Raising money: a big problem at the beginning of a business

When you are just starting a business and don’t have access to financing, you face various challenges. Naira Poghosyan, a 48-year-old who started her own business after working as a translator for many years, shares her experience.

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In 2021, Naira founded a negotiation skills coaching service. She says that this service is in great demand. These services are utilized not only by individuals seeking to develop negotiation skills but also by those seeking solutions to various business or personal issues. “When a person presents their problem, a deadlock in some relationship, the coach tries to help them find solutions and ways out by asking the right questions,” says Naira.

In search of financial resources, Naira turned to no one. “For example, in Europe, the state provides interest-free loans, and there is state support for newly created businesses, but in our country, there is none. I have not found any support. In Armenia, we want to develop the economy, but we only strangle and destroy the taxpayer; we give nothing else.”

Having given up hope in the state, Naira also turned to various private organizations, but there, too, her expectations were not met. “Yes, there are organizations that give grants, but when you go to participate, there is such fierce competition, they may not like you for your competence. If you are a little weak, you can lose your head. I have participated in 4 different programs, of which, for example, the “Jinishyan” Memorial Foundation provided loans at a very low interest rate (with a program aimed at improving the business environment in the region and increasing the competitiveness of the private sector, – ed.), but they wanted real estate collateral, and my family would not help me with that.”

Naira managed to convince one of her close friends, who had expressed a willingness to finance her idea and start a business, to support her in pursuing her business idea. “I have only studied the business side of coaching for two years. It is a highly paid service available worldwide. For example, in Russia, coaches can charge $2,000-5,000 for one session, in the Gulf countries it is even more – you can earn up to $30,000 in half a month. In Armenia, one session currently costs 25,000 drams.”

Finding investors is a problem

Economist Suren Parsyan says that attracting financial resources is one of the most important issues in business. He mentions several sources of attracting financial resources, including investing one’s own savings, taking out loans, and making investments. In the case of the latter, the business idea is of great importance.

“Many are ready to invest their money in projects that aim to expand not only in the domestic market, but also abroad, and few such projects are prepared and presented in Armenia. We really have a problem with starting start-ups with interesting ideas.”

Naira Poghosyan also notes that you can have “a million good ideas, a calculated plan, a financial analysis,” but the investor will not be interested in it. And the reasons for “not being interested” are different: for example, they may invest not because the project is realistic or they believe in its success, but because the author is their acquaintance, friend, or close friend.

She also talks about several problems in this area: “We like to invest quickly, withdraw quickly. We don’t look at the long-term, and we look down on people who don’t have financial resources. They look down on people like that. Then they can listen to you, implement your idea without you, and that’s another problem.”

According to Naira Poghosyan, constant rejections can break a budding entrepreneur. “From my personal experience, I can say that you have to be strong enough not to give up, to believe that you will find a way out if you have a desire to do something.”

According to Karine Ghukasyan, a member of the board of the SME Association and founder of the “Laktina” brand, the art of dialogue and persuasion is important for attracting investments. And considering that female entrepreneurs start their business with smaller steps, investments from the family budget can also be a solution: “Women’s investments are not so much that they are a burden on the family. It is likely that the amount of money needed to start a business is comparable to buying a house: a TV, furniture, etc. “Within that amount of money, our women have so many good ideas. We need the art of dialogue and persuasion.”

Grants for women who want to start a business

Grants are one of the sources of business financing. You can often come across announcements about them on social media and in the news.

Grants of up to 2 million drams – financial support for women entrepreneurs – are provided by the Armenian General Benevolent Union (AGBU) under the “Women Entrepreneurs” program.

Tatevik Manukyan, head of the AGBU “Women Entrepreneurs” program, says that the program participants go through several stages of selection. In the first stage, the applications of the applicants are read and evaluated by at least 3 specialists. The authors of the applications that received high marks are invited to an interview in the next stage, during which the motivation of the participant, willingness to work, competitiveness of the business, and prospects are important.

Those who pass the interview begin the main phase of the program: they participate in 3-4-month business courses, develop their business plan, working with various specialists, including a business consultant.

In the next stage of the program, business plans are submitted to receive grants. Tatevik Manukyan notes that the grant provided to the winning participants is transferred to the bank account of the registered business. Within a year, they must use the allocated amount to cover the expenses envisaged in their business plan, and during that 1 year, AGBU monitors their activities and receives reports from the participants on business acquisitions. She notes that the maximum grant amount is 2 million drams and the amount is given taking into account the needs of the business. “For example, it is possible that the participant needs to acquire fixed assets of 1.5 million drams to develop the business, naturally, the participant’s business plan is considered and the amount is provided according to the business need.”

The state’s response to supporting women entrepreneurs

In response to our question about whether the state has mechanisms to provide low-cost loans to start-up women entrepreneurs or assist them in attracting finance, the Ministry of Economy responded:

“The programs of the Ministry of Economy are broad-based and do not target specific groups, and state policy is aimed at ensuring universal support for entrepreneurship and business development, without restrictions on age or social groups. The promotion of women’s entrepreneurship is considered in the context of existing state and international programs.”

And the 5th event of the draft annual program “Coordination and Management of State Support Programs for SME Entities” for 2025 envisages the promotion of women, youth and social entrepreneurship. In particular, it is planned to organize targeted discussions and meetings on entrepreneurial opportunities, state support programs and financing mechanisms.

The section related to the same event states that “the active participation of women and youth in the “From Idea to Business” program will be encouraged.” This program is intended only for financing and providing other resources to start-up technology companies and research teams.

By the way, the Ministry of Economy is accepting suggestions and observations on the draft annual program “Coordination and Management of State Support Programs for SME Entities” at this link.

Author: Arpine Simonyan

The material was prepared within the framework of the “Support to Women Entrepreneurs” program by the “Ket 33” NGO with the support of the Embassy of the Kingdom of the Netherlands in Armenia. The author is solely responsible for the content of the material, and the views expressed therein may not coincide with the views of the Embassy.