YEREVAN, Armenia — Armenia is a landlocked country with a historically high poverty rate. Hostile relations with both neighboring countries, Azerbaijan and Turkey, mean that travel to Armenia is restricted. The country’s lack of abundant natural resources indicates that it has never been able to capitalize on its environment. In the current economic climate, Armenians realized that developing its human capital is critical to its economy. Furthermore, the development of the tech sector would allow for a robust economy to flourish even without natural resources. With both private groups and the government encouraging the growth of the sector, the Armenian technology industry is beginning to develop rapidly. These six groups are a part of the rising tech industry in Armenia. They are integral to understanding the country’s changing economic state and transition out of poverty.
6 Groups Involved in the Rising Tech Industry in Armenia
- PicsArt – PicsArt is a photo-editing app of Armenian origin. It has more than 600 million downloads and about 150 million active users per month. Mikayel Vardanyan, a founder of PicsArt, noted that the app came from the wish to let non-creative people be creative. The start-up culture was not fully established, especially not in Armenia. PicsArt is valued at almost $1 billion due, in part, to increased human talent, technology, education and government incentives.
- 2hz/Krisp – This company created an app that works as a noise reduction software. With a background from the American technology sector, Davit Baghdasaryan chose to return to Armenia for his next venture. After initial investors and venture capitalists put more than $1.5 million dollars into the company, 2hz created the app krisp.ai, allowing clearer voice communication across many platforms. The company (renamed Krisp) is generating national interest since it shifted its focus from only noise cancellation to worker productivity. Baghdasaryan notes that Krisp’s success would not be possible if the company was founded in the U.S. The newly recruited Armenian talent will cause a rapid development in the economy.
- D’efekt – The founder of D’efekt, Nane Toumanian, understands that location headquartering is irrelevant to success in the cyberspace and tech industries. In Armenia, after years of interregional conflict between neighbors, this opportunity to develop a booming regional business is especially appealing. D’efekt, described as a “creative playground”, allows users to edit and apply various effects to videos. Though there may be many apps with the same general purpose, Toumanian realizes that charging $1-2 for unique effects that resemble art can make their app unique compared to similar competitors.
- GGTaxi – The Uber of Armenia, ggtaxi, gained significant popularity for its simplicity and easy access. The company has been able to expand across all of Armenia. After recently expanding to Georgia, ggtaxi plans to launch in Iran next. After ggtaxi’s initial success, another company rose to the forefront – Yandex.Taxi. Though Yandex.Taxi offered $4 million dollars for the ggtaxi project, estimates showed that ggtaxi is worth $5 million. For the time being, it is choosing to continue competition in Armenia.
- Aybuben Ventures – Aybuben Ventures is not a traditional company resulting from the Armenian technological boom. Rather it is an Armenian venture capital firm seeking to invest directly in the rapidly developing space. Initially set to invest about $50 million into the Armenian technology scene, the firm is looking for the next young Armenian company to grow. With capital ranging from $1-3 million for the initial investments, Aybuben is planning on a group of about 15 companies for its inaugural class.
With the private sector rapidly developing into various fields of transportation and media manipulation, the technology industry in Armenia is robust and quickly improving. In 2019 alone, Armenia was able to increase its technology industry by more than 30% and expects to double the industry output by 2024. The government has also become involved in the efforts to capitalize on the technology sector’s growth. It has introduced tax breaks that have benefited about 230 firms and resulted in more than 1,200 new jobs. Still, the issue of poverty in Armenia has persisted, with around half of all citizens living at or under the poverty rate. However, the Armenian government hopes that by supporting the blossoming tech sector, Armenia can simultaneously demonstrate a rapid improvement in the quality of life for its people.
– Pratik Samir Koppikar