The allocation of sufficient funds to support growth is one of the most crucial, if not the primary factors of success, for entrepreneurs and start-ups. One of the most essential forms of funding is venture capital, which enables young founders to transfer the financial risk to the venture capital firm if the business fails. In exchange, the founders give up a part of their equity so that they lose some of the possible returns on a potential exit of their venture.
- PE funds, including VC, are considered specialized funds in Armenia, meaning that at least 30% of their total assets are targeted to be invested in certain types of assets.
- PE funds may function as joint stock companies with fixed or variable capital. In the case of VC funds, a partnership legal structure is also an option.
- For investment funds the rate is 0.01% of net assets of the fund.
- The investment funds, including venture funds, are regulated by the Central Bank of Armenia.
- If the PE fund acts as a VC, according to the fund’s rules or charter, not less than 50% of the fund’s assets shall be invested in:
✔️Securities not allowed for sale in the regulated market and issued by organizations that are newly created; or
✔️Are in the early stage of their development, for the purpose of their growth, development; or
✔️Enabling their securities to be sold in the regulated market.