A new socially responsible crowdfunding platform called Khachen launched in Armenia

YEREVAN, Dec. 6. /ARKA/. A new socially responsible crowdfunding platform called Khachen has been launched in Armenia, aiming to help restore and develop micro and small businesses in the country.

Financiers Armen Minasyan (Managing Director of the Russian investment platform Potok.Digital) and Dario Pelazzo (Director of Strategic Projects at Mikro Kapital Holding) came up with this idea in November 2020. The platform was officially launched in October 2021.

The initiators of the project say the primary goal is to create as many as 5 thousand new jobs by 2027 – which means an average of 130 successful projects in the segment of small businesses per year (including the expansion of operating businesses and the registration of new ones).

Armen Minasyan told ARKA News Agency that the tools currently available in Armenia for attracting money are not enough, and a reward-based crowdfunding for entrepreneurs is the most appropriate tool for the country at this stage.

"Philanthropy solves a fairly narrow range of problems. Remittances to relatives and friends from the Diaspora are the same charity. However, attempts to solve economic issues through charity from afar do more harm than good," the financier believes.

In his opinion, it is difficult to attract investments to Armenia, as it is not the most attractive market for most external investors both in terms of volume, and in terms of the profitability-risk ratio.

"The shareholders of the project are financiers who specialize in lending to small and medium-sized businesses and know how important it is to the economy. Since 2018, I have been lending to SMEs through crowdfunding; now I manage the largest crowdfunding platform in Russia; before that I managed a similar platform of the Italian Mikro Kapital group. Accordingly, I am well versed in this market," said Minasyan.

According to Ferdinando Pelazzo, the chairman of the supervisory board of the Khachen project, Armenia is a small country with a rich history and vast experience.

"The time has come to apply what Armenians have learned from the past in order to build the future. And like in Italy, to create a network of micro and small businesses to build up competitiveness in specific market niches. In my opinion this is the best way to survive in the era of globalization," he said.

Investment and principle of action 

The amount invested depends on how the project develops, Minasyan said. "Sometimes quick success requires serious investment to scale. We are prepared for different development scenarios and plan to invest several hundred thousand US dollars in 2022. If these plans have to be adjusted, we're ready for that, too," he said.

Regarding the principle of how the platform works he said: "It's simple: if there is an existing business or business idea, or there was a business, but for various reasons (consequences of war or pandemic) now on pause, you can come to the platform for help. It is important for us that this business works on the territory of Armenia; that it complies with the rules and principles of the platform; that the sponsors (backers) receive a product or service produced by this business," Minasyan explained.

According to him, the initiators of the Khachen project decided to focus on small businesses at this stage. "This is the segment, which faces many problems in trying to obtain available financing from banks, and which is not interesting to external investors. At the same time, a small check makes it possible to successfully close such projects in a clear timeframe," he said.

Charity VS investment 

Minasyan noted that there is no task of combining the principle of charity with investment. ”Moreover, in the perspective of 2-3 years it is important for us that the projects of our authors are interesting not only for the Diasporans, who care about helping their compatriots but because they are more competitive than producers from other countries," he explained, adding that now the element of charity is present in a certain format.

In this regard, Pelazzo pointed out that both elements can coexist and there is no specific rule defining their percentage. "The idea, in any case, is to stimulate the development of SMEs and individual entrepreneurs, to help them move from charity to business, so that the charitable element is only the first step towards a full-fledged business," he stressed.

Number of projects 

Minasyan said there were nine projects on the platform now with 2-3 more to come by the end of 2021. "There are several dozen in line for next year. Projects are selected according to the same principles mentioned above. Also, the author of the project must understand that we are not a marketplace for the sale of goods, such requests will be rejected," he said.

The author must understand how much money he/she needs to achieve a specific tangible goal. They must also have a clear understanding of the time frame in which they will be able to produce and deliver products to sponsors-an amount equal to the amount of money raised at the site.

"Once we see that the project author has realistically evaluated all of the steps, we can proceed with the design: preparing videos, photos and marketing descriptions," Minasyan explained. He listed the current sectors: agriculture, manufacturing, tourism, IT, education, sports and culture.

"Again, we have three main conditions: 1) it must be a project in Armenia or a project that can benefit Armenia, 2) it must be a project where sponsors can purchase a product or service. Not charity, 3) it must comply with the rules and principles of the platform," the financier said.

In turn, Pelazzo, speaking about the criteria for selecting projects, pointed out the main goal - for the product or service of the business to be beneficial to Armenia - directly or indirectly. 

Prospects of the crowdfunding market 

Speaking about the prospects of this segment, Minasyan noted that Armenia does not yet have a law on crowdfunding - unlike Russia, which clearly states which crowdfunding activities are licensed by the Central Bank and which are not; how to identify authors/borrowers/sponsors/investors and when it should be done and when not.

"The law describes all the issues that can and do arise in the operation of the platform. It took several years to develop it: since 2018, I was part of a working group along with the Central Bank of Russia staff and gave feedback from the business side. In Armenia, hopefully only for now, there is no law. And it will not appear at once, it needs to go a certain way," Minasyan believes.

According to him, right now it's hard to forecast the prospects of the crowdfunding market due to many external factors.

In turn, Pelazzo expressed confidence that crowdfunding will become widespread and will intensively develop in Armenia. "Like leasing, factoring and microcredit - these products will survive in the global market, even if their spread will vary depending on the specifics of local markets," he said. -0-