Venture Capital Markets in Caucasus and Central Asia Surpass Northern Regions in Development Rates

The venture capital market in the Central Asia and Caucasus (CCA) region is undergoing rapid expansion. Recent research involving RISE Research, EA Group Holding, BGlobal Ventures, Crunchbase, the Kazakhstan Ministry of Digital Development, Innovation and Aerospace Industry, and KPMG Central Asia and Caucasus shows that venture financing in the CCA region is growing 5.5 times faster than in the Nordic countries.

RISE Research, along with EA Group and BGlobal Ventures, in partnership with Crunchbase and KPMG Central Asia and Caucasus, and with support from the Republic of Kazakhstan's Ministry of Digital Development, Innovation, and Aerospace Industry, undertook an extensive study of the venture capital landscape in the Central Asia and Caucasus region.


The startup ecosystem in the region has seen considerable expansion recently, showcasing a developed environment ripe with successful startups, supportive foundations, and active business angels. Many countries in the CCA region are actively taking steps to foster startup growth. These efforts include establishing specialized agencies, IT parks, free economic zones, and public financing initiatives. These strategic measures have laid the foundation for establishing the essential elements needed for a thriving venture ecosystem.


According to Crunchbase data, there has been a notable increase in startup investments within the Central Asia and Caucasus region over recent years. This trend is particularly evident in the early stages of financing, such as pre-seed and seed rounds, with Kazakhstan, Georgia, and Azerbaijan leading the way. As the local venture capital ecosystem continues to expand, we anticipate that companies will make significant strides in securing early-stage investments throughout 2024 and in the years to follow” – Gené Teare, Senior Data Editor, Crunchbase News


The report indicates that, over the last five years, the volume of venture capital investments in the region has seen a substantial increase, growing by 5.5 times. In 2023, this amount surpassed $110 million. Venture capital financing in the CCA region is expanding at a quicker pace compared to the Nordic regions, Europe (excluding the Central and Eastern Europe region), and the global venture capital market as a whole. Despite its rapid growth, the venture capital sector in this region remains relatively small in the medium term, yet it holds significant potential for expanding investment opportunities.


Our research reveals that over the past five years, the volume of venture capital financing in Central Asia and the Caucasus has surged by 5.5 times. By 2023, the total value of transactions in the region had surpassed $110 million. Although the ecosystem has experienced growth, it remains relatively small, suggesting ample room for further investments. The scarcity of reliable market data has been a hindrance to development, but RISE Research is committed to bridging this gap by supplying crucial information to support sustainable growth” – Ainur Zhanturina, founder of RISE Research


Kazakhstan has emerged as the leader in the region in terms of both venture financing volumes and development rates. In the past six years, the volume of venture capital transactions in the country has surged by over sixfold, reaching upwards of $80 million in 2023. The average size of transactions has grown 3.8 times over the last six years, reaching $1 million in 2023. The transaction sizes are significantly influenced by international investors, who show keen interest in local projects and invest substantially in local startups. Local investors contribute to just 45% of the total investment volume.


“"As a Kazakhstani entrepreneur with aspirations on a global scale, I take great pride in Kazakhstan's leading role in this swiftly evolving sector. This report positions Central Asia prominently on the global stage, drawing international focus and investment that are set to propel the upcoming surge in innovation and entrepreneurship” – Erik Aubakirov, Chief Executive Officer at EA Group Holding


Uzbekistan has also experienced growth in the volume of venture capital investments. In 2023, venture capital transactions in the country surpassed $6 million, doubling the volume from the previous year. The total count of venture capital transactions saw a 1.42-fold increase, amounting to 34 transactions in total.


In 2023, international investors were responsible for 60% of all investments made in Uzbekistan. Among local investors, government organizations are the predominant source of investments. In 2023, the average size of transactions by venture capital funds was $204 thousand.


Georgia is also experiencing growth in venture investment volume. Last year, the total venture financing in the country exceeded $21.6 million, marking a four-time increase from 2022. The notable growth in 2023 can be attributed largely to four major transactions involving Pave Bank, Cargon, Hexacore, and, which collectively represent more than half of the total investment volume.


Experts point out that the advancement of the venture capital market in Georgia was primarily driven by the establishment of the Georgia Innovation and Technology Agency (GITA). GITA supports the growth of early-stage startups and the attraction of foreign venture funds by offering grants, training, and technical assistance.


"The regional venture capital market is increasingly drawing investment interest due to its robust growth dynamics and the enhanced quality of projects. However, despite the recent surge in both the volume and number of venture transactions, our region still falls short of having a sufficient number of active business angels and venture funds at both early and late stages to fulfill the current investment demand from startups" – Abay Absamet, CEO of BGlobal Ventures


The total sum of venture capital financing in Azerbaijan stood at approximately $2.2 million, representing a decrease compared to the previous year. However, the average investment per funding round in the market is on the rise. While the average funding per round amounted to $95 thousand in 2022, it surged to $163 thousand in 2023.


The emergence of the first large venture capital fund in the country, Caucasus Ventures, is one of the reasons for the consolidation. This development serves as a catalyst for the country's ecosystem, notably enhancing the market's maturity.


In Kyrgyzstan, there has been a decrease in the total volume of venture capital financing.  The total amount reached approximately $1.1 million, which is $100 thousand lower compared to last year. It is worth noting that in recent years, there has been an increase in the number of qualified technical specialists in the country. However, due to the rather small domestic market and lack of funding, these talents often opt to go abroad, initiating projects that have little to no relevance to Kyrgyzstan. Among the notable Kyrgyz projects in the global market are Appboxo, Behaviox, Kodif, EnsiliTech, and several others.


In contrast, the venture capital market of Tajikistan is still in its nascent stage. However, despite this early phase, two noteworthy FinTech projects have emerged in the country: the Alif digital ecosystem and, a startup developing a credit scoring tool utilizing artificial intelligence. Almost all disclosed venture capital investments in the country for 2022-2023 are attributed to It's worth highlighting that in 2023, the total volume of venture capital transactions reached $2 million. 


In the past five years, the startup scene in Central Asia has witnessed significant expansion, pointing towards the presence of a developed ecosystem teeming with numerous startups, funds, venture investors, and angels. The transition from prioritizing quantity to enhancing the quality of product development and business aspects signifies a more mature startup community compared to its state five years ago.


For further details, you can access the study via this link


About companies:

RISE Research is a specialized company offering market analysis, research, and consulting services within the realms of FinTech, venture capital, startups, technological ecosystems, and trends in the CIS and Central Asia region.


EA Group is a financial and investment holding company specializing in venture and private equity investments, as well as asset management. The company offers comprehensive support, ensuring growth and success through portfolio management, mergers and acquisitions, and strategic guidance for the companies in which they invest.


BGlobal Ventures offers both financial and non-financial support to venture investors. It operates as a subsidiary of the fund of funds, Qazaqstan Investment Corporation JSC.


Crunchbase stands as a premier provider of solutions for searching and researching private companies. With 75 million users, including sellers, entrepreneurs, investors, and market researchers, Crunchbase serves as a valuable platform for discovering new business opportunities.


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