Seed Money. How startups can get up to 20 million tenge for development

Anarbek Utegulov, Director of the Astana Hub Funding Programs Office

About Me

I am the head of the Astana Hub Funding Programs Office. We have two main areas of work. The first is funding private IT schools that train Kazakhstani citizens in priority IT fields. The second is funding IT startups through the Seed Money program, where early-stage projects can receive up to 20 million tenge for development.

Previously, I was involved in creating an innovative ecosystem for startup development at Nazarbayev University. Since 2013, I have been building business incubation, acceleration, technopark, and IT community development programs there. Since 2023, I have been leading the funding programs for IT schools and IT startups at Astana Hub.

About the Seed Money Program

Seed Money is a startup funding program operating at various stages. The program has been running since 2021, and this year we are conducting it twice.

Since 2021, we have funded about 50 startups with a total amount of over 500 million tenge. Projects at various stages are eligible for funding. We have seven areas for participation: Smart City, SpaceTech, Defense Tech, hardware, artificial intelligence, game development, and blockchain. If a project falls into one of these areas, it can be considered for funding. Our funding model is not a grant, but revenue share.

We do not take equity shares in the project. However, the project commits to paying 1% of the company’s total revenue for five years after receiving funding under the program. This creates a sustainable model where successful projects can grow and reinvest these funds into new initiatives.

We have seven areas, each evaluated by a separate expert commission. Experts in each commission have experience in the relevant fields—technological or entrepreneurial experience related to similar projects.

Projects are evaluated based on four criteria:

1. Team. Attention is paid to the team’s competence. It is important that the team is well-balanced and includes specialists capable of implementing the project. The minimum number of participants for the Seed Money program is three people.

2. Scalability of the business model. The project must have the potential for exponential growth. The monetization model also plays an important role.

3. Technological aspect of the product. The product should solve industry tasks efficiently using various technologies.

4. Progress. The current progress of the project, achieved results, and future plans are evaluated. The total score is 40, but a minimum of 25 points is required for funding consideration based on these criteria.

The Seed Money program not only funds projects but also helps them through networking: establishing business contacts, providing access to B2B partners, corporations, government agencies, and business angels through Astana Hub. We offer relocation of projects to the Astana Hub coworking space for a synergistic effect. We regularly hold status meetings to support projects at all stages of development.

Other Programs from Astana Hub

Startup Garage. This is for projects at the idea stage or even without a team. Through this program, they can receive incubation, avoid common mistakes thanks to mentors, tracking, and educational resources. This helps them achieve their goals faster.

Silkway Accelerator in collaboration with Google for Startups. The program is designed for startups that already show positive dynamics in business development, have a team, sales, and aim for scaling.

Scalerator is for entering international markets, and the Hero Training program with Draper University helps projects get to Silicon Valley and undergo acceleration there.

For freelancers, there are special programs, such as Global Outsourcing, which help obtain contracts on IT platforms like Upwork. There are also many other educational programs that help stay informed and receive support.

Statistics and Participant Dynamics in the Program

Each time, we had different statistics because we were also starting this for the first time. The criteria were quite flexible, and we gradually learned from our mistakes to improve the program.

The second stream was more focused on participation in Silkway Accelerator, where we funded projects up to 24 million tenge. The third stream provided funding up to 10 million tenge and was available only to members of the Astana Hub community who had already undergone specialized startup programs. However, we decided to make the program open to everyone who meets the basic criteria. It is not necessary to be an Astana Hub resident for this program.

The only condition after passing the selection is that the company must become a participant of Astana Hub. This provides several advantages, such as tax benefits: basic taxes are 0%, and in return, companies must pay 1% of their income quarterly. Companies that received funding through the Seed Money program must additionally pay 1% of their income upon completion of the program, totaling 2%.

We receive about 100-150 applications per competitive stream. We select approximately 10 projects for funding. In the last stream, 9 projects were approved, in the previous one 10, and so on. We give projects the opportunity to improve their applications as they are reviewed and provide feedback. So, if you apply in advance, you will have more time for refinement and confidence that everything will be done on time.

How the Startup Industry is Developing in Central Asia

Today, there is dynamic development of the startup industry, accompanied by growth in the venture capital market. Recently, an report on the growth of deal volumes and improvement in project quality was published at Astana Hub. We see significant progress in the field of artificial intelligence, especially in medical projects such as Cerebra. Successful projects include educational and technical initiatives, such as CodiPlay, which are actively expanding beyond one city and country. We look to the future with a focus on AI, as it is a key area in IT that will transform all sectors of the economy. We see huge potential here and expect interesting projects to emerge in this field.

A Few Recommendations for Beginner Startups

I recommend participating in incubation or acceleration programs because there you will learn all aspects of launching and developing a startup: team formation, fundraising, first sales, and much more.

Some investors use acceleration programs as a filter for projects. If a project has passed such a program, it means that the founders have mastered the basic skills of product development and started intensive work. Participation in such program initiatives helps toughen founders and accelerates their professional growth. I recommend going through such programs, as this can be the most valuable experience for founders, helping to avoid long and expensive self-learning through correcting their own mistakes.

I also recommend subscribing to various pages, such as The Tech, where all this is announced. Many of these programs are free and do not require equity from your project. By participating in them, you will gain valuable experience and networking. At the end of the program, there is often a demo day where you can present your project to potential investors, angels, and representatives of large corporations. This is a great opportunity to receive feedback, recommendations, and establish contacts for future cooperation.