Kazakhstan’s Venture Capital Journey: From Soviet Roots to Innovative Frontiers

Erik Aubakirov
6 mn read

Author: Erik Aubakirov is a prominent entrepreneur, investor, and the founder of EA Group Holding Ltd. Among his investment ventures is the innovative startup S1lkPay, which was awarded a U.S. patent for its cutting-edge payment system in 2023. He also played a key role in making the Parqour project a success. This project is about a smart parking system with number recognition, and it is now used in big places like Dubai and Saudi Arabia.


The Beginnings of Venture Capital in Kazakhstan

To lay the groundwork, let us first clarify the fundamentals. What exactly constitutes a venture capital investment? 

“Venture” means taking a risk or embarking on an adventure. In the context of venture investments, this usually refers to putting money into promising startups or companies that are ready to turn their ideas into profitable businesses. It’s key to highlight that for me, venture is less about the financial investment and more about believing in people and their vision.

I was raised in the modest Kazakh city of Semipalatinsk. It might be familiar to some due to its proximity to the USSR’s first and most significant nuclear test site, operational until its closure in 1991. My father worked as an engineer and my mother served as a civil servant, while my heart belonged to football. From a young age, I was captivated by the game, spending countless hours on the dusty fields of my neighborhood, aspiring to one day turn professional. Back then, the concept of investments was foreign to not only me but also to anyone in my hometown. Both the upbringing from my parents and my passion for football have been pivotal in instilling a sense of hard work and discipline in me. This foundation has been instrumental in shaping me into an entrepreneur who not only champions the growth of futsal and football in my homeland but also aids fellow entrepreneurs in bringing their innovative business ideas to fruition. The other half of what drives me in business and investment endeavors is a strong belief in people coupled with a profound interest in technology.

But let’s get back to the topic of venture capital. As many are aware, this concept originated in the USA, where it was initially developed before spreading to other global markets. By the late 1990s, venture capital investments were flourishing in both the United States and Europe, marked by a surge in renowned funds and numerous high-profile IPOs.


During that period, venture investments in the conventional sense were virtually nonexistent in Central Asia and specifically in Kazakhstan. Instead, it was more about entrepreneurs discussing business support, pitching ideas, and garnering interest in their projects, but this fell short of what we recognize today as venture capital. Certainly, the political climate had a significant impact. It was not until December 16, 1991, that the Constitutional Law on Independence was enacted in Kazakhstan.

Comparing the evolution of Kazakhstan’s venture ecosystem with that of the Persian Gulf countries reveals some intriguing parallels. The inception of venture funds in both regions occurred roughly concurrently in the late 1990s and early 2000s. However, the Persian Gulf countries experienced a faster growth rate, buoyed by state backing and the influx of petrodollars. By the close of the 2000s, the Gulf countries boasted dozens of venture funds with capital amounting to hundreds of millions of dollars, and witnessed the emergence of their first startup unicorns .

In contrast, the development of Kazakhstan’s venture ecosystem has been more gradual. A significant turning point came in 2004, with the government’s initiation of programs to support innovation. Eventually, the first investment funds and individual investors started to emerge. However, their strategy was different from what you’d see in America. They tended to invest in older, more traditional businesses rather than the risky tech startups that are popular in the US.

A classic example of early venture investments in Kazakhstan is the journey of Ramil Mukhoryapov with his project, Chocofamily. In 2011, Ramil Mukhoryapov managed to gather $105,000 from family and friends for his Chocofamily project. By 2013, he secured an additional $400,000 from an investment fund, and in 2015, prominent entrepreneur Murat Abdrakhmanov made a significant investment. The project was valued at $1 million at that time, setting a record for an early-stage startup in the region.

This highlights that even in the nascent stages of Kazakhstan’s venture scene, the credibility and character of the person behind a project were crucial factors. In my view, it was after the so-called golden era of venture capital that investors in Europe and the USA began to clearly recognize the importance of the entrepreneur’s personality, realizing that simply pouring funds into IT projects and expecting profits was not enough. In Kazakhstan, we understood the significance of the individual behind the project from the very start.

