Prime Minister Tigran Avinyan led a delegation of government officials to ServiceTitan's California headquarters to meet with US government representatives. It resulted in investment agreements between the two countries worth $30.5 million.
The country is home to the Microsoft Innovation Center Armenia, Nvidia Scientific Research Center, and engineering offices of companies like Synopsys, National Instruments, Oracle, VMWare, Cisco, Mentor Graphics, Teamviewer, and D-Link.
Startups to watch
Founded in Armenia and headquartered in Berlin, Softr is a no-code low-code platform to enable non-technical teams to develop and maintain custom apps that automate workflow processes across HR, customer care, online marketplaces, and more.
Headquartered in Berlin, Softr has raised $15.7M in funding.
Expper Technologies is a health-tech company headquartered in the US that has created Robin the Robot, an emotional support report to help children and older people to reduce stress and anxiety during medical appointments through storytelling and interactive games.
The company has raised $2.5 million in Seed funding in January 2022.
Zoomerang is a short-form template marketplace designed for video creators, active social media users, small and medium-sized businesses, and those who want to create artsy videos on their phones.
Founded in 2018, over 30 million downloads and over 50,000 new templates are created daily on the platform.
Lucky Carrot is a Peer Recognition and Employee Engagement platform that helps teams stay connected and engaged. Carrots are sent as virtual units redeemable for gift cards.
Prelaunch measures market demand for product ideas by testing the market with an ad and landing page. The company claims the data accurately predicts the market demand for the potential product at different prices and what feedback potential customers have.
Wordbook is an all-in-one YouTube learning tool.
With Wordbook, users can easily view audio transcriptions in real-time as they listen and quickly look up definitions of unfamiliar words with just a single click. This allows users to learn new words and concepts without interrupting their viewing or listening experience.
Lead image: Photo by Levon Vardanyan