With investors from 12 countries and a venture capital fund size of $7 million, Formula VC has been supporting Armenian startups to advance in the market since 2021.
Formula VC co-founders Grigor Hovhannisyan and Karen Vardanyan sat down with ARMENPRESS’s tech journalist Karine Terteryan to speak about their firm’s activities.
In 2022 the venture capital fund made 8 new investments.
The first ever venture capital fund was launched in Armenia in 2013, while Formula VC was created in 2021.
“We were planning to launch it in 2020 but it got delayed due to the pandemic and the war. After the war we decided that we must launch it no matter what. The fund officially exists since January 19, 2021, but we started the work itself a bit later on,” said Grigor Hovhannisyan.
Formula VC is aimed at taking the talented and innovative teams through their early stage journey.
The firm’s vision is to transform Armenia into an innovation hub.
“We made our first investment in CoinStats in March of 2021. This year’s first investment was made in WildLearner code learning platform. When we were planning to launch the fund we envisaged to make three to four investments annually within five years. This year we’ve made eight investments, bringing our portfolio to 12. Startups in our portfolio are CoinStats, Expper Technology with Robin the Robot, Hexact, Zoomerang, WildLearner, EasyDMARC, BlueQubit, Docus, Prelaunch, Stylbit and B4,” said Karen Vardanyan.
Formula VC has a mission to support startups with its network and resources in early stages of growth to become global players in their domain.
Formula VC’s main focus is on the projects engaged in SAAS, IoT and AI from Armenia and nearby regions.
The projects eyed by the firm are:
Stage: funded by angel groups/ other pre-seed vehicles or bootstrapped,
Performance: generate sustainable ARR of $100k+ or possess an active user base of 100k+.
According to the co-founders, the 7-million dollar total size of the fund is sufficient for advancing startups.
Notably, aside from investments the firm seeks to help the startups with knowledge, networking and other resources, which could at times be more valuable than money. Hovhannisyan said this “important approach” makes them stand out from other venture capital funds.
“We have investors from 12 countries. Our investors represent the entire eco-system. We have private angel investors, founders of outsourcing firms, representatives of product-based companies. The community was developed from different individuals representing the Armenian startup eco-system. Our role is that of a big brother for startups,” Vardanyan said.
But the co-founders of the Formula VC also pointed out problems requiring solutions in the sector. Current regulations don’t allow more than 49 participants in the fund, which they describe to be a “restricting circumstance” which hinders them from involving larger funds and more participants. Hovhannisyan and Vardanyan have officially asked the Armenian Ministry of Economy to revise the regulation and are hoping for a swift solution.
Like many others in the sector Formula VC also faced the currency rate fluctuation problem this year. Losses were minimized after revising plans and procedures of activities with startups.
“It’s also important to discuss why angel investors are not active in Armenia. The regulations covering their activity are unclear. For example, in Britain losses of angel investors are reduced from taxes. There are no favorable or clear conditions in Armenia in this regard. If we want this sector to develop in our country we should introduce regulations in the legal framework,” Vardanyan said.
The co-founders said that in 2023 most of the fund will be invested and since demands are growing parallel with the development of the eco-system they will work to have a larger fund by yearend 2023.
