Top 12 Disruptive Tech Startups in the Caucasus
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Start talking about Georgia and most ethnocentric Americans immediately assume you mean the State of Georgia with her ten million occupants. There’s also Georgia the country with her three million occupants – one of the three countries known as the Caucasus. (Zee German who coined the phrase Caucasian, Johann Friedrich Blumenbach, believed that the people of the Caucasus were the most beautiful in the world. Take that, Russia.) We visited all three capital cities in the Caucasus – Yerevan in Armenia, Baku in Azerbaijan, and Tbilisi in Georgia – to uncover the top disruptive technology startups in the region.
Disruptive Technology in Georgia
The startup scene in Georgia emerged around 2016 when the Georgian Innovation and Technology Agency (GITA) decided to sponsor a startup competition, complete with a venture capitalist imported from Silicon Valley to provide some on-the-spot-guidance. Between 40-50 startups participated, one of which was Optio.ai which went on to become the first Georgian startup to be accepted into the Techstars accelerator program.
Banking on Georgia Banks
Former classmates Shota Giorgobiani and Giorgi Mirzikashvili sold their first company, a web studio, and then went on to birth Optio.AI. While their original product was an AI-powered chatbot for personal finance, they’ve since pivoted to a B2C “conversational banking” product that speaks English and Georgian and is in use by at least one Georgian bank. The natural language processing component which speaks Georgian is their second product offering. The third product, and perhaps the most impressive, is Optio Discovery which is a cloud-based offering that uses Natural Language Processing (NLP) to categorize transactions so that banks can provide intelligence on their clients’ spending habits. Lastly, their Optio Insight product lets banks see an aggregate snapshot of their customer’s spending which allows them to do cool things like predictive analytics.
Eventually, they plan to expand outside the Georgian banking sector to other countries in the region.
500 Million Cars for Sale
The next Georgian startup we met with was Shelf.Network, and their story starts in 2015 when founder Lasha Antadze was working in Ukraine on the privatization of state-owned property which involved nefarious auctions that his team legitimized with blockchain technology. Most importantly, they developed the ability to conduct network trades – in other words, auction a single property across 100 property brokers simultaneously, each of which might be conducted in a different language. It worked, and in 2017 he saw an opportunity to extend the idea to cars. (Cars represent the world’s number three exported product by value behind crude oil and refined petroleum oils.)
Shelf.Network allows car sellers to extend their sales channels into a part of the world it would take years to enter. In 2018, they raised undisclosed funding from participants that included a large publicly traded Japanese auto company and now have paying customers in all four major auto markets. For auto dealers in Lithuania, Ukraine, and Georgia, they can provide 500 million vehicles worth of online inventory.
A Substitute for Antibiotics
You might be excused for not knowing what a bacteriophage is – unless you’re from Georgia-the-country, in which case you might have been given some by your parents as a child. In more than 500 pharmacies around Georgia, you’ll find an over-the-counter medicine for throat and nose infections which is a “cocktail” of bacteriophages. The word “bacteriophage” actually means “bacteria eater,” and that’s because these are actually good viruses that destroy bacteria. When chlamydia finally becomes resistant to antibiotics because everyone’s self-medicating, a technology like bacteriophages might come in awful handy. Recently, they received a grant from the World Bank and the aforementioned GITA (Georgia’s Innovation and Technology Agency) to develop and commercialize PowerPhage, a sustainable alternative to antibiotics for livestock production.
Georgia is the birthplace of the bacteriophage, and we met with the Head of Business Development at Biochimpharm, Rati Golijashvili, who told us about how his family company has deep roots in this technology. They’re running a profitable business with revenues showing Compound Annual Growth Rate (CAGR) of 26.75% over the past eight years. We’re going to write a feature article about this interesting company in the coming weeks so stay tuned.
Smart Looking Smart Rings
What started out as a small project for three students in 2015 turned into a wearable that’s as stylish as it is functional. Georgian startup Cnick won Startup Georgia 2016 with their wooden wearable that lets you pay for your purchases anywhere Mastercard is accepted. (In Georgia, that happens to be about 95% of all businesses.) Founder and CEO David Kvitsiani couldn’t hide his enthusiasm as he casually brushed his hand over the credit card reader at the coffee shop where we met to talk about how his company’s wearable compares to well-funded competitors like New Yawk’s Token (requires a battery), or the plethora of “smart rings” on Amazon, all of which they tested, and all of which underperformed in the area of durability and ease-of-use. (You shouldn’t have to twist the ring around to use it, that’s just bad design.) Cnick is just now wrapping up a pilot with Mastercard and is in talks with the largest bank in Georgia.