Venture Capital in Kazakhstan Today

To really understand my view on investing and venture capital, I need to share about a time my business didn’t work out. In 2017, I put money into an IT product franchise and, with a partner, made it one of the top players in the market. We also invested in a fintech startup that is now among Kazakhstan’s top ten payment services. However, our venture into food distribution did not succeed due to slim profit margins and no earnings, resulting in the business shutting down.

This setback, especially the closing of the food distribution venture, taught me to concentrate on sectors like IT, high-tech, fintech, and neobanking. It was around this time that EA Group investment holding was established, aiming to organize all the companies managed or owned by partners.

The venture capital market in Kazakhstan is currently experiencing significant growth. Recent research indicates that Kazakhstan leads in investment volume across Central Asia and the Caucasus, with growth rates surpassing those in Northern Europe. From 2017 to 2022, the amount of venture capital funding in the CCA region has surged by 5.5 times. For context, in the MENA (Middle East and North Africa) region, venture capital funding increased by 6.8 times, while Europe saw a 3.8 times rise. Globally, the growth rate stood at 2.2 times.

A key reason for these growth figures, particularly in Kazakhstan, is the contribution of investors from other countries. Kazakhstan is now seeing the emergence and growth of impressive IT projects that are drawing investors from around the globe. In 2023, international investors accounted for 55% of all venture capital investments in the country.

The most attractive sectors for these investments include fintech, artificial intelligence (AI), and health technologies. Experts predict that by 2026, the worldwide fintech market will double in size, reaching $638 billion. In 2022, global investments in AI startups hit $18.4 billion, marking a 23% annual increase. The healthtech sector is experiencing significant growth as well, particularly fueled by the recent pandemic.

Leading the charge in Kazakhstan’s startup scene, several standout companies emerge:

  • S1lkPay is a payment service which secured a U.S. patent in 2023 for its innovative transaction processing technology, which enhances both the speed and security of payments. The company has developed its innovative transaction processing technology, which enhances both the speed and security of payments. S1lkPay is now making significant strides into the Middle East and Southeast Asia markets.
  • CerebraAI stands out as an AI-based platform specializing in diagnosing and treating strokes. This startup gained momentum through acceleration in the United States and secured $1 million from international investors. Its technology is already in use in various Kazakhstani clinics, showcasing significant potential for worldwide expansion.  

Despite the achievements, the venture ecosystem in Kazakhstan and Central Asia remains in its infancy. Investment levels are not yet on par with those in developed nations, and there is a shortage of local players to sustain robust growth. The region has yet to produce “unicorns,” and it still relies heavily on government support, facing regulatory and infrastructural hurdles that need to be addressed.  

Yet, I remain optimistic about what lies ahead. Kazakhstan is home to talented entrepreneurs capable of competing on the global stage. Moreover, the mindset of investors is evolving: there is a growing interest in venture capital, along with an increasing readiness to not just invest financially but also to offer mentorship and networking opportunities. The emphasis is transitioning from strictly financial indicators to valuing human capital and the character of the founders. This shift is a positive development because without a dedicated team, even the most promising idea is likely to remain unimplemented.

Based on my projections, within the next 5-7 years, the volume of venture capital investments in Kazakhstan could increase by 3-5 times, potentially reaching $1-1.5 billion annually. We expect to witness the rise of the first generation of local unicorns, set to become the driving force behind the ecosystem’s growth. Fintech, AI, biotech, and green technologies are poised to be the most promising sectors.

There is considerable work ahead in developing infrastructure, attracting talent, and forging links with the global market. This journey will require substantial effort and patience. The lessons from recent years confirm that we are on the right path. Our greatest assets are our people, their innovative ideas, and a drive for progress. I am confident that, together, we will achieve success.

Your chance to share your opinion and argue in the comments

Learn more about Crunch/Dubai

Crunch Dubai is a community-orientated media portal. We find cool stories. Experts and entrepreneurs write their stories on our platform.

Learn latest Tech and Business news in home town

Crunch Dubai is a hyperlocal media portal. Real people, real business, real stories

Become an expert

If you want to promote your expertise, reach out to [email protected]