Reasons Why You Should Start a Business In Armenia

Are you ready to take the plunge into entrepreneurship?

Are you looking for a unique opportunity to build a business in a foreign land?

If so, consider starting a business in Armenia.

In 2022, the former Soviet Union was the spotlight due to Russia’s military invasion. Armenia turns out to be its very neighbor.

In this blog post, I’ll discuss the advantages of starting a business abroad and provide tips on how to make it successful with a real-life case study from Armenia.

Whether you’re looking for a low cost of living, a new life abroad, or simply a challenge, Armenia is an ideal place to launch a business.

Read on to learn more!

Change in the Global Startup Ecosystem

9/10 businesses fail in the first 5 years.

That's what my university business professor told us on our first day. This shocking statistic should be enough of a motivator for us to do everything possible to make our business succeed. We can't control everything, but we can put ourselves in the best position to win.

Thousands of young people flock to Silicon Valley year after year dreaming of becoming the next Elon Musk.

True, the city offers an opportunity to grow your network with other professional young entrepreneurs. A large number of venture capitalist events are equally appealing. Don't mention the simple cool factor of you can tell your friends back home you're moving to the "Bay Area" (which is not equal to success).

What so few young engineers realize is that they're doing the same thing as the thousands of people entering LA to become the next Dwayne Johnson. What is the odd, you may say? That's just the sad truth of the Valley. There're just so many competitions.

One more investor the city offers, a hundred other entrepreneurs, like you, are asking for their cheques.

Knowhow Myth

Back in 2012, as I was developing iPhone app by watching Stanford lectures on iTunes, I believed all the startup magic formula was locked inside that campus and its neighbor. Google was born out of Stanford. Peter Thiel (PayPal co-founder) was offering startup lectures on the campus.

The world stood as if to shout; if you want to know where the world is going, look to the West.

In 2022, however, startups have moved on.

Startup knowledge has since been spread all over the world.

That very Mr. Thiel made a public claim the next Google won't come out of Sillicon Valley anymore.

Y Combinator (YC) is by far the most successful incubator in the world with successful candidates ranging from Airbnb to Coinbase. Since 2013, it's been offering educational materials on YouTube which was previously only offered to the internal community. YC's very founder Paul Graham has written 212 essays since the 90s freely available on his website.

If that's not enough for your preparation, you will go to the bookstore's Startup section and find heavy-duty information ranging from Lean Startup to Zero-to-One to Blizscaling, which were all written by very notable founders (ie: Reid Hoffman of LinkedIn).

It does not stop there.

Startup institutions have been booming globally. With options from Bangalore to Seoul, startup incubations are widely accessible. They provide members with mentorship opportunities, regardless of nationality.

What this tells us is that the venture capital and startup know-how that produced Silicon Valley giants like Google has been spread out, opening its door to any of us who's willing to learn and take action.

The Armenian Startup Ecosystem

"Starting a company is like jumping off a cliff and assembling a plane on the way down." - Reid Hoffman

Now we've got rid of the common stereotype of the geographical advantage of Sillicon Valley, let us look into the case study of Armenia.

Armenia is a post-Soviet country, located in the west end of Asia with a population of fewer than 3 million people.

You might have heard of Armenia because of the recent Armenia-Azerbaijan Conflict.

But you want to ask why would anyone start a company in this faraway country?

Armenia is often overlooked as a potential startup destination due to its geographical location. However, Armenia has a lot to offer startups in terms of its ecosystem. In this case study, we will explore the potential of Armenia as a startup environment in conjunction with my personal experience as part of JICA (Japanese International Cooperation Agency) program this summer.

Highly Connected Professionals

"Starting a business is not for everyone. Starting a business - I'd say, number one is to have a high pain threshold." - Elon Musk

One of the hardest things that today's entrepreneurs are facing is the difficulty to find good engineering talents. If you have the luxury of enlisting fat salary capital to outcompete Google, by no means, go for it. But, if you're like most startups that are tight on budget, you'll have to get creative to find the right engineers for your team.

A great way to start is to find someone from your personal connection who believes in your vision and character. But many of your friends have student loans or family responsibilities. They cant simply afford to jump on the wobbly wagon.

What can we do about it?

The answer lies in the power of community.

Located on the outskirts of downtown Yerevan is the Tumo Center. It is a nonprofit job training center for youth with an active enrolment of 20,000 per given time. Equipped with the newest Mac and designers' desks, the motivated young would grow out of this modern facility talented and ready to enter the job market directly.

To give you a precise idea about the material they teach, here's what the web development instructor told me. He teaches HTML, CSS, JavaScript, PHP, and SQL database. Their program seems to be designed after the modern bootcamp program, except that it's offered all for free to the students, while the US bootcamp easily costs $20,000. Other teachings include game design, 3d modeling, animation, etc.

The educational curriculum is so practical that our guide has told us what is challenging to them is to push the kids to continue on university education. I mean why would you if you can make $24,000/year right out of highschool (remember, the cost of living in Yerevan is 1/10 of San Francisco).

What makes Tumo Center unique is its volume of graduate network. with its 20,000 active enrolments. To put that in scale, Nucamp, one of the most highly rated coding bootcamp in San Francisco, has enrolled cumulatively 10,000 students since 2019. Tumo Center has double the graduate count.

