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Doing business in Armenia։ a perfect timing for startups

The current economic situation in the context of the global recession may be seen as a new opportunity for the development of new start-ups in those regions that are most prepared in material and technical terms. Therefore, business in Armenia with the aim of creating startups remains the most attractive as the South Caucasian republic has every chance of becoming a world-renown technological center.

There are several reasons for this: active government measures aimed at instrumental support for development ideas and scientific breakthrough, a strong pool of highly skilled workforce, as well as a stable basis for the revival of the technological sector which was historically strong since the Soviet era. At the same time, tax incentives are envisaged 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.

Attention: if you would like to receive quick and professional assistance in opening a bank account (corporate and/or personal), registering a company in Armenia or another country, you are encouraged to contact us immediately at  info@offshore-pro.info or via online chat. We will be happy to respond to all your questions and provide clarification related to immigration, incorporation or relocation, banking services, including remotely. We are able to provide you assistance in selection of real estate, arranging a sale and purchase transaction distantly, without requiring your personal presence in the country.

Doing business in Armenia – rapid development of existing and new startups in Yerevan

Some Armenian startups have already gained world-known reputation, and over time these companies increasingly have strengthened their positions, demonstrating steady growth and development. Here are some of the many success stories:

  • Krisp – the well-known real-time noise reduction application (during the pandemic, especially in view of increased number of users working remotely, the number of downloads grew by approximately 700%);
  • PicsArt  – video, photo editor,  developed and launched in 2011 (currently available in 30 languages worldwide, ​​for Windows , iOS and Android);
  • SoloLearn  – social mobile application  (since 2013);
  • IntelinAir –  application for the agricultural industry which allows you to identify and eliminate problem areas for the farmers;
  • Vineti  platform for the correct selection of the treatment process based on advanced technologies.

Read more about these large-scale developments by Armenian startups and researchers in this article.

New development from Armenian Expper Technologies  – a robot named Robin, which allows children to adapt to clinical conditions and not be afraid of doctors, is another remarkable startup deserving special attention. At the moment, the startup has been tested in one of the private clinics in Yerevan, and aroused interest from the United States, which are ready to test the device in their own medical institutions. According to the founder of the company, Karen Khachikyan, two practicing psychologists took part in the development of the robot in order to create a device that maximally understands the psychology of children, is able to recognize emotions and remembers conversations with a specific child in order to avoid repetitions.

According to the software developer of the project Areg Gasparyan, the achievement today is based on four years of extensive work, aimed at educating Robin to go beyond just soothing functionality  in hospital conditions, and be able to assist in education purposes. Doctors who have used the startup in their clinic report that it is much easier for Robin to establish rapport with children, including those with disabilities or serious diagnoses. In the United States,  clinics in California and Massachusetts will be the first to host this nanny robot.   

Doing business in Armenia – comprehensive development and support at the government level

Upon 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. In addition, the opportunities for international cooperation in science and technology parks are expanding: venture funds and business angels are expanding in Armenia.

Having analyzed the available information on the Armenian technology sector, we can confidently say that this is an ideal platform for research and innovation. Indonesia has already explored and praised and advantages of the small Caucasian republic in the field of technology, and 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.

At the same time, the international technology company DataArt Solutions is interested in cooperation with Armenia, given the vast prospects and opportunities of the IT sphere and technologies of the financial (fintech) sector). DataArt will focus on sectors such as media, finance, travel and healthcare.

Also at the end of February, the Minister of High-tech Industry of Armenia, Mr. Hakob Arshakyan visited the UAE, within the framework of the UMEX / SimTEX 2020 exhibition, where issues of cooperation in the field of navigation systems based on artificial intelligence were discussed. In addition, Armenia presented the “Soldier of the Future” project to the UAE authorities, aiming to combine efforts of the two countries for introducing high technologies in the sphere of defense and military industry. 

In the coming months, the government’s agenda includes a package of regulations for the crypto and blockchain industry. During the period of quarantine and a state of emergency, the government organization that proposed the package of regulations, together with the authorities, is remotely finalizing the package in order to bring it to parliament in April-May.

