Is Kazakhstan The Subsequent Sizzling Spot for Fintech?

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April 2, 2024

Over the previous years, enterprise capital (VC) funding in Caucasus and Central Asia (CCA) has elevated considerably, rising by greater than fivefold between 2018 and 2023, a brand new report produced by RISE Analysis in cooperation with EA Group and BGlobal Ventures, in addition to Crunchbase, the Ministry of Digital Growth, Innovation and Aerospace Business of Kazakhstan, and KPMG Caucasus and Central Asia, says. Throughout the area, fintech has risen to prominence, changing into certainly one of CCA’s buyers most popular funding targets.

The “Enterprise Capital in Central Asia and the Caucasus 2023” report, launched in March 2024, offers an outline of the VC panorama throughout the CCA area, outlining rising traits and favored sectors in 2023.

Based on the report, VC funding in CCA reached US$110 million in 2023, up by 450% from a mere US$20 million in 2018. This development has been pushed by the area’s increasing startup ecosystem, which noticed its variety of tech startups develop sixfold whereas the variety of lively VC buyers within the area elevated by practically threefold in the course of the interval, knowledge from the report present.

The VC ecosystem within the CCA area over the previous 5 years, Supply: Enterprise Capital in Central Asia and the Caucasus 2023, Mar 2024

Fintech Kazakhstan on the Rise

In 2023, fintech emerged as some of the outstanding sectors within the area. Although the report doesn’t share particular quantities, knowledge present that fintech was the highest startup sector in many of the international locations throughout the area, and most notably in Kazakhstan and Uzbekistan, two of CCA’s largest VC markets.

In 2023, Kazakhstan secured US$80 million in VC funding, accounting for practically 73% of all VC funding in CCA. Of that quantity, about 40% was raised by fintech startups, making the phase the favourite of buyers within the nation.

VC deals in Kazakhstan by sectors, 2023, Source: Venture Capital in Central Asia and the Caucasus 2023, Mar 2024

VC offers in Kazakhstan by sectors, 2023, Supply: Enterprise Capital in Central Asia and the Caucasus 2023, Mar 2024

Fintech Amongst Investor’s Favorite in Central Asia

An analogous pattern was noticed in Uzbekistan the place fintech startups secured a complete of US$2.75 million by way of 12 offers in 2022 and 2023, making fintech essentially the most prevalent amongst sectors within the home startup scene.

Uzbek startups secured a complete of US$6.3 million in VC funding in 2023, a sum that makes Uzbekistan the third greatest market in CCA when it comes to VC funding.

Uzbek VC deals by sectors, 2022-2023, Source: Venture Capital in Central Asia and the Caucasus 2023, Mar 2024

Uzbek VC offers by sectors, 2022-2023, Supply: Enterprise Capital in Central Asia and the Caucasus 2023, Mar 2024

Fintech was additionally the popular funding goal in Tajikistan the place the sector secured a lot of the US$3.1 million VC funding raised by the nation’s tech startups in 2022 and 2023. Zypl.ai, an early-stage startup that develops a credit score scoring instrument powered by synthetic intelligence, accounted for practically all of disclosed VC investments in Tajikistan in 2022 and 2023, elevating US$1.1 million in a pre-seed spherical in September 2022, and US$2 million in December 2023, the information present.

Tajikistani VC funding in 2022 and 2023, Source: Venture Capital in Central Asia and the Caucasus 2023, Mar 2024

Tajikistani VC funding in 2022 and 2023, Supply: Enterprise Capital in Central Asia and the Caucasus 2023, Mar 2024

Georgia, the second largest VC market in CCA, additionally recorded robust curiosity in fintech final yr, with a few of the nation’s greatest rounds being secured by corporations within the sector. Pave Financial institution, a new digital financial institution, raised US$5.2 million in December 2023; Hexacore, a blockchain and Internet 3.0 writer, secured US$3.5 million in seed funding in August 2023; and CityPay.io, a digital foreign money cost resolution, raised US$2 million in August 2023.

Collectively these 4 rounds secured US$10.7 million, representing practically half of what was raised in Georgia final yr.

Georgian VC funding in 2022 and 2023, Source: Venture Capital in Central Asia and the Caucasus 2023, Mar 2024

Georgian VC funding in 2022 and 2023, Supply: Enterprise Capital in Central Asia and the Caucasus 2023, Mar 2024

VC funding in Caucasus and Central Asia

Information from the report reveal that Kazakhstan at the moment stands as the most important marketplace for VC funding in CCA and essentially the most developed startup ecosystem. Since 2018, the nation’s VC market has elevated significantly, rising by 6.6 instances to US$80 million in 2023. In the meantime, common deal dimension grew 3.8 instances to quantity to US$1 million in 2023, a sign of the maturing of the Kazakh startup ecosystem.

Nonetheless, the Kazakh tech startup ecosystem stays nascent with the majority of 2023’s VC offers being pre-Seed (52%) and Seed (38%) rounds. Sequence A and B rounds accounted for 10% of the full variety of offers in 2023 and Sequence C rounds had been non-existent.

Kazakhstan VC volume, 2018 - 2023, US$ million, Source: Venture Capital in Central Asia and the Caucasus 2023, Mar 2024

Kazakhstan VC quantity, 2018 – 2023, US$ million, Supply: Enterprise Capital in Central Asia and the Caucasus 2023, Mar 2024

The comparatively low ranges of investments in CCA indicate that a lot alternatives nonetheless exist for buyers alike.

A survey of greater than 100 startups within the area and insights drawn from interviews with over 30 markets leaders reveal that business contributors are bullish on the expansion prospect of VC funding in CCA.

40% of the buyers polled anticipate vital development in VC funding in 2024. This development can be pushed by the launch of latest enterprise funds and the emergence of latest enterprise angels, with 60% of respondents anticipating the investor pool within the area to develop considerably in 2024.

Traders cited fintech as essentially the most promising sector for VC investments in CCA within the close to future (30%), adopted by e-commerce (15%), agrotech (15%) and medtech (10%).

Results of the CCA survey, Source: Venture Capital in Central Asia and the Caucasus 2023, Mar 2024

Outcomes of the CCA survey, Supply: Enterprise Capital in Central Asia and the Caucasus 2023, Mar 2024

 

Featured picture credit score: Edited from freepik





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