The start-up ecosystem in landlocked Armenia generates high value companies in a country with highly intelligent human capital. The eSwap start-up with its enthusiastic team of Gyumrians, inhabitants of the second largest city of Armenia, provides a multi-channel ecommerce management tool with a cutting edge innovation – integrated artificial intelligence, thanks to the assistance of the European Union.
Higher education is widespread in Armenia, with the nation ranking first in educational attainment in the 1989 general census of the former Soviet Union and particularly strong in the fields of Science, Technology, Engineering and Mathematics (STEM), including Information and Communication Technologies (ICT). Even though Armenia is a landlocked country with limited ways of exporting products and services, these foundations of a vibrant IT ecosystem prepared the ground for the eSwap start-up to expand its business to the USA and EU with the support of EU-SMEDA (Support to SME Development in Armenia), a project co-funded by the European Union in the framework of the EU4Business initiative.
When the Ghost Services company, the founder of the future start-up, was first established in 2015 as a digital design, strategy and development agencyproviding services in high load software development, developing its own innovation idea– eSwap –was just a dream. Karen Nikoghosyan, 24, the founder and CEO of Ghost Services and the year-old eSwap start-up, explained what the idea was: “If you are a retailer or sell your products, it shouldn’t take you hours to list products across Shopify, WooCommerce, eBay, Amazon and more. If you use more than two channels, eSwap is the solution for you as a powerful multi-channel inventory management software.”
Online retailers need to visit different platforms daily, check their orders and shipping, the stocks on each channel separately and make lots of calculations to get the overall picture of their business. With eSwap, the total sales for each store, profit broken down, total returns, orders, the amounts of products and lots of other options are just one click away. “eSwap has made a handy platform which will help to manage every single step. Through eSwap, you can link marketplaces and web stores with just a few clicks, and even accounting could later be done within the system, with all the total figures calculated,” said the start-up founder.
The idea was there, but the company was facing an uphill struggle to develop it. Ghost Services needed to make ends meet, and so staff resources were devoted to client needs.At the same time, a few platforms already offered options similar to some of those envisaged by eSwap, and the Gyumri-based start-up had to act fast in its programming development if it was to be competitive. They had been working on the programming of a cloud-based platform for few months, when the EU-supported Innovation Matching Grants (IMG) competition was announced.“EU support was the necessary intervention that helped us to concentrate on the start-up work, using the forces that had previously busy in outsourcing,” said Karen.
Six Armenian start-ups - 360 stories, eSwap, Himnark, Hirebee, Smart Metering system for power distribution networks and Wirestock - in 2018 received up to €35,000 in seed funding as part of the EU4Business initiative. They were selected from 16 shortlisted start-ups in the final stage of the EU-supported Innovation Matching Grants (IMG) competition. The process of pre-selection, extensive trainings and mentorship before the final competition gave the team the opportunity to achieve its dreams.
Aiming to promote companies from the Armenian start-up ecosystem for impact on the national and global stage, the IMG grant was tailor-made for eSwap’s ambitions. “eSwap exists to simplify and automate the business management including inventory, orders, contacts, accounting and shipping,”said Karen. “Even more, our platform is cloud-based while other similar tools need to be set up on a computer.”
eSwap has even more to offer to its customers: “With the artificial intelligence, we will provide predictions of stocks, prices, seasoning, repricing and consumer preferences based on analysesso that retailers can run their business smoothly and effectively, ” said Karen. Registered eSwap clients will also enjoy price optimisation helping them with competitor analysis that makes it possible to trackthe market in real time.
EU support helped to solve the challenges in financing the start-up work: the whole team, previously divided into two to ensure necessary turnover,could now work on eSwap. The CEO of the start-up confessed: “Thanks to the grant, the preliminary works were completed faster, and the software is already in the market. ”The testing of different features is now in process, and with the feedback of its first, free registered clients, the eSwap team is working on improvements. The CEO added: “Our market is huge, and if we take into account the trends of online trade to grow fivefold by 2021, we will have more and more clients.”
The biggest markets for eSwap services are currently in the United States, China, Australia and Great Britain. And once the features based on artificial intelligence are available, the start-uphopes to reach its full momentum.
Programme Director Ernest Gaboyan, 25, is confident that European Union grant was the best solution for the challenges that the newstart-up faced. “It was a complicated project, the volume of work was very big, and we had no clear idea of the field we were entering,” said Ernest. He added that the EU grant had helped to involve new specialists, and freed up financial resources for marketing.
A start-up is more than a job engine. Each unique start-up can change the world, and bring innovations. “The start-ups’ location is not important, and eSwap could have been established in the capital as well. It was the founder’s decision to have it based in Gyumri, a town from which all the currently employed specialists are drawn,” said Ernest.
“This was our first grant project ever, and it helped us to become self-confident, to solve the issue of sustainability that is an important aspect for any start-up. ”Ernest concluded: “The grant was very motivating; internally it was a great encouragement and gave us confidence on our future steps and plans.”
EU-SMEDA (Support to SME Development in Armenia) is co-funded by the European Union in the framework of the EU4Business initiative and by the German Federal Ministry for Economic Cooperation and Development, and implemented by GIZ. Since 2017,EU-SMEDA has been supporting Armenian start-ups with two types of grant – Innovation Matching Grants (EU4Business IMG) and Science and Technology Entrepreneurship (EU4Business STEP) grants, through the Enterprise Incubator Foundation (EIF). In total, 34 start-ups received EU4Business IMG and STEP grants in 2017 and 2018.
EU4Business is a European Union umbrella initiative which brings together all the EU programmes offering support to SMEs to develop the private sector. EU4Business covers 49projects in the Eastern Partnership region, and its total active portfolio is worth over €300 million in EU funding. Across the six countries of the Eastern Partnership, EU4Business offers access to resources, funding for export investments, alignment with EU standards and support for female entrepreneurs and new businesses, including through advisory services.
In Armenia, EU4Business supports 19 ongoing projects for a total of over €38 million, providing improved access to finance and new markets, training, advisory and consultancy services for SMEs, targeted support for women in business, start-ups, technology-based enterprise and cluster development, as well as regional development and social entrepreneurship.
This article was produced in the framework of the EU4Business Initiative.