Kazakhstan’s startup landscape is emerging, with the country making significant strides to establish itself as Central Asia’s technological hub. While still reliant on oil and gas, Kazakhstan is actively diversifying into a knowledge-based digital economy. To support this shift, the government is creating a pro-innovation environment with funding opportunities that encourage early-stage startups.
As the economy transitions from natural resources to digital innovation, Kazakhstan’s young and growing population offers a fertile ground for new business models. Companies can leverage the country’s digital infrastructure and supportive ecosystem to expand across Central Asia.
Though Kazakhstan’s startup ecosystem remains in its early stages, the country is committed to fostering entrepreneurship and digital industries to secure its economic future.
Where Continents Converge: A Digital Silk Road
Nestled in the heart of Eurasia, Kazakhstan occupies a pivotal point where continents converge physically and digitally. Its modernised railways and the expanding North-South corridor weave a modern-day Silk Road, facilitating trade and logistics between Europe and Asia. This strategic location is a magnet for businesses seeking access to markets in China and neighbouring countries and a burgeoning domestic consumer base with increasing purchasing power.
Kazakhstan’s connectivity transcends physical infrastructure. The country is cultivating a vibrant digital ecosystem, exemplified by the rise of companies like Kaspi.kz.
Kazakhstan’s Digital Leap: Where Evidence Meets Opportunity
Imagine walking into a co-working space in Almaty, where a local fintech startup processes international transactions through the Astana International Financial Centre (AIFC) while collaborating with developers in Dubai. This is how Kaspi.kz grew from a traditional bank into Kazakhstan’s first unicorn, valued at over $10 billion in 2023.
This fintech pioneer, defying expectations to achieve unicorn status with a valuation exceeding $10 billion in 2023, demonstrates the power of Kazakhstan’s digital infrastructure. Kaspi.kz’s ability to seamlessly process international transactions and collaborate with global partners through platforms like the Astana International Financial Centre (AIFC) paints a vivid picture of the country’s digital potential.
In a move that signals its ambitious expansion plans, Kazakhstan’s leading fintech company, Kaspi.kz, has acquired a majority stake (65.41%) in Hepsiburada.com, one of Turkey’s largest e-commerce platforms. The deal, valued at $1.13 billion, was announced on October 18, 2024, and marks a significant development in the Central Asian and Turkish tech landscape.
Kazakhstan: Economic Outlook
- GDP Growth: The European Bank for Reconstruction and Development (EBRD) projects Kazakhstan’s GDP to grow by 4.0% in 2024 and 5.5% in 2025. This forecast revised slightly downward from earlier projections, reflects the impact of factors such as floods in certain regions and a slowdown in mining operations. However, public spending on infrastructure recovery and the planned expansion of the Tengiz oil field are expected to support growth in the coming years.
- Digital Economy Contribution: While pinpointing the exact annual growth rate of Kazakhstan’s digital economy requires further analysis of official statistics, it’s undeniable that the sector is expanding rapidly. The government’s “Digital Kazakhstan” strategy aims to accelerate this growth by promoting e-commerce, digital literacy, and the development of tech startups.
- Tech Talent Pool: Kazakhstan invests in education and skills development to build a strong tech talent pool. Initiatives such as the Astana Hub International Technopark attract and nurture startups, while programs like Tech Orda aim to train 100,000 IT specialists by 2025. This focus on human capital is crucial for sustained growth in the digital economy.
Government Initiatives Fueling Growth
The government has implemented multiple initiatives to create a supportive ecosystem for startups. These include establishing tech parks, innovation hubs, and accelerator programs critical in nurturing local and international startups.
The National Entrepreneurship Development Project (2021-2025) financially supports entrepreneurs, especially those in smaller towns and rural areas. Another key project, Business Roadmap 2025, targets emerging business ventures across priority industries.
