Kazakhstan as a Promising Market for Technological Investors
In recent decades, Kazakhstan has demonstrated significant economic growth thanks to reforms, natural resources, and the influx of foreign investments. The country increasingly attracts technological investors: its advantageous geographical location, growing economy, and government support for startups make it promising for investments. In 2023, as a result of effective reforms and digitalization, Kazakhstan's GDP grew by 5.1%. In 2024, the startup ecosystem is experiencing a real boom: according to the Association of Fintech and Innovative Technologies, the number of registered startups in the first half of the year increased by 28% compared to the previous year.
International investments are also doing well. For example, the national company "Kazakh Invest" is currently overseeing 200 large projects worth $27.3 billion, and plans to launch more than 40 projects with foreign participation during 2024.
In recent years, Kazakhstan has been creating a unique investment environment for international players in the technology sector, thanks to successful reforms and active support for startups. To assist new investors in Kazakhstan, we have prepared a guide on the key aspects of the market. Everything you need has been collected – from the structure of the startup ecosystem to business advantages and investment directions. The guide will help you get acquainted with the Kazakhstani technology sector in more detail, providing a clear understanding of tax benefits, legal nuances, and government business support programs.
How is the Startup Ecosystem of Kazakhstan Structured?
The Kazakhstani startup ecosystem is actively developing thanks to the involvement of both public and private players, providing young companies with the necessary resources for growth: training, mentoring, and access to funding. Let's look at the key organizations.
Astana Hub: The largest technology park in Central Asia, supporting startups in Kazakhstan since 2018. It actively engages with investors and attracts financial aid. Acceleration programs and events for experience sharing, partner, and sponsor finding are regularly organized at the technology park. In 2023 alone, Astana Hub attracted more than 500 startups. One of them, CITIX, received $1 million from globally renowned investor Tim Draper.
Tech Garden. This organization provides comprehensive support to startups: acceleration programs, mentorship, assistance in developing business plans, and market entry strategies. Tech Garden also collaborates with investors, helping in attracting funding.
Venture Capital Funds: In Kazakhstan, startups are actively supported by venture funds that provide financial assistance and expert consultations for entering new markets. One such fund, Zubr Capital, specializes in investing in fast-growing IT companies and offers support for scaling and entering new markets. It's worth noting that the average check size for Zubr Capital ranges from $2 million to $10 million per investment, significantly higher than the market average. Other active funds include MyVentures, Big Sky Capital, and others.
Universities: Universities, including Nazarbayev University, Al-Farabi Kazakh National University, and Satbayev University, actively support startups. These and other institutions offer various acceleration programs and mentorship for students and graduates aspiring to develop their own projects.
Advantages of Investing in Tech Startups in Kazakhstan
Kazakhstan offers technological investors a number of advantages: from tax incentives to consistent access to skilled personnel. Let's take a closer look at them.
Access to Central Asia: Kazakhstan is renowned for its strategic location and serves as the "gateway" to Central Asia. Such a vast market (with a population of over 75 million people) creates attractive conditions for tech companies and startups aiming for regional development.
Tax Incentives and Government Programs: Residents of the Astana Hub are exempt from corporate tax and VAT, simplifying business operations. The draft of the new Tax Code of the Republic of Kazakhstan for investors provides a single package of benefits, including tax exemptions for certain operations, tax preferences for large projects, the opportunity to purchase land in special economic zones (SEZs), simplified access to infrastructure, support through the "green corridor" for accelerating administrative procedures, and simplified obtaining of permits and licenses for quick project launches.
Industry 4.0: Kazakhstan is actively implementing the principles of Industry 4.0, paying special attention to the automation and digitalization of production to increase flexibility and efficiency. By 2025, the state aims to increase the share of large and medium-sized enterprises using information technology to 23%, which should reduce the time to market for new products and ensure businesses adapt to advanced models.
Partnership with Google for Startups: Kazakhstan is the only country in Central Asia with an official Google accelerator – the Silkway Accelerator. In 3 years of operation, 62 startups from Central Eurasian countries have successfully completed the acceleration program.
Skilled Personnel: Since 2022, the IT sector in Kazakhstan has been producing about 10,000 highly qualified specialists annually. However, according to the latest data, the actual demand for such personnel in the labor market is significantly lower than expected. For example, despite the ambitious goal of training 100,000 IT specialists, in 2022, only about 3,800 specialists were employed in this field. It is expected that by 2029 the need for IT specialists will be around 5,000 people per year, which also raises the question of the labor market's readiness for such a number of novice specialists. This may affect the balance between the number of graduates and market demands.
