Jumaniyazova A.R.
THE EVOLUTION OF THE STARTUP ECOSYSTEM IN KAZAKHSTAN: TRENDS, CHALLENGES, AND OPPORTUNITIES *
Аннотация:
this study examines the evolution of Kazakhstan’s startup ecosystem, focusing on key trends, challenges, and opportunities. While government support, university incubators, and state-backed initiatives have accelerated startup growth, limited private investment, talent shortages, and regulatory inefficiencies remain significant barriers. The research, based on interviews with startup founders and stakeholders, highlights the dominance of AI, MedTech, and automation while underscoring the need for stronger international collaboration and a more customer-centric approach. Findings suggest that enhanced investment accessibility and global integration are crucial for sustaining Kazakhstan’s startup ecosystem.
Ключевые слова:
startup, Kazakhstan startup environment, government support, technology
DOI 10.24412/2712-8849-2025-687-33-42
Startups are one of the main engines for the progress of the country’s economic growth and becoming more frequent. The idea of a startup is to conduct business at the initial stages with the introduction of innovations [1]. ]. Every start-up company has its own goal: to benefit, to build a business, to improve the well-being of the population, or to bring some benefit to the whole world. Each successful startup project contributes to the development of the state’s economy, national wealth, and various spheres of trade, education, and medicine.These new aspects of economic and technological development have not spared our domestic development and labor market. As a result, the initiation of the third modernization in Kazakhstan has been achieved. The ”Kazakhstan - 2050”development strategy has been adopted, which aims to create the necessary conditions for transitioning into the fourth industrial revolution. It is imperative to understand that without reliance on science and technology, it will be impossible to achieve this goal [2]. The current landscape of entrepreneurial activity in our nation has been marked by the emergence of numerous state-sponsored startup enterprises that prioritize the utilization of technological innovations to cater to the requirements of the market.The number of Kazakhstani startup companies sustained by technoparks, incubators, and accelerators reached 300 companies in 2019, and by the end of 2022, it had increased to 1,000 companies [3]. This, in turn, proves the involvement of both sides: citizens and the state in the development of the domestic economy. However, not all projects are successful and continue their activities some years after the start. According to [4], about 90 percent of all startups face failure. The purpose of this study is to explore the evolution of the startup ecosystem in Kazakhstan by analyzing key trends, identifying major challenges, and highlighting emerging opportunities. The findings aim to provide valuable insights for entrepreneurs, investors, and policymakers to foster innovation, support sustainable growth, and enhance the overall competitiveness of the startup landscape in Kazakhstan.As Kazakhstan continues to develop, it has gained recognition for its strategic initiatives and its potential to drive growth in the high-tech sector, particularly within the startup ecosystem. [5]. The government has actively worked to create a favorable investment climate through various measures, including the establishment of the Astana International Financial Center and the implementation of the Digital Kazakhstan program. These initiatives aim to enhance the venture investment landscape by introducing legal reforms, providing tax incentives, and developing special economic zones [5].Kazakhstans technological landscape has been rapidly expanding, driven by both government initiatives and increasing venture capital investments. Key sectors such as EdTech, MedTech, AgriTech, and Artificial Intelligence (AI) are emerging as major contributors to economic diversification, creating new opportunities for investors. The nations growing emphasis on these industries reflects its strategic shift beyond traditional sectors and deeper integration into global technological advancements [5]. Additionally, expanding international partnerships are granting Kazakh startups greater access to global markets. The establishment of regional innovation hubs and participation in international tech exchanges further support this progress, equipping local entrepreneurs with the resources needed to scale their businesses globally [6].Methods and Materials.The present study employs a combination of two research methods, qualitative and quantitative. The semi-structured approach was chosen to analyze the environment of Kazakhstani technology startups. Specifically, data was collected from governmental organizations, particularly from the Astana Hub International Tech Park, for the purpose of conducting a quantitative analysis, which provided a clear insight into the startup environment in Kazakhstan, helping to visualize the overall landscape.In addition to the above data, interviews were conducted with key stakeholders in the startup ecosystem, including new startups, existing startups, and startups that have suspended their activities. Each interview lasted about 30-40 minutes using a semi-structured questionnaire to collect more accurate and detailed information. The content of the questions aimed at getting information about the experience of startups, including any