How can start-up ecosystems in Central Eurasia become more effective?

• Start-up Ecosystems are key to creating high-value products and boosting economic productivity.Central Eurasia, which is an emerging market with a growing start-up ecosystem, is receiving coordination support from the ITU-Startup Central Eurasia platform.Central Eurasia can become a hub for high-value products and increased economic productivity – if it receives the right support and infrastructure.

Amid the the Fourth Industrial Revolution, the key to driving significant productivity shifts across all sectors lies in waves of innovation, science-intensive breakthroughs, and the transition to Web 3.0. Numerous digital products, such as Chat GPT by OpenAI, have their origins in research projects and technological start-ups. To catalyze these innovation waves and ensure that experimental ideas successfully pass market tests while driving positive transformations in our societies, the establishment of effective start-up ecosystems is crucial.A start-up ecosystem comprises various building blocks that depend on public and private stakeholders including entrepreneurs, academia, entrepreneurship support networks, and financiers. These building blocks work together to enable a start-up project to evolve into an innovative business. The effectiveness of an innovation ecosystem is achieved when all the supporting blocks are developed and operational at every stage, including Pre-seed, Seed, Startup, Valley of Death, and SME stages.

Rise of the start-up ecosystem in Central Eurasia

For the last few years the Central Eurasia region – Armenia, Azerbaijan, Georgia, Kazakhstan, Kyrgyzstan, Tajikistan, Turkmenistan, and Uzbekistan – has been playing a growing role in the global economic landscape. With a population of roughly 100 million, the region has shown promising potential for economic development and innovation. The number of start-ups in the region stands at around 7,000, and there is a rising number of internet users. Digitalization is reshaping user habits in Central Eurasia, enhancing B2C potential and reinforcing its existing strength as a B2B hub for start-ups.There has been an increase in the average percentage of GDP invested in research and development (R&D). However, countries should strive for at least 1% of GDP investment in R&D if they aim to participate in the development of knowledge-intensive innovations. Currently, R&D support in the region ranges from 0.09% to 0.30% of GDP.Countries have integrated start-ups into their digital transformation strategies and established technoparks. Notable examples include Astana Hub in Kazakhstan, IT Park in Uzbekistan, the High Technology Park of the Kyrgyz Republic, and the Artificial Intelligence Council in Tajikistan. Additionally, FAST and EIF play significant roles in Armenia, while Sabah Lab is prominent in Azerbaijan. The Future Laboratory in Georgia and Central Eurasia has created the Startup Central Eurasia platform in partnership with the International Telecommunication Union (ITU). They have also launched the Innovation and Entrepreneurship Master’s Program in partnership with UC Berkeley SCET and collaborate with SkyDeck, serving as a gateway to Silicon Valley for regional innovators. Additionally, to foster capital integration within the region and neighbouring countries, the Central Eurasia Venture Club. The Startup Central Eurasia platform has implemented various initiatives, including establishing a Slack Channel, providing training for Limited Partners (LPs), working towards creating a better legal environment, improving institutional investments, facilitating the exchange of deal flow, and fostering knowledge sharing, and events.These institutions provide support programs, access to innovation infrastructure, financing, and other resources to nurture innovative enterprises. The Astana International Financial Centre (AIFC) in Kazakhstan is an effective tool for promoting the development of the start-up ecosystem in the region. In 2022, Astana Hub launched the Silkway Accelerator in collaboration with Google for Startups. In Uzbekistan, the One Million Uzbek Coders Project (OMUC) is underway to develop the local talent pool. IT Park is actively supporting the Business Process Outsourcing (BPO) segment, including collaboration with Huawei. In Georgia, the 500 Georgia Acceleration Program is likewise gaining international traction.

The region has seen several strong-growth start-ups, with particular demand in sectors such as fintech, e-commerce, digital platforms, AI, edtech, agrotech, and advanced manufacturing. Notably, success stories have emerged, with Picsart, an Armenian start-up, achieving “unicorn” status. Others include Elvin Technologies, Cerebra, Voovoo, Billz, NBFit, Zypl.ai, IMAN, TASS, Hirelamp, Perkskit, Theneo.To enable founders to realize their start-up potential, it is essential to address the following:

• The public sector should ensure that the ecosystem has the necessary building blocks.Start-up ecosystem mapping is crucial alongside strong private-sector collaboration with the governmentGovernment institutions should enhance entrepreneurship education in universities by updating educational programs and improving the qualifications of teaching staffExpansion of infrastructure, including the establishment of technoparks and innovation centres, is vital not only in major cities but also in regional areas, considering their specific characteristicsEfforts to refine venture financing legislation and establishing a Fund of Funds should continue, with a goal of promoting investment in globally scalable start-ups that embrace AI and IoT.

Central Eurasia can, with the right blend of support and infrastructure, become an epicentre of innovation. Enhancing coordination mechanisms between central, regional, and local authorities is crucial for fulfilling commitments to the ecosystem. In this context, the establishment of joint working groups involving various ministries is essential for coordinating initiatives in the field of innovation policy. Additionally, it is important to avoid creating structures that duplicate the functions of existing organizations. The challenges are real, but so are the opportunities.By addressing the former and seizing the latter, Central Eurasia is on track to become a nexus for high-value products and a powerhouse of economic productivity. A nurturing environment for start-ups, strategic investment in human capital, and a commitment to regional integration are key elements of success in this regard. When these elements come together, the start-up ecosystem in Central Eurasia won’t just become more effective—it will become a catalyst for growth, propelling the