Next up for Cnick? Scandinavia, a region that’s also focused on cashless transactions.
Disruptive Technology in Azerbaijan
We visited newly opened Azerbaijani incubator Innoland to meet with Managing Director at SUP Accelerator, Vusal Karimli, a man who is doing some great things for the newly created startup scene. About 5 years ago, the Azerbaijani government saw the price of oil drop and realized their “curse of oil” required the nation of entrepreneurs to start turning to tech. The ecosystem is new and most talent goes to corporations – brain-drain does damage to local talent as well. Then there’s the problem of foreign investors not being able to invest in Azerbaijani startups or the fact there’s no stock market in the Caucasus for liquidity events. That hasn’t stopped these next startups from making things happen.
Hacking the Hustle
There’s nothing worse than hearing people complain on Twitter about how “broken” venture capital is because investors aren’t hand-delivering them meeting invites to throw buckets of money at their inner genius. Founders of VRiendly, CTO Kamran Gurbanli and CEO Ulvi Nasibli, hustled their way – visas and all – into the hallowed chambers of Mountain View to meet with Adam Draper of Boost VC and pitch their virtual reality (VR) company that started out helping students with disabilities in Azerbaijan who couldn’t attend public schools. The Government of Azerbaijan bought it, and now they’re selling something different – events in virtual reality where startups can engage with incubators and accelerators. They’re democratizing access to Silicon Valley because they hustled. Ironic, isn’t it?
The first event is selling out fast and has two ticket tiers: tier-one gets you into the virtual auditorium and tier-two gets you in front of Adam Draper for a five-minute pitch. If virtual reality is now slowly climbing up Gartner’s Slope of Enlightenment, then VRiendly might be in the right place at the right time when 5G arrives.
Made in Azerbaijan
In 2014, three diverse people came together to build Sumaks Technology – one majored in Mugham, one was just 18 years old at the time, and one actually took the boring route and studied engineering. The idea was to build a company to design and manufacture IoT hardware devices along with the software to go with them. After one or two pivots, they developed a GPS tracking system for fleets which displaced a foreign competitor. We talked to their Head of Business Development, Mr. Isfandiyar Kalantarli, about the custom solutions Sumaks has developed for the Azerbaijani government like a hardware system for old-school ad scrolling devices and a device that captures the size of an advertisement area using a photo and then notes the GPS location so that tax can be assessed. Sumaks Technology believes their most important asset is their team which has proven they can deliver on a diverse set of IoT products. Without access to capital, startups like Sumaks need to build a successful business – a cash cow if you will – so they can then fund their next killer app. Our next startup used this strategy as well.
Hustle Until You Make It
We chatted with Farid Davudov, founder of Customar, who has been working on virtual and augmented reality projects since 2013. His team has delivered all kinds of solutions for client list that includes some big names like Toyota, Coca-Cola, Allianz, and Samsung. Now, they’re in the process of scaling their own killer app – ARZoom – an augmented reality application that allows you to add interactivity to simple content. Mr. Davudov wasn’t at liberty to talk much about clients that are engaging with the app but he did just come back from the States where he was working with grocery giant Safeway on the app, so it’s probably safe to say they’re getting some traction.
When Chatbots Meet Chatbots
Founded just this year, Botbox founder Elmir Aliyev comes from a background in banking where he focused on developing products. Botbox sees a growing gap in technology between big banks with their giant tech budgets and small to medium-sized banks that don’t have economies of scale behind them. The company has developed a flexible chatbot platform – from custom dashboards to custom implementations – which speaks English and the local lingo, Azeri. (Fun fact #1, nearly 20% of all people in Iran speak Azeri.) The Total Addressable Market (TAM) isn’t just the 20 banks in Azerbaijan that are SMEs, there are also plans to expand to Turkey since the two languages are similar (Fun fact #2, Turkic languages are spoken as a native language by some 170 million people.) Botbox has several paying clients already including a retail client – LG in Azerbaijan.
