Fintech, IT, startups, and venture capital hardly come to mind when one mentions Central Asia (CA). Comprising Kazakhstan, Kyrgyzstan, Tajikistan, Turkmenistan, and Uzbekistan, the region is more often associated with its history – traders of the Silk Road, the defunct Soviet Union, and the peoples’ previously nomadic way of life.

If the association goes further, then modern-day tourism is usually where the conversation ends.

Why Central Asian businesses deserve to be on the radar

Beneath the quiet, though, insiders watch the region’s startups intently. Despite the low internet penetration rate overall, it is heartening to note that according to World Bank data, those of Kazakhstan and Uzbekistan average at around 80 per cent, which is higher than some European countries.

This has enabled the rise of young, ambitious businesses in the region. They are helmed by aggressively driven founders who lead highly competent teams comprising, but not limited to, IT architects and developers.

Because these startups lack adequate access to global venture capital compared to developed markets and developing Southeast Asian (SEA) economies, they are not valued nearly as high either.

Alas, there is a silver lining. Their high-quality tech-proficient human capital and lower valuation present a brilliant opportunity for investors seeking new horizons.

Increasingly, thanks to KASPI, Kazakhstani payment systems and e-commerce leader that was the first to have attained unicorn status in CA and serves eight million users as of mid-2020, CA venture capital and its resulting success stories are gaining interest and traction.

Also Read: Kazakhstan’s Clockster raises seed funding round, will expand to Southeast Asia

Synergies between Central Asian and Southeast Asian markets to capitalise on

CA startups are just as eager to scale abroad, and SEA has been a popular destination well able to help incubate business ideas and models due to structural and cultural similarities and familiarities.

Affluent economies and expanding enterprises in SEA also need new destinations for investment and exportation, and CA being a relatively under-explored frontier for either purpose means a new and exciting array of opportunities.

A sizeable number of digital trade services, e-commerce, and fintech startups growing in the region might be of great interest to SEA investors. Further, CA’s young and emerging middle class promises abundant commercial potential in but five years.

Because of these gaps and how each one bridges them for the other, the synergies between CA and SEA could mean favourable outcomes should businesses and investors choose to join hands. Already in pursuit of such profitable output is Singapore’s Quest Ventures.

In tandem with Kazakhstan’s state-owned QazTech Ventures, the two funds established an early-stage accelerator programme to foster a new generation of startup founders, propel them to succeed in their respective CA markets, and eventually scale to SEA.

Launched in 2020, the Kazakhstan Digital Accelerator (KDA) has already produced multiple batches of brilliant young companies. Among them are finalists already receiving investments.

Beyond KDA, Quest Ventures, and QazTech Ventures also witnessed a successful case that is Clockster, a Singapore-incorporated Kazakhstani startup that raised US$750,000 in a round led by Quest Ventures in 2020.

I lead-invested in their previous seed round. It has since successfully entered Indonesia and, in 2021, raised a game from 500 Global.

The partnership between Quest Ventures and QazTech Ventures is proving to be instrumental to advancing and growing the budding venture capital market in Central Asia, particularly Kazakhstan.

Also Read: These Kazakh startups are gearing up to dive into corporate innovation waters and beyond

A stellar example of a startup benefitting from synergies

As the techies in Kazakhstan celebrated KASPI’s IPO success in the London Stock Exchange (LSE) in late 2020, another Kazakhstani entity, a B2B inventory and logistics management and payment platform called Smart Satu, was striking a deal with British fund Sturgeon Capital.

It would become the first Kazakhstani project that Sturgeon Capital funds after the former had obtained US$6.8 million in private investment.

Aided by the fresh injection from an institutional fund, Smart Satu has continued to dedicate most of it to further R&D and expansion into countries dense with mom-and-pop businesses that would greatly benefit from improved infrastructure, cloud inventory, and integrated payment gateway, to name a few key features of Smart Satu.

To date, Smart Satu has seen a total of over 1,800,000 orders in Kazakhstan and Russia alone, and a turnover of over US$44.5 million since January 1, 2019. Smart Satu has served nearly 12,000 merchants in Kazakhstan and Russia in the same time frame and opened a company in Turkey.

It is in the process of setting up a shop in neighbouring Ukraine. In partnership with VISA, Smart Satu also became the world’s first B2B e-commerce payment gateway.

Closer to Asia, Smart Satu piqued the interest of VISA in Singapore, Dubai, Ukraine, and Turkey, and the two corporations are deep in discussion about partnerships with local banks, with the hope of providing 60-day interest-free corporate credit cards to small to medium merchants who decide to come on board.

For Europe, Smart Satu has an integrated system built-in in Kazakhstan that is ready for plug and play abroad. This system has been endorsed by METRO, a leading international player in wholesale trade.

METRO is now on board the system in Kazakhstan, enabling METRO to reach and transact with small mom-and-pop businesses with greater convenience, sans additional costs. METRO will efficiently employ this system wherever they have a presence, mainly Bulgaria, Germany, India, and Turkey. Beyond, Smart Satu is in the talks with potential partners in the US and UK to establish a presence there via pilot projects.

To investors and venture capital fund managers, I urge you to look to CA for some of the world’s most rapidly emerging tech startups armed with compelling solutions for the world. Propelled by state-funded nationwide digitalisation schemes such as the Digital Kazakhstan and Digital Uzbekistan 2030 strategy, they could be the bright, new horizons you seek.

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