Doing business in Armenia – what are the benefits of startup founders in   Armenia?

Why it is recommended to choose Armenia for doing business as a startup? The following is the non-exhaustive list of undeniable advantages that the country offers:

  • Skilled workforce – in many Armenian schools, children study robotics (in 2017, 15% of schools on the territory of the country included this specialty in their curriculum within the framework of the Armath Engineering Laboratories  educational program); also, there is a US-accredited American University of Armenia providing educational services in the country, with a diploma recognized at the same level as a diploma issued in the USA);
  • representative offices of many world technology corporations – Mentor Graphics , Microsoft , National Instruments , IBM , Synopsys , etc;
  • there are popular Google resources on deep learning in Armenia – with the YerevaNN A 1 webpage (artificial intelligence research laboratory) leading the top list;
  • Armenia’s high ranking in terms of Ease of Doing Business (7th in 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;
  • worldwide recognition of Armenian developments – in addition to the above startups, we should also note the Shadowmatic puzzle game from Triada Studio Games , which won the Apple Design Award in 2015;
  • in 2019, for the first time in its history, Armenia entered the list of countries in the OECD Foreign Direct Investment Regulatory  Restrictiveness Index rating   (10th in ranking, among 69 countries);
  • according to the ratings of the World Intellectual Property Organization, in 2019, the Armenia ranked the 64th in the Global Innovation Index (among 130 countries).

By starting a business in Armenia, foreign investors and businessmen not only benefit from perfect platform with their own eco-system , but also impressive opportunities for collaboration. A striking difference between Armenia and other technological hubs is the ability to successfully combine software development with research activities. Today, there is a startup incubator in Yerevan and the country offers all the possible opportunities for attracting additional financing (entrepreneurs’ funds serving as intermediaries between foreign investors and startups).

Doing business in Armenia – the best ideas for startups in 2020

In the current environment, the development of startups can be perceived as a safe harbour for private assets and capital. Considering the macroeconomic situation amid the pandemic, experts predict large-scale technological developments and the emergence of a large number of startups, including the field of education and innovation. According to Armenian Prime Minister 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. Restructuring of 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 startups.

In this regard, Armenia benefits from the presence of research laboratories. It is also worth noting 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 startup academy, which became the cradle and a solid foundation for many businesspeople.

In 2018, a network of business angels STAN ( Science and Technology Angels Network ) was created in Armenia, with investments from the United States, Russia and Armenia, as well as the foreign Armenian diaspora. The STAN association is most interested in financing the following areas of developments:

  • advanced materials;
  • biotechnology;
  • microelectronics;
  • data science;
  • IT.

To ensure consistent and lasting impact in the market, a starting business in Armenia needs to focus on new products that could be of interest to larger-scale organizations. For founders of startups, including small local companies, it is important not only to have a well-versed business plan to support its development, but also keep the quality considerations of the new product in the loop. We have collected the most remarkable concepts and ideas for business in Armenia, which embody vast opportunities for development, given a fairly modest territorial span. These are, in particular:

  • alternative sources of energy, which is a global trend that has embraced literally all countries. The concepts in this direction can be diverse – from pace-powered lighting to glowing bicycles. In the USA, England and Japan, similar ideas have already been introduced, and in Armenia there are vast opportunities to develop them further;
  • robotization – Robin robot, discussed above, is a vivid example of the latest development of the Armenian startup,  not to mention the huge amount of artificial intelligence introduced into the spheres of healthcare, education, aviation, defense and other industries in the developed countries of the world. There are vast opportunities to explore in terms of developing robots to support designers, artists, representatives of agricultural industry/farmers;
  • devices and technology – today large data archives in the size smaller than an atom or the options of contactless payments are our routine reality, yet the industry of trade, logistics and transportation remains quite competitive. Here, startups for development of applications of keeping sales and delivery records, drawing up optimal delivery routes remain in high demand.

So, a business in Armenia, based on a viable concept and following several rules typical of the high-tech world, are able to bring you maximum benefit and attract interest of large-scale investors and potential clients. 

