How to develop Armenia's startup ecosystem, venture capital market? Panel discussion at Orion Summit 2023

There are several important factors to change the economic situation in Armenia, to develop the private venture capital market, and the first one is financial literacy, said ANIF Deputy Director Sergey Grigoryan during a panel discussion titled "How Alternative Investments foster the acceleration of the startup ecosystem and country economic growth. The importance of VCs and Family Offices" organized as part of the Orion Summit 2023 in New York.

Financial literacy

"In terms of financial literacy, there is a lot of work to be done. When ANIF was just established, very few entrepreneurs understood what private capital investment was... Educating entrepreneurs is a big priority, it wasn't our task to do, but we had to do it, otherwise our model wouldn't work," he said.

According to him, it is also important that there should be diversity in the financial institutions in the country, and a good example of this is the stock exchange itself, in which few companies are listed. "If the private capital investment market does not develop, we will never have a financial growth market. We only have a few listed companies on the stock exchange," he said.

Find the right advisor

Speaking about venture capital market, Mark Manasian, a partner in private client services at BDO US, said that it is very important that these companies are in contact with the right advisers who will help them go through all the stages, from the beginning to exit.

"We have all the resources for all the needs of funds, because along with the growth of the fund, its needs can also change: there can be tax, insurance, consulting, digital needs. And having experience in private equity, we can serve all of those needs ... And this is where we can contribute to all stages of growth," he said.

Branding and strong ties with US

According to Yervand Sarkisyan, Covenant Venture Partner and Co-Founder at Granatus Ventures, Armenia has a very active ecosystem that is connected with the USA, but this connection, according to him, should be further strengthened.

"That connection is strong, but we need to strengthen it even more, we need to make more efforts to increase the number of companies in Armenia, we need to create more capital that will be spent on the innovation ecosystem. In order to become a visible player in this field, we need to increase both the size of existing companies and increase their number," he said.

According to Yervand Sarkisian, several things deserve attention. The first is branding. "Ten years ago, when we were just starting the foundation, Armenia was not known as a place of innovation, there were no startups. Ten years later, we see venture capitals that have invested in a number of Armenian companies," he said.

He also mentioned that today there are four Armenian unicorn companies, but it seems that little is said about them, while they should be talked about a lot, because branding is very important. "We don't show what we have," he said.

Direct air travel, investments in funds

According to him, direct air travel is also important for the development of the sector. "There is no direct connection with any American city. New York, California, London are very important," he said, adding that if you want to invite someone to Armenia, they immediately ask you how many hours the journey takes and how they can get to Armenia, and very often it is arise that difficulties arise.

Further, he said that it is also important to invest in different funds. "Capital is also very important; more capital should be invested in both private capital and venture capital. In addition, more investment should be made in finding talent. We need to bring talent from the Armenian diaspora, which is an obvious choice, we need to bring more people from the diaspora to Armenia," he said.

Legislative issues

Vardan Khachatryan, the chief legal officer of Fastex, speaking about the legislative aspect of the sector's development, said that there are still legislative problems in Armenia that do not favor private or venture capital investments. According to him, Armenia should perhaps follow the example of Delaware and localize the tools and regulations available there.

"However, it will not be easy," he said, adding that first of all, the laws are different, besides that, the courts act differently. Nevertheless, according to him, changes should be made.

Vardan Khachatryan also mentioned that the legislative regulations regarding private capital should be changed in order to create more favorable conditions for them to operate.

NEWS.am Tech is the official media partner of Orion Summit 2023.