Tech Garden, another major accelerator, provides a platform for startups to connect with resources, mentorship, and funding. This program focuses on high-impact sectors, helping local entrepreneurs gain the skills and support they need to launch and scale their projects.
AIFC as a Catalyst of Investment Growth in Kazakhstan
The Astana International Financial Centre (AIFC) is essential in attracting foreign investment and fostering financial innovation. Its regulatory framework, based on English common law, provides a secure and transparent business environment. The significant growth in cross-border payments through the AIFC indicates increasing investor confidence.
A Startup Ecosystem Blossoms
While relatively young, Kazakhstan’s startup ecosystem is growing. Over recent years, it has gained visibility and climbed in global rankings due to rising investment and increased tech-related ventures.
Despite a slight dip in global rankings in 2024, the country retains its position as the leading startup hub in Central Asia, a testament to its consistent progress since 2020.
Source: StartupBlink, Startup Ecosystem Report 2024
According to Startup Ecosystem Report 2024 by StartupBlink, Kazakhstan ranked 74th globally in 2024, a slight drop from its 2023 ranking of 73rd. Despite this decline, Kazakhstan remains the leading startup ecosystem in Central Asia, demonstrating steady improvement since 2020, when it was 86th globally. The country’s progress underscores its ambition to become a competitive player in digital innovation within the region.
Investment Trends
Kazakhstan’s funding landscape has grown significantly, with total investments reaching USD 30.2 million in 2023. This is a substantial increase from previous years: USD 5.8 million in 2020, USD 9.7 million in 2021, and USD 7.9 million in 2022. This upward trend reflects heightened investor interest in the country’s tech and digital sectors, although the ecosystem is still maturing and may be more vulnerable to fluctuations than established markets.
Regional Challenges and Strategic Position of Kazakhstan
Kazakhstan’s ranking within the Central Asia Regional Economic Cooperation (CAREC) region slipped to 4th in 2024, indicating increasing competition among regional peers. The relatively small gap in ecosystem scores between Astana and Almaty highlights the need for further investment in innovation to maintain Kazakhstan’s regional lead.
The country’s strategic location and established financial centres, like the Astana International Financial Centre (AIFC), position it well as a bridge for companies aiming to enter Central Asia.
Astana and Almaty remain the key innovation centres. Astana is the only Central Asian city with a worldwide ranking in the payments industry, underscoring its growing influence in the fintech arena.
Kazakhstan’s Tech Scene Overview: Where Innovation Meets Investment
Kazakhstan’s technology sector is attracting increasing attention from investors seeking to capitalize on the country’s digital transformation. Several key areas drive this interest, offering significant potential for growth and innovation. These are the key sectors attracting investment:
FinTech
Kazakhstan’s burgeoning fintech sector is fueled by a young and tech-savvy population, a growing middle class, and increasing smartphone penetration. Opportunities exist in mobile payments, online lending, and personal finance management.
Artificial Intelligence
With a strong foundation in STEM education and a government committed to supporting AI development, Kazakhstan is poised to become a regional leader in AI applications. Investment potential lies in sectors like healthcare, agriculture, and logistics.
HealthTech
Kazakhstan’s healthcare system is modernising, creating opportunities for health tech solutions that improve access to care, enhance diagnostics, and streamline healthcare delivery.
Real Estate Technologies (PropTech)
As Kazakhstan’s real estate market matures, prop-tech solutions are gaining traction. They offer innovative ways to manage property, facilitate transactions, and improve construction processes.
B2B SaaS
Businesses in Kazakhstan are increasingly adopting cloud-based solutions to improve efficiency and productivity. This creates a growing market for B2B SaaS providers offering solutions like CRM, cybersecurity, and more.
Prominent Startups in Kazakhstan
Kazakhstan’s startup ecosystem has already produced notable companies across various sectors. For example:
- QGames (Software & Data), a leader in game development in Astana, is enhancing digital entertainment locally and regionally.
- 1Fit (HealthTech) offers a subscription-based fitness app that promotes accessibility to fitness services across Kazakhstan.
