Entrepreneurship in Armenia
Armenia is a country that’s landlocked at the crossroads of Europe and Asia. Historically the region was ruled by the Ottoman’s and the Iranians between the 16th and 19th century. The Russian empire ruled Armenia for much of the 19th century and with the dissolution of the Soviet Union in 1991, Armenia became an independent country.
Economy – Background
Armenia was part of USSR, where everything was state owned. But privatisation of state properties in Armenia began even before the disintegration of USSR. Private sector constituted about 11% of the GDP in 1990 which is the beginning of privatisation. And with the completion of privatisation in 2004 the private sector constituted about 84% of the GDP. As per world bank rankings Armenia ranked 47 in ease of doing business amongst 190 economies and the 10th easiest country in terms of starting a business. The economy grew 7.6% in 2019, which was the best in the whole of Europe.
State of Entrepreneurship in Armenia
Entrepreneurship is being developed in post-Soviet Armenia for over 30 years. The Soviet economy was characterized by a large inefficient industrial sector, most of the industries in the Soviet Armenia produced goods for the military, and in the post- Soviet period the services sector and trade grew because the industry could not adapt to the new economy. Agriculture also grew as a form of self-employment for most during the privatisation phase. Size of a Business in Armenia is measured by the number of people it employs and not by the amount of turnover it generates. Hence micro entrepreneurs and self-employed do not consider their activities as a business, as it is pursued for survival. Small and Medium businesses have a higher share in the economy than the large enterprises. The large enterprises rely on foreign capital, foreign markets and hence have been vulnerable to the ups and downs in global economies. Comparatively small and medium enterprises are focused on the domestic market and able to withstand local economic ups and downs.
The government has been attracting entrepreneurs and high net-worth individuals from outside by making the rules for incorporating and running a business very attractive, one can get a new business registered in a single day, no government fees for registering a company or renewal of the registrations, there is no minimum capital requirement, foreigners are 100% owners, no need to have local partners, no need to hire locally, the company can have all its employees from abroad and not necessarily reside in Armenia for their employment and last but not the least being the low taxes on businesses compared to most European countries.
Prominent Startup’s in Armenia
Armenia has some well-known names in the startup world. Picsart the photo editing app being on the top of the list. It was founded by Hovhannes Avoyan in 2012, and has more the 120 million users and creates a million pics a month. SoloLearn provides online courses in programming through their app. Codefights aims to solve programming problems through gamification where in users solve the problem and win points. ggTaxi is the local Uber in Armenia. Teamable helps sourcing best manpower in the labour market. Menu.am offers food delivery services.
The geographic location of Armenia ensures that it is landlocked and reliable on its neighbouring countries for movement of goods across borders, and hence bullied in to paying heft rates on logistics. Hence technology has been an attractive sector for growth, attracting large amount of foreign direct investments. Most big-name Tech companies have set up shop in Armenia, and most of the aspiring entrepreneurs and entrepreneurs are focusing on launching or running tech startups.