failures they may have encountered, and how they reacted to these failures. The questions also targeted understanding the impact of the problems on the startup and its team, as well as the steps taken to prevent similar failures in the future. The sample for this study consists of individuals who have relevant experience in the startup industry in Kazakhstan. It was selected using purposive sampling, with the aim of identifying individuals who have experience in launching startups themselves or have worked closely with startups as investors, mentors, or advisors.Interview with Project manager of International University of Information Technology.Interview with novice startuppers - game developers at Astana IT University.Interview with the founder of a startup “IOne”.Interview with the founder of a startup “Ehala”Interview with the Chief manager of the Department of Science and Innovation of Astana IT UniversityInterview with the founder of a startup “NeoAI”Interview with the founder of a startup “Qpia”Figure 1. Illustrates the methodology framework, outlining the research process through qualitative and quantitative data collection and analysis.Both qualitative and quantitative research methods were used to explore startup experiences, challenges, and responses to failures, providing deeper insights into the ecosystem. Interview participants were selected using purposive sampling to ensure relevance. This combined approach offers a comprehensive understanding of the trends, challenges, and opportunities within Kazakhstan’s startup landscape.Results.Statistical Analysis from Astana Hub.A quantitative assessment of Kazakhstan’s IT sector in 2024 reveals impressive growth indicators, as reported by Astana Hub. The sector’s total investments increased by 40%, IT service exports grew by 52%, and overall industry revenue rose by 48% compared to the previous year. Additionally, the number of newly created jobs in the sector expanded by 12%, reflecting the impact of sustained government initiatives and international partnerships.Astana Hub’s contributions to the startup ecosystem also yielded measurable outcomes. Programs such as Silkway Accelerator and Hero Training facilitated market expansion for local startups, leading to 22 Kazakhstani startups entering Silicon Valley, where they secured $1.4 million in investments. The $10 million Astana Hub Ventures fund further strengthened financial support for emerging tech businesses.Kazakhstan’s positioning as a regional innovation leader is reinforced by export-driven growth and increasing participation in the global startup community. In 2024, 39 Kazakhstani startups were featured at international events such as Web Summit and TechCrunch Disrupt, expanding global visibility and investor interest.In the AI sector, the AI Movement initiative led to the establishment of Alem.AI International Center for Artificial Intelligence, alongside the AI’preneurs Accelerator, which trained 50 specialists, resulting in 21 AI startups, 9 of which completed acceleration, and 7 received seed funding. These data-driven outcomes indicate Kazakhstan’s steady transition into an AI-driven economy. [7]1. Trends in Kazakhstan’s Startup Ecosystem.Kazakhstans startup ecosystem has grown significantly due to government support, university-led innovation, and rising high-tech startups. Incubators like Astana Hub play a key role by providing mentorship and networking. Events like Digital Almaty 2025 highlight the country’s focus on AI, fintech, and automation, with state-backed initiatives and international investment aiming to make Kazakhstan a regional tech leader.Programs like QazInnovations fund early-stage startups, while universities offer coworking spaces, acceleration programs, and financial support. Despite progress, challenges remain, including a lack of experienced mentors, limited private investment, and an underdeveloped venture capital scene.1.1 University-Led Innovation Programs.Universities are becoming active players in entrepreneurship. Institutions like IITU and AITU run structured incubation programs, offering space, mentorship, and industry partnerships. These initiatives help students move from ideas to market-ready startups.1.2 Growth of AI and Deep-Tech Startups.Kazakhstan is aligning with global digital transformation trends, focusing on AI, MedTech, AgriTech, and automation. The Digital Almaty 2025 forum stressed AI as a national priority, aiming to train 1 million AI specialists by 2030. New centers like Alem.AI support deep-tech innovation. Startups such as NeoAI, Glucovase, and EcoSen show growing investor interest in AI and sustainability.1.3 Government and Institutional Support.The government promotes innovation through grants, incubators, and economic zones. Programs like QazInnovations offer funding up to 100 million KZT, though some sectors, like gaming, face limited support. Experts also noted the need for improved digital infrastructure to sustain startup growth.1.4 Market Expansion and Internationalization.Due to Kazakhstan’s small domestic market, startups are looking abroad. Many seek global accelerators and international investors. Astana Hub supports this by helping local startups access global markets. Efforts to position Kazakhstan as a hub in AI, MedTech, and fintech are gaining momentum.2. Challenges in Kazakhstan’s Startup Ecosystem.Despite rapid growth, Kazakhstan’s startup ecosystem faces several structural challenges that hinder sustainability and scalability, including talent