Venture capital is increasingly flowing to start-ups in Central Asia. But the relatively low number of investors in the region still prompts many Central Asian-born entrepreneurs to relocate abroad to nurture their ideas.

A recently issued report – Venture Capital in Central Asia 2024 – measured start-up activity in four regional states – Kazakhstan, Uzbekistan, Kyrgyzstan and Tajikistan, noting that VC deal volume for firms in the region totaled $95 million in 2024, an increase of 7 percent over the previous year’s amount.

Central Asia’s leading hubs for start-up activity are, not surprisingly, Kazakhstan and Uzbekistan. Kazakhstan boasted the highest overall number of start-ups with over 1,000, but Uzbekistan registered the most impressive growth in attracting VC in 2024: 11 times more VC deal volume last year than in the year-earlier period. The VC flow to Kazakhstan declined in 2024 to $71 million, down from $80 million the previous year; Uzbekistan’s over 400 start-ups succeeded in attracting $17.5 million in VC funding last year, up from $6.3 million in 2023.

Start-up activity and VC investment is occurring on a much smaller scale in Kyrgyzstan and Tajikistan. Although Tajikistan has only about 100 registered start-ups, roughly three times fewer such firms than in Kyrgyzstan, more than double the amount of VC has flowed to Dushanbe ($6.6 million) than to Bishkek ($2.8 million) over the past two years.

Funding challenges and other issues still push a significant number of entrepreneurs to move out of the region to pursue their dreams, the report acknowledges. It highlights that Central Asian entrepreneurs have launched over 200 start-ups in the United States, and over 50 in the United Kingdom. More than 20 firms led by Central Asian citizens also call Saudi Arabia home. Many of the start-ups headquartered abroad maintain teams of employees back in Central Asia, the report adds.

“Several key factors are accelerating the [Central Asian] market’s development. First, the number of startups is rising, and their business models are designed for international expansion from the outset,” says Murat Abdrakhmanov, a co-author of the report who also heads the Kazakh-based VC firm MA7 Ventures.

“Second, venture investment in the region is becoming more structured: local funds are emerging, international investors are showing increasing interest, and experienced entrepreneurs are actively supporting new teams,” Abdrakhmanov adds. “This landscape is set to change in the coming years as the market matures, late-stage funds emerge, and deals become more transparent and structured.”

Transparency in deal-making has been an issue. Few of the “market leaders” interviewed for the 2024 report were willing to speak on the record or disclose details of investments. “While we collected funding data from both investors and startups, nearly 50 percent of the deals were classified as undisclosed, meaning their detailed terms were not made publicly available. Instead, we were allowed to include these deals only as aggregated figures,” the report’s authors state, referring to VC flows into Kazakhstan.

Central Asia’s large pool of tech-savvy, skilled young people, combined with an “immense, untapped demand for innovative solutions” is catalyzing the growth of the region’s start-up ecosystem, according to Yerik Aubakirov, another co-author and a venture capitalist heading EA Group. The report was prepared with support from such international entities as KPMG, Dealroom.co and Rise Research.

The report touts the success of Uzum – a digital services company that provides e-commerce, fintech and banking services for individuals and small and medium-sized enterprises – as Uzbekistan’s first unicorn, or a privately held start-up with a valuation of over $1 billion.

The Uzbek government is playing a major role in developing the country’s start-up culture. “The VC ecosystem in Uzbekistan is currently experiencing rapid deployment,” the report quotes Makhsud Yusupov, who heads a state-backed firm, UzVC. “Several state-backed VC firms have emerged, with projections indicating over $200 million will be deployed in the next 4-5 years.”