Hovhannes Avoyan completed his PhD in Armenia during Soviet times and established his first start-up in 1997 after the dissolution of the Soviet Union. Now with the revival of Armenia and its tech scene, Mr Avoyan says that the success of his photo and video-editing app Picsart, valued at over $1bn, has provided a blueprint for others to follow.

CEO Hovhannes Avoyan tells fDi how homegrown start-ups intermingle with foreign companies in Armenia, how things have changed in the ‘Silicon Valley of the Soviet Union’ and why tech is Armenia’s path to greater prosperity.

Q: Has Picsart's popularity and unicorn status helped put Armenia on the map?

A: We were the first to lead the way. In 2015, we secured funding from Sequoia Capital and it was a unique story, because we were like one of the few companies in the world which Sequoia invested in without having a presence in Silicon Valley. Since then, we’ve created a presence in the US, hired more people and got SoftBank funding last year. 

Armenia already had a good tradition in IT and software and high tech. Now, there is a critical mass of successful homegrown companies and a steady inflow of foreign companies. 

Q: What do foreign companies bring to Armenia?

A: Foreign companies bring in the knowledge and skills that might be missing in the country, such as business thinking. While Armenians are good at technical skills, they might not have business/marketing skills. The influx of foreign companies has created a network effect.

Q: What are the constraints to the growth of Armenia?

A: Despite the country’s tradition in IT, the availability of talent is the main obstacle. Second, it is the stability in the region, which makes it harder to convince people to invest in the country because there is still a risk of escalation. Other than that, there are other minor constraints like the strengthening of the local currency (dram). This is not really playing well for us and other start-ups as we face pretty strong headwinds as a result of the exchange rates as well as inflationary pressures.

Q: As someone who was there during Soviet times, how has the epithet ‘Silicon Valley of the Soviet Union’ changed?

A: During Soviet times, there was no competition. There was a certain path for growth: you go to university, you do a PhD and you get a top job in a state enterprise. Now, it has changed radically: you can build your own start-up but there is more instability and more competition.

Q: Is tech Armenia’s future?

A: Armenia has no other choice. If we want to become a prosperous country, we only have talent. We have no oil, no access to the sea. The only way to be prosperous in Armenia is through high-technology. These limitations put more pressure on Armenia to create more value-added businesses. Of course there is tourism but the only high margin path available is the high-tech sector. This is our only choice.

This article first appeared in the December 2022/January 2023 print edition of fDi Intelligence.