Case Story

How does T2VC design capital to catalyze sustainable growth and innovation?

Challenge

Leaders in the Republic of Armenia leaders realized that fostering innovation was vital to the nation’s economy. This was particularly true given the nation’s small size and geographical distance from many global commercial centers. Innovation, they knew, was the key to creating higher-paying jobs, new technologies, and better standards of living. But Armenia was missing a key building block: early-stage venture capital for its startup companies. Without that, leaders realized that entrepreneurs would be challenged in their ability to build game-changing businesses. Leaders had obtained partial support from the World Bank for a new investment vehicle, but they needed help to design the right structure to attract private investors, close the fund, and launch their innovation economy on a long-term path for growth.

Solution

The Enterprise Incubator Foundation (EIF), an organization supported by Armenia’s Ministry of Economy to spur entrepreneurship and innovation, turned to T2VC for help in 2010. Our philosophy is to design solutions that fit each client’s particular circumstances. So, we set out not just to structure a venture fund for Armenia; we focused on how we could design a new fund to grow an entire ecosystem for long-term, sustainable economic vitality. We conducted extensive research on Armenia’s technology industry, including reviewing data, conducting interviews with over 20 stakeholders, including entrepreneurs, policymakers, organizations, multinational companies, and professionals. From that process, we designed a unique fund structure. From day one, the fund was to be established as a global player, with linkages between Armenian startups and the world’s markets, resources, talent, ideas, and opportunities. The fund would be staffed by a team with experience in global relationships and transactions. The fund would have a global advisory board, drawing talent and expertise from the huge Armenian Diaspora network. We named the fund after the pomegranate, the national fruit of Armenia symbolizing many seeds of abundance.

Results

Taking this fund structure, the EIF was able to complete fundraising, recruit the founding team and advisory board, and launch Granatus Ventures, the first venture capital fund in the Republic of Armenia. Granatus Ventures is focused on investing in and helping startups achieve success by leveraging international value chains, the influential Armenian Diaspora, and a global network of advisors, mentors, and partners.


My organization asked T2VC to design a venture fund to help grow Armenia’s IT startup ecosystem. This work required integrating the needs of various stakeholders, including government, development fund, corporations, and local entrepreneurs. T2VC did a stellar job at bringing together our partners, gathering information about local needs and sensitivites, and delivering a capital structure specially designed to nurture the success of our innovation community.
— Bagrat Yengibaryan, Director, Enterprise Incubator Foundation