Kazakhstan became the leader in the number of venture deals in Central Asia and the Caucasus for 2023

RISE Research in cooperation with EA Group and BGlobal Ventures (a subsidiary of Qazaqstan Investment Corporation JSC), as well as Crunchbase, the Ministry of Digital Development, Innovation and Aerospace Industry of the Republic of Kazakhstan and KPMG Caucasus and Central Asia, conducted a large-scale study of the venture capital market in Central Asia and the Caucasus. The official presentation of the survey results was held at Astana Hub.

According to the data received, the venture capital market in Central Asia and the Caucasus is experiencing dynamic growth. The total amount of venture capital deals in the region for 2023 exceeded USD110 mln.

“Our study found that venture capital funding in Central Asia and the Caucasus region has increased 5.5-fold over the past five years, with deals exceeding USD110 million in 2023. However, the ecosystem remains small, indicating significant potential for additional investment. One of the barriers to development is the lack of reliable data in the region. Our goal at RISE Research is to fill this gap by providing investors and the government with quality and reliable data that promotes sustainable growth," notes Ainur Zhanturina, founder of RISE Research.

“Government support, infrastructure development for startups and international partnerships support the development of Kazakhstan's venture capital market, reinforced by the creation of Astana Hub and a network of regional innovation hubs. These initiatives promote decentralization of innovation activity and provide entrepreneurs with access to resources and mentoring. The opening of hubs abroad enables Kazakhstani startups to reach an international level, creating bridges for exporting innovation and attracting knowledge back to the country. This comprehensive approach to support innovation and entrepreneurship makes Kazakhstan an attractive destination for venture capital investments and contributes to the country's integration into the global innovation ecosystem," says Yersultan Yermanov, Director of the IT Industry Development Department.

Kazakhstan became the leader among the countries presented in the report: in 2023, the amount of venture capital deals in the country exceeded USD80 million. For comparison, the second place is held by Georgia - the total volume of deals in 2023 amounted to USD21.6 million. The volume of venture capital financing in Kazakhstan has grown more than 6 times over the past six years. More than half (55%) of all venture deals in 2023 occurred in December. The average deal size has grown 3.8 times over the last 6 years and amounted to USD1 mln in 2023.

 

“This study is a critical milestone for the venture capital ecosystem in Central Asia and the Caucasus. Providing transparency and recognizing the maturity of our market, it will attract the attention of international investors and open the door to the global market for local startups and funds. As a Kazakhstani entrepreneur with global ambitions, I am certainly happy about this," emphasizes Yerik Aubakirov, CEO of EA Group Holding Company.

 

The bulk of deals in Kazakhstan were pre-seed (52%) and seed (38%) rounds. Series A and B rounds accounted for 10% of the total number of deals in 2023. However, there were no Series C rounds in 2023.

 

“Crunchbase data shows that investment in startups in the Central Asia and Caucasus region has grown in recent years, especially in terms of pre-seed and seed funding in Kazakhstan. With a growing local venture capital ecosystem, we look forward to seeing how companies progress in raising early-stage investment in 2024 and beyond," says Gene Thier, Senior Data Editor at Crunchbase News.

 

In terms of industries, in 2023, startups in FinTech, as well as AI (artificial intelligence), HealthTech (healthcare technology) and PropTech (real estate technology) attracted maximum interest from venture capitalists in Kazakhstan.

 

When analyzing venture capital investment deals in Kazakhstan by type of investor, it turned out that in 2023, venture capital funds were leading in terms of the amount of deals. Business angels invested more often. They accounted for the maximum number of deals. 

 

“The regional venture capital market is becoming more and more attractive to investors due to high growth dynamics and improved quality of projects. Despite the intensive growth in the volume and number of venture deals in recent years, our region still lacks a critical mass of active business angels and venture funds at both early and late stages to meet the existing demand for investments from startups," said Abay Absamet, General Director of BGlobal Ventures.

 

The study also shows that despite being outnumbered by the number of deals (80%), Kazakhstani venture capitalists are losing out to international players in terms of investment volume and occupy only 45%. This indicates a significant dependence of Kazakhstani startups on international investors to obtain larger financing. 

 

The startup scene in the region has expanded significantly over the past five years, reflecting a well-developed ecosystem with numerous startups, funds and venture capital investors and angels. The shift from quantity to improved quality of product development and business aspects reflects a more mature startup community compared to five years ago.

 

The full study is available at the link

 

About companies:

RISE Research  is a market analysis, research and advisory company specializing in fintech, venture capital, startups, technology ecosystems and trends in the CIS and Central Asia region.

 

EA Group is a financial and investment holding company specializing in venture capital, private equity and asset management. The company provides comprehensive support, growth and success through portfolio management, mergers and acquisitions, and strategic guidance to the companies they invest in.

 

BGlobal Ventures provides financial and non-financial support to venture capital investors. BGlobal Ventures is a subsidiary of the fund of funds - Qazaqstan Investment Corporation JSC

 

Crunchbase is the leading provider of private company search and research solutions. 75 million users including vendors, entrepreneurs, investors and market researchers use Crunchbase to find new business opportunities.

 

KPMG is one of the world's largest networks of professional companies providing audit, tax and consulting services. More than 270,000 employees worldwide work in KPMG offices in 143 countries. KPMG's clients are business corporations, governments and public institutions, as well as non-profit organizations. The company cooperates closely with them to assist them in mitigating risks and capitalizing on opportunities.

 

Qazaqstan Investment Corporation is a fund of private equity funds established to promote sustainable development of the national economy. Our activities are aimed at building private equity infrastructure in Kazakhstan, attracting foreign investment in priority sectors of the economy, utilizing leading international experience and transferring innovative knowledge and technologies to private equity.