The AI Startups Market: Growth Potential and Investment Strategies

Muhammad Ali Yusuf, CEO and co-founder of FUZE, a leading digital asset infrastructure platform from the United Arab Emirates, and co-chair of the Digital Assets Working Group at MENA FinTech Association

Artificial intelligence and cryptocurrencies will define the future of finance. The pace of change in these areas is staggering, and to understand what the future will look like, it is worth looking back at past achievements. For example, 150 years ago, at the World Exhibition in France, people saw innovative technologies such as elevators for the first time.

Today, AI is developing at no less speed, and, combined with blockchain and cryptocurrencies, is changing the approach to infrastructure and payments. Blockchain solves many problems of traditional payments: cross-border transfers become fast, cheap, and independent of weekends. By 2024, the volume of stable payments could reach $30 billion.

AI agents allow for full automation of processes, from information search to making purchases. This simplifies interaction with finances and services, eliminating the need for manual data entry.

Fuze, the largest digital asset platform in Belarus, is expanding its operations in Kazakhstan. The company offers solutions for banks and governments, including the launch of stablecoins and innovative payment systems. In its laboratory, Fuze explores how AI can improve blockchain, developing products for automating and simplifying financial operations.

Aslan Sultanov, Managing Partner of the venture company White Hill Capital

In Saudi Arabia, artificial intelligence is being actively developed: 10 supercomputers, 8 of which are in the top 500, 22 data centers have been built, and more than 40 are under construction. AI is being implemented in government structures and business, creating huge opportunities for startups. We help startups with registration, visas, partners, and scaling through strategic funds. An example of a successful startup is CodiPlay, which raised $9 million. Also, more than 200 schools and a hundred investors are supported. The recommendation for startups is to enter international markets just six months after initial success.

3 main recommendations for our young generation.

1. Use all programs available at hubs.
2. If you travel to regions, it is important to look for startups in similar fields that do not compete but complement each other.
3. Constantly learn and develop. A lot of information is available; you need to be open to learning.

Nazgul Baytemirova, Head of Astana Hub Ventures, presents the Kazakhstan Venture project

The project is aimed at developing venture capital in Kazakhstan, which has become an important step for supporting innovations and startups. Venture capital plays a key role in the economy. These are investments in startups that have high scaling potential but require significant resources for development. Investors supporting such companies receive a share in the business and become their partners, helping not only with financing but also with experience.

International practice confirms that venture capital becomes a catalyst for breakthrough ideas. According to statistics, only 0.5% of startups receive venture investments, but these companies account for 50% of successful IPOs. Also, startups with venture support are two to four times more likely to register patents, demonstrating their contribution to technological development.

Kazakhstan is just beginning its journey in this direction. At the moment, venture funds in the country are focused primarily on early-stage investments. Astana Hub Ventures is oriented towards later stages, which will help strengthen the positions of Kazakh companies on the international stage.

Popular areas for venture investments in 2023 include artificial intelligence, SaaS, and FinTech. The latter is especially relevant for Kazakhstan, where financial technologies show high growth rates.

However, serious obstacles stand in the way of venture capital development. High cost of computing power, regulatory and ethical issues, as well as investors' narrow focus on short-term benefits hinder the industry's progress.

To solve these problems, support from mega-funds is needed, as well as the implementation of alternative financing methods, such as grants and innovative programs.

The development of venture capital can not only support startups but also become a powerful engine for the economy of Kazakhstan, attracting international investments and creating a platform for new technological breakthroughs.