Doing business in Armenia as a startup – how to select the right idea?

Businesspeople and investors planning to register a company in Armenia in order to create a start-up should keep focus on the globally evolving needs and worldwide trends. Moreover, a completely familiar item can become a basis for exploring new ideas – for example, an ordinary car today can become a vehicle in the future without the need for human control. 

When planning a business in Armenia in order to create a startup, it is important to have a clear vision and calculate the opportunities that your company will have, including the methods of implementing a new project. It is also important to take into account those industries for which knowledge is not easily accessible. These include medical services, construction of objects of state importance, nuclear energy, etc., and it is important to become a real expert to work out a new idea in these sectors.

When deciding to incorporate a business in Armenia as a startup, the following details should be kept in mind:

  • you need to have a future-oriented mindset, think out of the box, see beyond the usual way of doing things, explore further the opportunities provided by familiar products / services, and be ready to implement them without hesitation;
  • it is important to become an expert in a particular industry, a master of a particular area or several areas. For example, the medical sector is closely connected with IT and government contracts, agriculture with retail, etc. and it is in the intersection of these industries that truly important opportunities may emerge;
  • Have an open eye to spot the issues that create discomfort in everyday life – this will become a brilliant business idea in creating a product to solve that issue, and undoubtedly this will be appreciated both locally and globally;
  • identify the weak points, both in business and in the usual daily routine: humanity is constantly in search of solutions to global issues, and  you can easily find partners who are already engaged in solving problems in the field of epidemiology, fighting hunger, alleviating poverty, etc.;
  • it is important to link an inexpensive resource with a wealthy buyer – the successful implementation of this step consists in your ability to find the skillful match of two constituents: combination of cheap labor offered by one country or by one continent with the wealth in developed countries (fortunately, e-commerce provides unlimited outreach across the globe).

Finally, we would like to recommend foreigners wishing to do business in Armenia as a start-up to take a closer look at the experience of other countries and developers – in many cases a new startup is an old idea – skillfully copied and improved. A simple example is the UniFashion project from a Russian student who decided to introduce uniforms in his country, following the example of Californian students.

If you need to establish a business in Armenia, we can help you register a company remotely within 1-3 business days. Additionally, we will help you open a bank account, select a real estate object (including a land plot), send a request to the migration service to obtain a residence permit or citizenship of the Republic of Armenia. Email us at info@offshore-pro.info and we will promptly respond. Please note that practically all services are provided remotely and do not require a personal visit.

Why is Armenia attractive as a country for establishing startups?

According to expert forecasts and assessments, Armenia may well become the next technological hub in Europe thanks to its solid resources and technical base. At the same time, the state has established special tax incentives for companies and startups operating in the IT sector. In addition, the local government provides strong support in the establishment and promotion of scientific and software companies. Armenia is considered an ideal place for startups due to its highly skilled workforce and academic knowledgebase. During the first three years, new startups pay 0% income tax, unless the company is formed as a result of the reorganization of another legal entity/individual.

What are the advantages of this country compared to others?

The key benefits for creating start-ups in Armenia are:technical potential (incubators, laboratories, own ecosystem);
human resources – skilled young workforce studying robotics from the school bench (under the Armath Engineering Laboratories program); availability of American University of Armenia; Armenia ranks 7th in the World Bank’s Ease of Doing Business rating; well-known Google deep learning resources are located here (for example, YerevaNN Research Lab A 1); the developments of Armenian startups are recognized at the global level; there are representative offices of well-known global corporations in the technology sector.

Why is it profitable to invest in Armenian startups?

Europe and the United States have fully assessed the potential of Armenia are already directing investments in new developments in Armenia. The rapid development of a startup can be achieved due to the low staff costs: in comparison with, say, California or Switzerland, the Armenian costs are significantly lower due to the low cost of living in the country. New startups in Armenia are focused on the interests of large-scale organizations. There are more than 15 well-known developments that have become popular around the world. These include Krisp (noise reduction software for video and audio calls), PicsArt photo editor, Vineti medical application for choosing a treatment course, SoloLearn social network , etc.

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