shortages, poor market validation, limited funding, and bureaucratic inefficiencies.2.1 Talent Acquisition and Team Stability.Building and retaining skilled teams is a major challenge, especially in student-led startups. Many professionals prefer stable employment, leading to high turnover. Burnout due to workload and uncertainty is common. Founders highlight the need for leadership development, incentive structures, and retention strategies to ensure long-term team commitment.2.2 Poor Market Research and Product-Market Fit.Startups often skip market validation, leading to products that don’t meet customer needs. Founders admit to overbuilding features without user testing. An MVP approach and early feedback are critical to avoid resource waste and achieve product-market fit.2.3 Limited Funding and Investment Constraints.Early-stage funding is scarce, forcing reliance on personal savings and grants. Some founders argue the problem lies in weak pitching and monetization skills, not just investor scarcity. Local VCs favor STEM projects, leaving creative industries underfunded. Many startups seek foreign investors, increasing exposure to external risks.2.4 Bureaucratic and Regulatory Hurdles.While initial government support exists, long-term backing is limited. Complex regulations and administrative delays discourage scaling and investment. Founders recommend joining international accelerators for better mentorship and funding opportunities.3. Opportunities for Growth in Kazakhstan’s Startup Ecosystem.Despite existing challenges, Kazakhstan’s startup ecosystem holds promising opportunities to grow by strengthening institutional support, leveraging cultural and technological strengths, expanding international investment, and fostering a customer-focused entrepreneurial culture.3.1 Government and Institutional Support.Government and universities like Astana IT University and IITU actively promote startups through incubation, mentorship, and grants (up to 100 million KZT). Structured programs track progress and support market entry. Expanding deep-tech focus, global accelerator access, and public-private collaboration could boost long-term growth.3.2 Leveraging Cultural and Technological Strengths.Kazakhstan’s unique heritage and rising tech expertise create niche opportunities in game development, AgriTech, and AI. AI startups lower barriers for innovation, enabling small teams to create impactful products. Broader government incentives beyond STEM and AI could foster diverse sectors.3.3 Expanding International Investment and Markets.With a limited domestic market, startups need internationalization to scale. Global accelerators and VC networks provide visibility and funding but navigating foreign investment remains tough. Policy incentives, mentorship programs, and trade partnerships can improve access to global capital and markets. For example, NeoAI plans expansion to the MENA region.3.4 Fostering Customer-Centric Innovation.Sustainable startups prioritize customer needs through MVP development and continuous feedback. Founders often overbuild products without validation, leading to failure. Adopting structured validation frameworks like the HADI cycle and expanding networking via accelerators and industry events can strengthen market fit and investor interest.Discussion.This study explores the growth of Kazakhstan’s startup ecosystem, noting strong government and university support alongside emerging high-tech sectors like AI and MedTech. However, challenges persist, including limited private investment, regulatory hurdles, and market entry barriers. While initiatives such as Astana Hub and QazInnovations provide early-stage funding, support for scaling startups is lacking. Overemphasis on STEM sectors limits diversification into areas like game development and creative industries.University incubators aid entrepreneurship but face issues with team retention and venture capital scarcity due to risk-averse investors. Many startups neglect customer validation, leading to high failure rates. Despite some legal reforms, bureaucratic inefficiencies remain obstacles.Implications and Future Research.The findings highlight the need to increase private investment, improve mentorship, and reform policies to better support startups. Future research should include quantitative investment analyses, focus on non-tech startups, and examine international expansion strategies to strengthen Kazakhstan’s entrepreneurial ecosystem.Conclusion.Kazakhstan’s startup ecosystem has rapidly evolved with technological progress and institutional backing, particularly in AI, automation, and MedTech. Yet, talent gaps, funding limits, and regulatory inefficiencies constrain growth. Expanding financial access, streamlining regulations, and fostering global partnerships are key to sustainable development. Encouraging customer-focused product development and scaling investment opportunities will boost startup success and global competitiveness. Continued research should track startup outcomes, compare with other emerging markets, and assess digital infrastructure’s role in entrepreneurship.
Номер журнала Вестник науки №6 (87) том 1
Ссылка для цитирования:
Jumaniyazova A.R. THE EVOLUTION OF THE STARTUP ECOSYSTEM IN KAZAKHSTAN: TRENDS, CHALLENGES, AND OPPORTUNITIES // Вестник науки №6 (87) том 1. С. 33 - 42. 2025 г. ISSN 2712-8849 // Электронный ресурс: https://www.вестник-науки.рф/article/23578 (дата обращения: 08.07.2025 г.)
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