Angel investing in Central Asia: the market is growing, but the funnel is narrowing

The Central Asian startup ecosystem has made significant qualitative strides in recent years. New accelerators, venture funds, and corporate innovation programs are emerging, and the number of technology teams is growing. At the late-stage and institutional venture levels, the market appears increasingly mature.

However, behind this growth lies a systemic risk that is not yet being loudly discussed: the capital market is growing faster than the early-stage startup market. If this disproportion is not addressed now, the region may face a classic investment funnel crisis in the coming years.

Capital is available. Startups are lacking.

Venture infrastructure is actively developing in Central Asia today: in Kazakhstan, the Alem Ventures fund of funds is being launched; in Uzbekistan, banks have been mandated to create venture funds, and two fund of funds are already operating. According to market data, a national venture fund may soon appear in Kyrgyzstan.

This is a positive trend. However, venture capital does not naturally work "from scratch." Funds need projects with a product, initial customers, revenue, and a validated business model.

If the number of funds is growing while the number of quality Pre-Seed and Seed startups is not increasing, the market inevitably faces a pipeline deficit. There is money, but no deals.

Where is the ecosystem's bottleneck?

This bottleneck is the angel stage.
The earliest stage, where a startup needs:

— the first $10,000–50,000
— mentorship
— market access
— belief in the team, not just metrics.

Business angels play a key role here. Yet, this segment remains the least supported in Central Asia—both by the state and at the institutional level.

Business angels exist—the market is alive

It is important to emphasize that it is incorrect to say there are no business angels in the region. They exist, and their numbers are growing.

In 2025, there are at least five active angel clubs operating in Kazakhstan:

— MA7 Ventures
— MOST Investors Club
— Astana Venture Club
— Silk Road Innovation Club
— Activat Invest Club

Collectively, they comprise more than 359 business angels, and the total volume of deals has already exceeded $12,250,000—with MA7 Ventures holding a significant share of this statistic.

For an emerging market, this is a strong signal. It indicates growing interest from private capital in technology startups and shows that a culture of co-investment is taking root.

Anuar Lenzat, Head of Investor Relations, Activat VC
I am encouraged that venture capital is attracting more attention from traditional asset managers and business representatives. This year, we conducted two business angel schools, which attracted many participants from the business community—a signal for the market. We see demand growing despite the approaching internal crisis and market uncertainty.

But there is another side to this growth

Despite positive dynamics, the business angel market faces several systemic challenges.

First, a lack of professionalization.
Many private investors enter startups without a portfolio approach, investing significant sums in just one or two projects. In venture logic, this almost always means a high risk of capital loss. Here, market education is necessary, along with inviting prominent angels, supporting angels, and conducting training.

Yelzhan Kshekebayev, CEO of MA7 Ventures
When investing in early-stage startups, it is necessary to build a diversified portfolio. If you invest in 10 projects per year, you can build a safe portfolio over 3–4 years, increase your chances of hitting a unicorn, and recover the entire portfolio—and much more. Instead of looking for a needle in a haystack, it is better to buy the whole haystack.

Second, a weak institutional environment.
The region still lacks instruments for tax deductions in case of unsuccessful investments.

Third, an imbalance in state support.
The state actively invests in startups through grants, accelerators, and venture funds. This is important and correct.

However, business angel investing as a separate element of the ecosystem is practically unsupported.

In many countries, there are no tax incentives for angel investments, mechanisms for accounting and writing off investment losses, or co-investment programs with angels at early stages.

As a result, private investors are left alone with the riskiest stage of a startup—without any "leverage" from the state.

Why this is a risk for the entire ecosystem

If the current imbalance persists, the region may face a situation where:

— venture funds compete for a limited number of deals
— startups "jump" early stages without sufficient preparation
— the quality of projects at the Seed and Series A stages does not meet investor expectations.

Only business angels can bridge this gap, form a sustainable funnel, and prepare projects for institutional capital.

What needs to be done now

Developing business angel investing is not an alternative to venture funds, but their foundation.

The region needs:

— systematic educational programs for business angels
— support and scaling of investment clubs
— standardization of legal instruments for early-stage deals
— state co-investment programs and tax incentives for angel investments.

Conclusion

Central Asia is currently at a unique growth point. Capital is available, interest is present, and entrepreneurial energy is high.

The question is whether a solid foundation will be built for this growth.
Without a strong layer of business angels, the venture ecosystem risks facing a funnel crisis in the coming years.

And now is the best time to transform business angel investing from a sporadic initiative into a systemic driver of the region's innovative economy.