This Armenian VC Will Fund Tech Start-ups At Home And Abroad
Alexander Smbatyan, founding partner of Aybuben Ventures having $50 million initial corpus, talks about exciting new tech investment opportunities in Armenia
Ayuben Ventures is set to invest an initial $50 million into Armenian tech and the country’s entrepreneur. Alexander Smbatyan, founding partner of Ayuben Ventures, in an interview talks about exciting new tech investment opportunities in Armenia and among the thriving Armenian diaspora.
At the World Congress on Information Technology 2019, Aybuben Ventures announced the first pan-Armenian venture capital fund primarily dedicated to global Armenian tech entrepreneurs with an initial $50 million fund. What led you to create this dedicated venture capital fund?
Armenian entrepreneurs and professionals have successfully created some of the most advanced technologies either by starting their own companies or working in other companies around the world. We are not limiting the fund for people within Armenia; this would be shortsighted and irrational. Armenians live all over the world. They are proud of their culture and don’t want to lose their identity. Potentially this creates a huge global pool of entrepreneurs, professionals, capital, companies and knowledge, which can be leveraged and scaled in any of the world's economies. That said, we welcome interest in our foundation, from any organization irrespective of nationality.
What are the most significant tech developments that have been driven by Armenian tech entrepreneurs in the past few years and how successful have they been?
Today dozens of international companies have their offices in Armenia and some of them are unicorns that have gone from start-up to high market value players. Many of them were founded in Armenia, and thanks to their founders efforts and strong national ties in the Silicon Valley, they have achieved brilliant results, and importantly become a reference point for dozens of other young companies. Among them are PicsArt, ServiceTitan, Krispos, Renderforest, Teamable and SoloLearn, among others.
Also, Armenians have created and developed large companies away from their homeland. For example, in the fiercely competitive taxi service market in Russia, there are many Armenian businessmen who are leading the way thanks to creative innovation. Even the tech giant Uber couldn’t succeed in this market. We also know about successful tech entrepreneurs in Europe, the Middle East and Southeast Asia.
I understand there is a large Armenian diaspora. Are you aiming to invest to emigres and if so, other than a sense of patriotism, what will compel them to invest in the fund?
Many representatives of the Armenian diaspora will be naturally interested in our foundation, and we are sure many will also connect us with other international investors in mind. For us it is, in equal measures, about drawing on business, patriotism and belief in technological progress. Together with our partners we are not just creating opportunities for the development of new companies that will make a difference, but companies that will win the loyalty of millions of customers around the world, and deliver many benefits and of course profits.
What are your investment targets in terms of how many tech start-ups you plan on supporting?
Aybuben means alphabet, the designation of the first two letters of the alphabet, A and B, are Ayb and Ben. This name symbolizes the first, but the most important step that we want to make together with our partners and company founders.
With the size of the first fund, we believe it’s possible to invest in more than 15 companies from 2020 to 2022. The average size of a single investment will be within the range of $1 million to $3 million. These investments will drive development breakthrough in terms of expanding the geography of sales and increasing investment attractiveness for the following rounds of investment.
Is the Armenian government helping in developing the tech sector and if so how does this dovetail with your investment plans?
The government of the Republic of Armenia has been actively implementing programmes to support technology companies in the country for a long time. However, the state is not taking on the role of an investor, rather its main task is to create a favorable infrastructure and investment climate, to be in continuous dialogue with entrepreneurs and not to interfere in the market relations of different parties. My partner Alexander Yesayan is the head of UATE Armenia, which unites all the successful technology companies in Armenia. Within this context we have deep expertise in the potential of Armenian companies and professionals. Also, thanks to WCIT 2019, we have established an effective dialogue with many Armenians from all over the world, and are already developing several projects.
What types of tech development are taking place within Armenia and does it mirror what is happening in other parts of the world such as machine learning and blockchain developments?
Yes, of course. There are two very important things about the Armenian nation; on the one hand, there is a drive for creativity and developing new things, and on the other hand, there is a strong tradition of schooling in mathematics. When you bring these two together, there is an innate disposition to develop companies that make extensive use of technologies such as artificial intelligence, machine learning, biotechnology and more. Further, pupils in every Armenian school learn to play chess, which is a strong foundation for logic and maths. Also, Armenia has a strong and long-standing tradition of developing microchips, control systems and other things since Soviet times. So clearly the ground is fertile for utilizing advanced technologies to create things that are new and different.
How much is the Armenian tech sector valued at and what rates of growth do you expect to see in the coming years?
I don’t think there are any accurate statistics that provide an estimate of all companies whose shareholders or leaders have Armenian roots. But personally, and based on my knowledge of the Armenian diaspora, I believe there are hundreds of such companies with a total capitalization that runs into billions of dollars. That said, according to open source material, during the last few years well-known companies such as ServiceTitan, PicsArt, Teamable, SoloLearn, CodeSignal, RenderForest, Disqo and others have obtained finance in excess of $300 million, which only confirms their high potential in the eyes of investors.
Are any of the bluechip tech giants, such as Microsoft, playing a part in tech development and if so, does this reflect on the potential of new tech coming out of Armenia?
Yes, Microsoft, VMware, National Instruments and others have opened research and development (R&D) centers and offices in Armenia. This is driven by knowledge of Armenia as fertile investment ground with a tech-literate and creatively driven workforce that can help deliver technology transformation. For instance, VMware established its R&D site in Armenia in 2010 through the acquisition of Integrien Corporation, which was a leader in real-time performance analytics. Following the acquisition, VMware changed the name of Integrien’s core product from Integrien Alive Enterprise to VMware vCenter Operations, which later became the key component of vCenter Operations Management Suite. This product provides a new and more simplified approach to the operations management of physical, virtual and cloud infrastructures. In turn this helps enhance VMware vSphere thanks to this technology transformation.