Kazakhstan to launch $1 billion venture capital fund

Kazakhstan is set to launch a new venture capital fund of funds to attract $1 billion in investments. The government believes this initiative will provide access to crucial technologies to help transform the economy.

«Our main goal is to create conditions that retain local talent and attract new expertise, support startups at all stages of their development and bring global competencies to Kazakhstan,» said Prime Minister Olzhas Bektenov.

The new fund will be the first of its kind to invest in venture capital funds. Previously, only a few venture capital funds were established in Kazakhstan, primarily focusing on early-stage startups. These include the Tumar Venture Fund, founded by White Hill Capital (owned by Aslan Sultanov et al.), with a target investment size of up to $50 million, and the Qazaqstan Venture Group, set up by a government entity with an authorized capital of $250,000.

The new fund is expected to strengthen Kazakhstan’s position as a regional hub for technology and innovation. Minister of Digital Development Zhaslan Madiyev stated that Kazakhstan currently accounts for more than 70% of all venture deals in the region. Over the past five years, the volume of venture capital in the country has grown more than sixfold, reaching $80 million.

Large Kazakhstani companies have already pledged over $100 million to the new venture capital fund.

The investments raised will be directed toward global, regional and domestic venture capital funds. The new fund will focus on investing in startups in artificial intelligence (AI), digital healthcare and other technological sectors. AI will be the top priority, given the projected global market value of $827 billion by 2030.

Experts invited by the cabinet to consult on the new initiative emphasized that to attract global capital, Kazakhstan should strengthen its legal infrastructure and create conditions that support startups in the later stages of development.

In his 2023 state-of-the-nation address, President Kassym-Jomart Tokayev stressed the need to develop venture capital financing and lower requirements for banks to increase their role in financing the real economy. Vadim Novikov, an antitrust economist, told Kursiv.media that liberalizing banks’ participation in venture capital funds would address both issues simultaneously.

Novikov also pointed out the relatively low volume of venture capital financing in Kazakhstan compared to other countries. He identified legislative restrictions on bank investments in venture capital as a major obstacle to the sector’s growth.