The New VC Geographies: Central Asia and the Caucasus

Guest most by Nazgul Baitemirova, VC Advisor to the CEO of Astana Hub

Welcome to The New VC Geographies, a regular column exploring rising venture ecosystems that are reshaping global innovation dynamics. In each edition, we focus on an emerging region whose startup and investment trajectory holds strategic significance. This inaugural piece turns our lens to Central Asia and the Caucasus — a historically overlooked frontier that’s rapidly maturing into a globally relevant innovation corridor.

The venture capital landscape of Central Asia and the Caucasus is undergoing a profound evolution. A region once marked by fragmented startup activity is becoming a dynamic and increasingly integrated ecosystem. In 2024, regional VC funding surpassed $95 million, with Kazakhstan accounting for over $80 million—a sixfold increase over six years. While absolute volumes remain modest, growth here has outpaced many developed markets: Central Asia’s VC market grew 5.5x faster than that of the Nordic countries in 2023. International investor interest is rising, and institutional infrastructure is maturing.

As VC Advisor to the CEO of Astana Hub, the region’s most advanced tech platform, I’ve witnessed how entrepreneurial clusters are emerging across Kazakhstan, Georgia, Uzbekistan, and beyond. Local champions are now building scalable businesses with global ambitions. Structural reforms, proactive state support, and diaspora talent flows are accelerating this transformation. The region is no longer just a frontier—it’s a platform.

Kazakhstan leads the region in VC activity, contributing more than 75% of total funding volume. The average deal size in 2023 exceeded $1 million, up 3.8x from 2018. Notably, 55% of Kazakhstan’s VC inflows came from international investors—a sign of rising global confidence in the country’s startup ecosystem.

The growth isn’t happening in isolation. Astana Hub and regulatory sandboxes have enabled a generation of founders to access capital, talent, and policy support. Government strategy is no longer just supportive—it’s catalytic. Astana Hub Ventures Ltd., the venture capital arm of Astana Hub, was launched on May 31, 2024. Registered at the Astana International Financial Centre (AIFC), the Fund is dedicated to supporting early-stage startups. It invests in participants of Astana Hub’s acceleration and incubation programs, helping them move forward to subsequent investment rounds. Qazaqstan Venture Group — the Fund of Funds initiative — is also building long-term institutional capital infrastructure. Kazakhstan ranks 89th in Harvard’s Economic Complexity Index, with an economy still heavily reliant on oil, gold, and uranium. Yet, it’s precisely this resource dependency that presents an opportunity for structural transformation. Venture capital is emerging as a vehicle to transition from extraction to innovation.

According to Harvard’s Growth Lab, Kazakhstan is projected to grow at 3.8% annually through 2033—placing it in the global top quartile. If leveraged wisely, sovereign capital can help replicate the resource-to-innovation transitions seen in Norway and Australia. Kazakhstan has the potential to become a launchpad for tech-driven economic diversification in Central Asia.

Beyond Kazakhstan, other countries in the region are gaining momentum. Georgia’s VC market quadrupled in 2023, reaching $21.6 million, largely due to the catalytic role of the Georgia Innovation and Technology Agency (GITA). Uzbekistan registered $17.5 million across 38 deals in 2023, with 60% of capital coming from international investors. While Azerbaijan saw fewer deals, its average investment size increased by 71%. Kyrgyzstan and Tajikistan are producing globally relevant startups like Appboxo, Behaviox, and Zypl.ai—a standout AI-driven credit scoring platform from Dushanbe.

The region’s VC infrastructure is also evolving. In Kazakhstan, MA7 Ventures and several angel syndicates are providing both early- and growth-stage funding, while media platforms like Digital Business and ER10 Media are helping shape an informed startup culture. Ecosystem mapping by Dealroom.co and the rise of publicly available datasets have reduced information asymmetry for global investors.

Astana Hub has matured into a regional innovation platform, offering zero-tax zones, physical infrastructure, access to a global network of experts, and extensive founder support. Its model of state-supported yet market-driven development is becoming a blueprint for others in the region. The UAE and U.S. are popular international springboards for local startups, with many companies incorporating abroad to access capital and markets. Cross-border expansion is becoming the norm, especially at the Series A stage.

Fintech continues to lead in deal count and volume, particularly in Kazakhstan and Uzbekistan. But new verticals—AI, developer tools, healthtech, and e-commerce—are rising fast. The average deal size is increasing, international co-investment is more common, and an increasing number of repeat founders are building globally scalable ventures.

A noteworthy example from the broader global AI landscape is Higgsfield AI, a generative AI startup founded in 2023 with its core technology team based in Almaty, Kazakhstan, though headquartered in San Francisco. Specializing in visual content creation for social media, Higgsfield has rapidly risen to global prominence and is now listed among the top 25 AI startups worldwide, according to Dealroom.co. It is currently ranked as the number one video generative AI startup globally, having outpaced competitors including OpenAI's Sora. The company’s AI models are trained on an immense 9-petabyte dataset using 512 NVIDIA GPUs. In just nine months, they launched two products, demonstrating the velocity and ambition that define this competitive segment. Higgsfield competes with companies like Shapes AI, Trint, DeepEyes, and Colossyan, and serves as an inspiring benchmark for emerging AI ventures across Central Asia and beyond.

Challenges remain. Talent outflow persists, especially in AI and software engineering. Founders are still adjusting to international investor expectations. Follow-on capital remains scarce. But the region’s trajectory is clear: quality is improving, expansion is accelerating, and the local investor base is maturing.

Looking ahead, based on current growth trajectories and increasing investor interest, it is reasonable to estimate that VC volumes in Central Asia and the Caucasus could exceed $150–200 million by 2027. Kazakhstan may surpass $120 million, while Georgia and Uzbekistan could each exceed $50 million. These forward-looking figures are projections informed by recent momentum and ongoing ecosystem development. International participation, which stands at 55–60% today, may climb to 70% as global investors expand their presence.

For early-stage investors, this is the moment to build long-term exposure. The region offers structural growth, competitive talent, and a relatively untapped startup landscape. For policymakers, now is the time to double down on regulatory harmonization and global capital integration. For founders and accelerators, the opportunity is to act regionally—and think globally.

From Astana to Tbilisi to Tashkent, the ecosystem is forming. The capital is coming. The ambition is rising. The next wave of global startups may well be born in Central Asia. While the current ecosystem is primarily dominated by early-stage startups, there is a growing capacity and appetite for growth-stage investments as well — a signal that the region is evolving to support companies across the full venture lifecycle.

Next in the Series: Stay tuned for our next column where we will explore the investor archetypes entering this region and how regional LPs are beginning to reshape VC dynamics from within.

References:

• Dealroom.co – Central Asia & Caucasus VC Ecosystem Report 2024 and AI startup rankings
• Harvard Growth Lab – Atlas of Economic Complexity and GDP growth projections for Kazakhstan
• Rise Research – State of Venture Capital in Central Asia & the Caucasus 2024, published in partnership with EA Group, MA7 Ventures, and BGlobal Ventures
• Georgia Innovation and Technology Agency (GITA) – Official publications and investment reports
• Astana Hub & Qazaqstan Venture Group – Internal data, strategic reports, and public communications
• Higgsfield AI – Company disclosures and industry coverage from TechCrunch, Dealroom, and internal interviews