The emotional bonds between classmates of your youth cannot be transported to an adult coding bootcamp. Tumo Center is like your high school alumni group, except that this time you guys all went into an industry-standard ready-to-work environment. Needless to say, people there are extremely well connected. Each one of them can reach one another and potentially find someone to work with.

As a startup founder, you will have the opportunity to connect with other ambitious young engineers who have graduated from this center. This can be a valuable resource for finding talented and driven team members for your startup.

Investor Connection

“It's not who you know, it's who knows you.” - Unknown

Numbers do not lie.

Armenia's investment per million capita reached $66m in 2021-2022. That's almost twice as high as that of the third biggest economy Japan ($37.5m). Who expected this much money to flow into that country?

Ok, the macro is there. What about the ease of access? It's pointless if the money is locked under corruption. The key to getting your foot in the door of the venture capitalist is through the web of mentorship.

Shane Snow, the author of Smartcuts, believes that informal mentoring is more valuable in a career outcome than formal mentoring, when it comes to your career outcomes.

When you go to San Francisco or any other major startup hub, you start from ground 0. You will be attending events, possibly incubations alongside 1000 other entrepreneurs. Only when you raise $10 million and get yourself covered in TechCrunch will people acknowledge you as somebody.

When you start a company in Armenia, you might be able to skip a few hoops. Why? Because there're so few foreigner entrepreneurs, you'll inevitably stand out. And the Armenian business ecosystem is welcoming to outsiders. You might be able to tap into the Armenian American diaspora network as part of your startup journeys.

On the trip with JICA program, we had a chance to discuss with the highest deputy of the Ministry of High-Tech Industry. I threw him a question regarding my above startup hypothesis:

• Me: What if people start a business in Armenia to connect with diaspora abroad?
• Deputy: That's a great strategy! You have a much better chance to Kim Kardashian or System of Dawn crew (both Armenian descendants) here in Armenia than in the US. You can pitch your business idea to them.

Why would he say that? Because Armenians take their diaspora network damn seriously.

Israeli has made its name as a successful high tech startup country. The notable one being Waze and Wiz.  In the book Startup Nation, Dan Senor dedicated an entire chapter on the diaspora: "Israel owes much of its success to a deep Diaspora network". Armenia is no different. In fact, the government even started its own official diaspora association in 2019.

The love of helping their motherland is real.

As a foreigner, you're interested in revitalizing this small country to bring it up to the world level. Therefore, you need funding. You would not be disappointed in the amount of attention you'd draw.

Dynamic Landscape

"Innovators are in the business of sharing...The secret of the modern world is its gigantic interconnectedness. Ideas are having sex with other ideas from all over the planet with ever-increasing promiscuity. The telephone had sex with the computer and spawned the Internet." - Matt Ridley

One day, I was following the Google Map in the city center of Yerevan, the capital of Armenia, for the latest highly reviewed hipsta coffeeshop. When I finally arrived, I was welcomed by someone who didn't speak English. Armenians are usually quite fluent. It turned out everyone from the staff to customers in the coffeeshop was Russian.

Since the war between Russia and Ukraine in February, many Russian tech companies have relocated to this former Soviet country to handle internet infrastructure and online transactions. They've brought along 142,000 well-educated hightech engineers.

Armenia is one of the most monoethnic countries in the world (98%). As it developed its unique tradition, it's no surprise that the country is not accustomed to contacting diverse cultures. However, this is starting to change with a recent influx of immigrants. Armenians will be exposed to new ideas about technology, workstyle, fashion, and lifestyle. This can be both confrontational and rewarding for Armenians. But for you, as an entrepreneur who is all about bringing in change to the world, this is welcoming news.

Wait. The stage for cultural proliferation does not end with the Russians.

In fact, the multiple developments of foreign government agencies has been shining the spotlight on this country. The mentioned JICA program I was part of had a program of bringing and connecting private Japanese money to this country. The very Japanese Embassy of Armenia itself only opened in 2016.

The Canadian government is also investigating this region. It announced this June it will open a full embassy in Armenia to support stronger bilateral ties. This country is only now starting to open up to the world.

If you want to be successful with your startup, you need to be willing to offer something strange and noble that the market will accept. But not all markets want to experiment with your idea. In a dynamic society like Armenian, there are plenty of opportunities to do just that. If you can sell your great innovative products, you'll find the customers you need.

The World is Full Of Opportunities

"My doctrine says, the task is to live your life in such a way that you must wish to live it again - for you will anyway" - Friedrich Nietzsche

The Internet has gifted us with a flat world, where information flows from left to right for anyone to grab. If you're motivated, you can learn all the startup know-how you need.

At the same time, the cost of flying has been historical low. Working at Uber for a month will get you a trip across the world. Don't be held back by your birthplace

Entrepreneurs are the people who're excited about this new wave of opportunities. They want to dive into the unknown. While the ordinary sees risk, entrepreneurs see the appeal. Moving to an unknown territory is not only about building a successful business. You're ultimately giving yourself a chance of rebirth.

Armenia is a fascinating country that is often overlooked by business personnel. It is a land of contrasts, with its own unique history and culture. Armenia will be a great choice for your next adventure.