Disruptive Technology in Armenia
Photo Editing is Big Business
Founded in 2012 by Armenian serial entrepreneur Hovhannes Avoyan, PicsArt is a “freemium” photo and video editing app that’s taken in $45 million in funding from investors that include Sequoia. With 500 million+ installs and more than 130 million Monthly Active Users (MAUs), PicsArt spans the globe with support for over 30 languages. While the company now lists their company as “San Francisco-based,” their research and development center remains in Armenia where Mr. Avoyan is actively working to increase the amount of artificial intelligence training resources for local Armenians. A Forbes article by Mr. Avoyan talks about how he built “a new sort of data science/ML school in Armenia” which was launched at the end of 2015 and “has so far graduated 400 students,” 50 of whom were hired by PicsArt.Warm Introductions
Founded in 2013, Armenian startup Teamable has taken in $10 million in funding to build an innovative hiring solution that works based on “warm introductions.” Many firms have a referral program which provides a cash reward to employees who recommend a friend for employment, provided of course they’re hired and stay on for a predetermined amount of time. Teamable’s solution provides employees with an option to connect their social media accounts to the platform which then uses machine learning algorithms to look for suitable candidates – particularly for engineering roles.
We spoke with Barkev Iskikian, the Head of Engineering at Teamable, who leads the young engineering team of about 30 strong that resides in Yerevan. He told us how Teamable uses NLP to collect data from publicly available sources. Then, the AI algorithms determine which candidates are most likely to get hired by identifying patterns that even the most astute hiring managers can’t pick up on. The company counts a large number of startups as clients – names like Spotify, Elastic, and Lyft – along with a number of Fortune-500 companies.
Automatic Image Annotation
Founded just last year, Armenian startup SuperAnnotate filed a last-minute application for Berkeley SkyDeck, UC Berkeley’s premier accelerator, where they wowed the audience with the world’s fastest image annotation technology that helps companies easily label images. We spoke with co-founder, Tigran Petrosyan, about a tool they developed that enables users to quickly annotate images for applications like autonomous driving, aerial imagery, or retail self-checkout. His brother, Vahan Petrosyan, laid the groundwork for the patented technology which was the subject of his PhD thesis. Both men dropped out of their PhDs just months before completion to pursue their startup which is now in the process of raising a multi-million-dollar funding round. The solution uses AI algorithms to delineate an image after which objects can be selected and labeled.
In the above example, we used the tool to quickly label all adult males in the photo. A continuously expanding team of over 20 engineers and team annotators are working to service the company’s 10+ B2B clients, most of whom are autonomous vehicles companies, with more clients being on-boarded in the coming months. Click here to try the tool yourself.
Update 07/12/2021: SuperAnnotate has raised $14.5 million in its Series A round of funding to raise their profile through marketing. This brings the company’s total funding to $17.5 million to date.
Muting Background Noise
The first Armenian startup to feature in the Berkeley SkyDeck accelerator was Krisp, a machine learning startup that was founded in late 2017 and has taken in $3.5 million in funding so far from investors that include Sierra Ventures. We sat down to talk with co-founder Davit Baghdasaryan who previously served nine years in Silicon Valley before venturing out to solve an extremely difficult problem that nobody has solved yet – the ability to remove all forms of background noise from conference calls. Along with his co-founder, serial tech entrepreneur Arto Minasyan, they created a product that works exceptionally well, and now more than 30,000 people use it to converse in 200 different languages.
Even more impressive is that 6,000 of those users are paying Krisp a subscription fee for a freemium version of the product which presently has no known competitors and is used by every major tech company in the world. Mr. Baghdasaryan sees this as a billion-dollar business with a mission of making everyone appear more professional. Soon, the product may replace the background on your video call, overlay your t-shirt with a suit and tie, and make John-in-Mumbai’s accent go the way of the dodo. Give it a try yourself.
Update 02/16/2021: Krisp has raised $9 million in extended Series A funding to expand its products and team. This brings the company’s total funding to $17.5 million to date.
Conclusion
We left the Caucasus with a realization of just how much harder some people have to work in order to get businesses off the ground since venture funding is non-existent for many startups in this part of the world. We also realized there are some animosities within the region, scars of old wounds. (Fun Fact #3: It’s not a good idea to tell the Azerbaijanis that you were fraternizing with the Armenians.) Still, even in the face of adversity, the global entrepreneurial spirit gets on with the hustle. When things get tight and all the $100 million rounds dry up, these are the type of people – the cockroaches – that venture capitalists can count on to keep making things happen.
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