- Naimi.kz (E-commerce and retail) is a digital platform that facilitates on-demand services to streamline users’ daily tasks.
- Auto.kz (E-commerce & Retail) provides a comprehensive automotive product and service platform.
- Parqour (Hardware & IoT) specialises in smart parking solutions, supporting urban mobility with digital parking management tools.
Business Roadmap 2025: Aspirations and Realities
To stimulate economic growth beyond major urban centres and support entrepreneurship, Kazakhstan has implemented the Business Roadmap 2025 program. This initiative has been praised for focusing on regional development and aims to help small and medium-sized enterprises (SMEs). However, the program’s impact on business creation and growth remains unclear, highlighting the complex challenges facing Kazakhstan’s entrepreneurial ecosystem. Key issues affecting the program’s effectiveness include:
- Bureaucratic Hurdles: Entrepreneurs, especially outside major cities, face significant administrative challenges that impede business formation and expansion.
- Limited Access to Finance: Many entrepreneurs struggle to secure funding to start or grow their businesses, particularly in more remote regions.
- Regional Disparities: The program’s benefits may not be equally distributed, with urban areas potentially benefiting more due to existing infrastructure and resources.
These challenges underscore the need for continued refinement of policies and programs to support entrepreneurship effectively across all regions of Kazakhstan.
Kazakhstan: Weighing the Risks and Rewards of Market Expansion
- Regulatory and Bureaucratic Hurdles: Despite improvements, Kazakhstan’s regulatory environment can still be complex and time-consuming, with bureaucratic processes that may slow down business operations and increase compliance costs.
- Political and Economic Risks: While Kazakhstan’s political landscape is relatively stable, it has been marked by occasional unrest and power shifts. Any instability can create uncertainty for businesses. Additionally, the country’s dependency on oil and gas makes it vulnerable to fluctuations in global commodity prices.
- Corruption and Transparency Issues: Corruption remains a concern in specific sectors, creating challenges for foreign businesses using more transparent processes. Navigating these issues can require a deep understanding of local customs and business practices.
- Currency Volatility: The Kazakhstani Tenge can be volatile, especially given the country’s reliance on oil exports, which are susceptible to global market shifts. This can lead to currency exchange risks for foreign businesses.
- Geopolitical Tensions: Kazakhstan’s location between major regional powers places it in a sensitive geopolitical position. Shifts in international relations can influence Kazakhstan’s economic policies and occasionally result in sanctions or trade restrictions that may impact businesses operating within the region.
- Infrastructure Gaps Outside Major Cities: While infrastructure in significant hubs like Almaty and Astana has improved, rural areas and some regions may still lack adequate transportation and logistics infrastructure, which can be a hurdle for companies needing nationwide distribution networks.
- Limited Domestic Market Size: Despite growth, Kazakhstan’s domestic market size is relatively small compared to other emerging markets. The limited population of around 19 million for consumer-focused businesses may not provide the same growth opportunities as larger neighbouring markets.
- Cultural and Language Barriers: Kazakhstan’s cultural landscape blends Central Asian heritage with Western influences, which can present challenges for companies unfamiliar with the region.
- Legal and Contractual Challenges: Legal systems in Kazakhstan can differ significantly from those in Western countries, and contract enforcement may be more complex. Intellectual property rights, for instance, may not be as robustly protected, which can be a concern for technology and creative industries.
Streamline Your Kazakhstan Entry with Acumen International
Entering Kazakhstan’s market can be a high-stakes move, with regulatory and economic factors that catch even seasoned companies off-guard.
Labour laws change regionally, foreign worker quotas are strict, and currency volatility is often tied to global oil prices. For businesses without deep local knowledge, these factors can add hidden costs and compliance risks that disrupt operations.
Acumen’s global employment solutions address these complexities head-on, allowing employers to tap into Kazakhstan’s talent pool, manage compliance with shifting regulations, and maintain flexibility in a market where long-term commitments are often risky.
