Startups in Emerging Markets: Potential and Challenges in Kazakhstan

Talgat Kantayev, co-founder of Nomadiq Innovation Hub, @talgat_kantayev

Emerging markets are becoming increasingly attractive for startups due to their unique opportunities and growth prospects. Central Asia, with its strategic location and growing economy, provides entrepreneurs with a platform for creating innovative solutions and gaining significant competitive advantages.

The underdevelopment of many economic sectors in the region opens up extensive space for startups offering new technologies and services that can fill existing gaps. For example, the FinTech, e-commerce, and HealthTech sectors are only beginning to actively develop in the countries of the region, creating opportunities for the implementation of new solutions such as mobile payment platforms, online trading, and much more.

Many emerging markets, including Kazakhstan, are striving to attract foreign and local investors by simplifying business legislation. A vivid example of this is the introduction of tax incentives, the creation of free economic zones, and the digitalization of government services—all of which significantly simplify the launch of a startup.

Furthermore, in recent years, there has been a significant growth in intra-regional investments in Central Asia. In countries with growing economies, the middle class is increasing in size, which contributes to the growth in demand for new goods and services. This gives local startups the opportunity to respond quickly to changes, occupy vacant niches, and simultaneously attract investments.

Kazakhstan stands out among developed markets due to a number of key advantages:

1. Talented and motivated specialists
Kazakhstan has highly qualified specialists who are motivated and strive for success. Local professionals are often more "hungry" for achievements than those in developed countries and are willing to invest in projects with great enthusiasm. At the same time, hiring costs are lower, allowing for optimization of the personnel budget.

2. Low operational costs
Infrastructure costs, including office rent, internet, and other operational expenses, are significantly lower compared to developed markets. This makes Kazakhstan an ideal venue for testing ideas and products with minimal financial risks.

3. Development of the digital economy
The government of Kazakhstan is actively implementing digital technologies, especially in the banking and government services sectors. It can be argued that digitalization in the country outpaces many developed countries. This creates a favorable environment for startups in the IT, FinTech, and e-commerce sectors.

4. Investment support
The country is developing venture infrastructure, with accelerators and early-stage funds such as Astana Hub, Big Sky Capital, Most Ventures, byb capital, MA7, and others, offering access to venture capital, training, and international connections. Recently, we created Nomadiq Innovation Hub, which has become a new platform for supporting startups and entrepreneurs in Central Asia.

5. Young and ambitious professionals
The startup culture in Kazakhstan is actively developing due to the emergence of accelerators, competitions, and programs for entrepreneurs. This forms a supportive community and inspires new market players. As a result, Kazakh youth are actively mastering modern technologies, speaking foreign languages, and striving for professional growth. This creates great potential for forming strong teams.

Nevertheless, startup founders may face obstacles specific to the region, which require a careful approach and strategic planning.

1. Limited domestic market
The small size of the domestic market makes it difficult to build a significant track record and complicates entry into international markets. This can become an obstacle to scaling and attracting global partners.

2. Difficulties in attracting large investments
Attracting large investment rounds remains a challenging task. The lack of major investors and venture funds can slow down the growth of startups and limit their development opportunities.

3. Underdeveloped international image
The country brand of Kazakhstan on the world stage is not yet sufficiently developed, which can complicate establishing trust and recognition in foreign markets.

4. Limited investment in science
The absence of a developed infrastructure for research and development negatively affects the development of DeepTech projects. This makes it difficult to conduct scientific research and implement advanced technologies.

Emerging markets offer unique opportunities for startups, especially for those willing to adapt to local conditions and respond quickly to consumer demands. Kazakhstan stands out among the countries of Central Asia due to its support for innovation, low operational costs, and actively developing digital economy.

Nevertheless, the region faces a number of challenges, including a limited domestic market and difficulties in attracting large investments. For companies willing to take into account the specifics of the region and leverage its advantages, Kazakhstan can become a promising launchpad.

Ultimately, Central Asia, and especially Kazakhstan, represents a region of opportunities for startups and venture capitalists willing to adapt and innovate. Now is the right time to pay attention to this market.