Washington Diplomat: Armenia seeks new role as ‘Silicon Mountain’ hub

PanARMENIAN.Net - Armenia, a country facing major issues such as border security and the post-Covid situation, is looking at information technology to turn its stagnant economy around.

During Soviet times, a lot of the computer programming for weapons used to get done here.

"Obviously, Soviet technology was always behind the West. If Soviet Armenia had been an independent country, it would have been among the top 15 or 20 in the world when it came to IT,” political consultant Eric Hacopian said said, according to the Washington Diplomat.

Hacopian noted that ServiceTitan, a US-Armenian business software “unicorn,” plans an IPO next year. Its valuation is already at $10.5 billion; Armenia’s total GDP is around $13 billion.

“If these guys go public and their stock rises by 20%, they’ll be worth more than the GDP of this country,” he said, adding that “at least two more unicorns are coming, and one of them, Seda Systems, is the number-one Google subcontractor for cloud systems.”

Hovhannes Toroyan is chief strategy and analytics at AmeriaBank, which has a 22% market share and assets of $1.8 billion, making it Armenia’s largest financial institution.

“For sure, nobody knows what’s going happen,” said Toroyan, predicting that anti-Kremlin sanctions will be severe and long-lasting.

“Russia is our major trading partner, and frankly speaking, it’s never very positive when your biggest trade partner is having difficulties,” he said. “On the other hand, we already see lots of opportunities opening up. The Ministry of Economy says already more than a dozen Russian IT have registered in Armenia. They’re moving away from Russia.”

Armen Kherlopian, a trained biophysicist and professor at the American University of Armenia, is enthusiastic and optimistic about the future.

An ethnic Armenian who grew up in upstate New York, Kherlopian is a founding partner of BAJ Accelerator, which is hosted at the Jacobs-Technion Cornell Institute. He also sits on the advisory board of NASA-backed Translational Research Institute for Space Health (TRISH), a Houston-based collaboration involving the Baylor College of Medicine, CalTech and MIT.

“Armenia’s economy is only $12 billion, so a single startup unicorn represents $1 billion in value. For a country like ours, this is a viable economic strategy,” said Kherlopian, interviewed over an Ararat apricot brandy at Yerevan’s trendy Compot restaurant. “It’s particularly advantageous for small countries, because a few of these entities can make outsize impact.”

The idea is to create 10 unicorn startups employing at least 1,000 people within five years. Of particular interest are companies in the fields of security, robotics, financial technology, healthcare and biotech.

Kherlopian noted that the GDP of another tiny former Soviet republic, Estonia, jumped from $12 billion in 2012 to $30 billion within six years. The annual per-capita income of Estonia—home of Skype—now exceeds $23,000; that compares to only $3,300 for Armenia.

Armenia’s “Silicon Mountain” strategy involves capital, content and customers. The idea, said Kherlopian, is to raise unicorns that need capital through a network of angel investors, while the Armenian diaspora provides the scientists. Estonia and Israel, the original “startup nation,” are the best examples to follow, he said.

Another Armenian who returned to his roots is Sevan Kabakian. He was born in Beirut and came to the United States in the 1970s, living most of that time in the Los Angeles suburb of Glendale, which is more than half Armenian. An aerospace engineer for Boeing, Kabakian joined the nonprofit program Birthright Armenia in 2006—the second year of its existence—and has been here ever since.

Since its inception, the nonprofit organization has brought 2,300 participants to Armenia from 51 countries. Last year, 40% of its volunteers came from the United States, with the rest mainly from Russia, Lebanon, Canada, France, various Latin American nations such as Argentina and Brazil, and other ex-Soviet republics.