Key Sectors for Investment
Pioneering startups in Kazakhstan often copied foreign projects, but over time it became clear that the local market needed unique solutions. This shift allowed entrepreneurs to focus on local needs and create products tailored to the country’s characteristics. Currently, the most promising investment areas are:
Extractive Industry: Kazakhstan is among the world leaders in the extraction of minerals, including oil, gas, uranium, and rare earth elements. This sector provides a reliable foundation for investors due to the steady demand for raw materials and government support for large projects. Sustainable development strategies are introducing digitization and automation technologies that contribute to the modernization of the industry.
Fintech: The digitalization of financial services is actively developing in Kazakhstan. According to the National Bank, 43% of all financial transactions are now conducted through electronic services.
Artificial Intelligence and Machine Learning: These technologies are actively being implemented in sectors such as logistics and agrotechnology. According to the “Digital Kazakhstan” strategy, by 2025, it is planned that 20% of all businesses will use AI technologies.
Agrotech and Ecotech: Innovative technologies, such as drones for field monitoring, make the agricultural sector attractive to investors.
Logistics: Transport accounts for more than 5% of the country's total GDP. Kazakhstan’s strategic location and large distances between settlements make this sector promising for digital solutions.
Legal and Government Programs for Investors
Kazakhstan has created a favorable legal and financial environment to support foreign investors and startups, offering a simplified registration system, incentives, and major government programs that stimulate innovation.
Company Registration Process. The "one-stop shop" system significantly simplifies the registration of foreign companies, reducing bureaucratic burdens and speeding up the process of starting a business.
Government Programs and Infrastructure. The state actively supports the development of startups and creates favorable conditions for business and technology. The Ministry of Digital Development, Innovations, and Aerospace Industry plays an important role in this, implementing the "Digital Kazakhstan" program. In 2024, within the framework of "Digital Kazakhstan," 8 accelerators and 3 venture funds with a total funding of $280 million were opened.
Tax Incentives for Startups. An important element of startup support is tax relief. For instance, residents of Astana Hub are exempt from corporate tax and VAT, reducing the burden on businesses and allowing tech companies to focus on growth.
Investor Protection. Kazakhstan ranks 25th in the World Bank's Ease of Doing Business ranking, confirming the high protection of investors' rights and the effectiveness of the legal system. Since 2020, the Enhanced Partnership and Cooperation Agreement with the EU has also been in effect, promoting political and economic dialogue and addressing various issues, including investment protection.
Challenges and Risks for Investors
Kazakhstan is actively improving its business and technological infrastructure to attract international investors, but some issues still require attention.
Cultural and Regulatory Barriers: Despite progress, investors may encounter bureaucracy and difficulties in understanding the local business culture.
Infrastructure Challenges: While IT infrastructure is developing rapidly, some regions still face issues with access to high-speed internet and digital services, limiting potential growth in certain sectors.
Domestic Market Limitations and Geographical Features: Kazakhstan has a small domestic market and is landlocked, which can complicate logistics and limit opportunities for startups in this sector.
How to Start Investing in Kazakhstan
To begin investing in Kazakhstan, it's essential to understand the main steps and seek support from local experts who can help you adapt to the market's specifics and legal framework.
Practical Steps. Foreign investors are advised to collaborate with local consultants, such as venture funds and business accelerators. This cooperation will help you gain a deeper understanding of the market, identify strategic opportunities, and establish connections with potential partners.
Legal Support: To comply with all legislative requirements, it is beneficial to work with law firms specializing in international investments. They will assist with business registration, tax issues, and investor rights protection, ensuring compliance with local legislation and minimizing administrative risks.
Local Resources and Infrastructure. For more detailed information about Kazakhstan's startup ecosystem, investors should thoroughly explore available resources. Many organizations, such as Astana Hub and the Ministry of Digital Development, provide detailed information on startups, support, and partnership programs. These platforms offer comprehensive reviews of benefits, available programs, and services, helping you navigate the market and assess the potential for your investments.
Kazakhstan is rapidly establishing itself as a key technology hub in Central Asia, creating unique conditions for international investors. This makes the country a promising choice for long-term investments, especially in the technology sector.