Prospects for the development of the venture capital industry were discussed at the AFD session “Forging the momentum of regional VC”

The AIFC Tech Hub held a panel session “Forging the momentum of regional VC”. The panel aims to unleash the potential of Central Asian start-ups and find ways to influence the next wave of VC growth in the region. Representatives of Kazakhstani and foreign venture capital funds discussed the future of the industry in Kazakhstan and Central Asia.

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James Tan, Managing Partner of Quest Ventures, described the 5 pillars of VC. The first is startups, which means increasing the number of quality startups. The second is institute of higher education, which includes talent development, universities that train that talent, research, and commercialization. The third is risk capital, which means attracting late-stage funds. In this direction, according to the speaker, the AIFC and Astana Hub can create motivation for entrepreneurs to enter the later stages. The fourth is corporates, which provide corporate investment and procurement services. Fifth is the availability of agencies that are connected to the government. He noted that: “In Kazakhstan, we see that the government welcomes participants from all over the world to invest.”

Max Gurvits, the Partner at Vitosha Venture Partners also confirmed this thesis. He emphasized that “Kazakhstan is one of the few countries where you can do so much and so quickly based on such a talented and educated workforce. There is one thing we want to overcome, which is political instability. And I hope that eventually, European VC will become a stable partner in Central Asia, particularly in Kazakhstan”.

Daniel Seal, Partner of White Hill Capital, commented that investors and entrepreneurs must be careful – keep a more conservative approach at startup valuations. He added that investors shall collaborate and do common work together and that: “Kazakhstan is Singapore of Central Asia. 

Dilshod Zufarov, Chief Innovation Officer of Uzcard, also added that VC in Uzbekistan is promoted through incubation, acceleration, and investment programs that are aimed to stimulate project growth. “In Uzbekistan, there is a regulation on the movement of capital. If residents want to invest in foreign enterprises, they face strict regulations. We are trying to find ways to soften this regulation. Certain opportunities and solutions are offered by the AIFC. We do not have the opportunity of exits from VC investments, but with AIFC it works”, – he stressed.

At the same time, Alim Khamitov CEO, MOST Ventures/Business-incubator MOST, spoke about the shortage of IT specialists in Central Asia and the untapped potential. “Now there are more than 5000 thousand startups, most of them will die in 3-6 months, but there is nothing wrong with that. In general, you can see that this is no longer a hype, it is a steady trend. The transfer of the legal framework of the AIFC on venture investment to the Kazakh level is one law for venture investment”, – he commented.

In the speech, Yernur Rysmagambetov, Chairman of the Management Board, noted that: “VC is not just numbers, amounts. It is smart capital. A venture capitalist is someone who allows us to cultivate an entrepreneurial spirit. VC financing allows you to create new startups and form a new model. We are really trying to transform the country”.

Shakboz Rakhmanov CEO, MyVentures, said that: “There is actually no difficulty in finding startups. Many do not know how to fundraise, attract the right investments. But it is temporary. We will quickly overcome this barrier and reach the international level”.

According to most participants, the startup ecosystem of Central Asia is developing rapidly, claiming successful competition with leading startup hubs. One of the most important tasks today is to maintain an environment with positive dynamics of venture investments, and to develop talents so that regional startups go to a new level.

Reference:

The Astana International Financial Centre (AIFC) is an independent jurisdiction that began operations in 2018. In accordance with the Development Strategy until 2025, the key task of the AIFC is to consolidate as a universal platform connecting the countries of the EAEU, Central Asia and the Caucasus. www.aifc.kz

AIFC Tech Hub– a division of the Astana International Financial Centre (AIFC), whose task is to promote the development of a startup ecosystem, the venture industry market, e-commerce, corporate innovation and new technological directions in Kazakhstan (FinTech, GovTech, SatelliteTech, Industry 4.0. и etc.). Together with international partners, Tech Hub conducts programs to support market players, facilitates the structuring of venture deals and testing of new fintech solutions within the regulatory sandbox of the AIFC jurisdiction.  www.tech.aifc.kz