This approach enables a practical, scalable entry, freeing companies to test the market without heavy upfront investments or permanent setups.
Here’s how a strategic Global EOR approach clears the path for seamless, compliant HR operations in Kazakhstan.
1. Navigate Foreign Worker Quotas Effectively
Strict quotas limit the number of foreign hires, particularly for roles where local talent is available. Exceeding these limits can result in fines or forced team restructuring. Strategic workforce planning helps companies meet talent needs while staying within legal boundaries.
2. Manage Industry-Specific Tax Obligations
Tax regulations in Kazakhstan are complex and vary widely across sectors. Errors in compliance, especially across diverse industries, can lead to unexpected liabilities. Streamlined, sector-specific tax management reduces the risk of costly oversights, keeping operations smooth.
3. Test the Market Without Overcommitting to Entity Setup
Forming a local entity in an emerging market requires heavy commitment and significant investment, which may not align with a company’s long-term plans. Flexible market entry options allow businesses to operate locally without the burden of entity setup, so they can focus on testing the market before full-scale expansion.
4. Maintain Payroll Stability Amid Currency Volatility
Kazakhstan’s currency, the Tenge, often fluctuates due to its reliance on global oil markets, which can complicate payroll budgeting. By handling payroll processing locally, an Employer of Record ensures that employees are paid accurately in the local currency, reducing administrative friction for companies facing these fluctuations.
5. Facilitate Market Entry Without the Need for Entity Setup
Kazakhstan’s strict work permit and quota systems can be a costly barrier for companies looking to establish a presence. By acting as the legal employer, a Global EOR enables businesses to enter and test the market in Kazakhstan without setting up a local entity. This interim or long-term solution reduces the upfront costs and risks of market entry, allowing companies to onboard talent efficiently and exit smoothly if needed.
6. . Meet Local Benefits Standards with Ease
Kazakhstan requires employers to offer specific benefits, like social insurance and pensions, which can differ by industry. Acumen’s Global Payroll Calculator provides real-time insights into local payroll costs and benefits requirements, helping companies stay compliant while creating competitive packages that attract top talent. This tool simplifies payroll planning. It ensures full alignment with Kazakhstan’s regulations from day one.
7. Build Strong Teams Through Local Expertise and Cultural Insight
Success in Kazakhstan goes beyond compliance; it demands a deep understanding of local workplace dynamics. Acumen’s in-country experts bring the insights needed to shape HR policies that respect local values and align with cultural expectations, ensuring a more cohesive and engaged team.
By providing hands-on support and adapting swiftly to local developments, we keep your HR operations in sync with Kazakhstan’s unique business environment, fostering trust and alignment within your international team.
8. Ensure Full Labour and Immigration Compliance
Kazakhstan’s contractual requirements for employment terms, notice periods, and termination processes differ from international norms. CustOperating in Kazakhstan requires attention to specific employment standards, covering everything from contracts to ongoing compliance with local labour and immigration laws.
Employment terms, notice periods, and termination protocols must align with Kazakhstan’s legal requirements, while immigration rules demand regular oversight to manage visas, work permits, and renewals efficiently in Kazakhstan.
Acumen’s expertise and human support ensure that every aspect of employment — from customised contracts to labour and immigration compliance — is managed seamlessly. This reduces the risk of fines or legal issues and allows companies to focus on their strategic goals.
9. Scale Operations Flexibly to Respond to Market Conditions
Emerging markets require adaptability, as demand can change unexpectedly. Flexible workforce solutions allow companies to adjust staffing based on performance and growth potential without the restrictions of a permanent establishment.
Kazakhstan holds vast potential, and entering the market doesn’t have to be complex. With the right support, companies can move quickly, stay compliant, and adapt as needed.
Ready to unlock new opportunities in Central Asia? Contact Acumen International to start your journey with a seamless, risk-free market entry.