No government in Central Asia has built more machinery for entrepreneurs than Kazakhstan’s: a technopark with generous tax exemptions, a financial centre operating under English common law with its own court, a national development fund that has guaranteed small-business loans for a quarter of a century, state-paid coding schools, a digital-government platform that ranks among the world’s most advanced, and a home-grown fintech that listed on Nasdaq. And yet the country’s rank in global innovation indices has barely moved in a decade, and its technopark’s most visible output is software-services exports rather than product companies. This article explains the paradox — institutions ahead of pipeline — and what it tells every government that is tempted to build the ecosystem’s roof before its foundations.
The idea in brief. Kazakhstan is the region’s institution-builder. Astana Hub, the Astana International Financial Centre, the Damu fund and a first-rate digital state give founders a set of instruments that most middle-income countries lack. The constraint is the pipeline that those instruments were built to serve: a private sector still shaped by resource wealth and a large state, a founder base concentrated in two cities, a brain drain to Russia, Europe and the United States, and an equity culture only now forming. Kaspi’s success shows what a Kazakh company can become; the task for policy is to produce more companies capable of using the machinery — which means founder programs that reach mid-career professionals and the regions, procurement that makes the state a customer, and measurement honest enough to distinguish tax-regime registrations from companies built.
The resource economy and the shape of its private sector
Kazakhstan is the region’s largest economy by a wide margin — a GDP in the region of US$260 billion in recent World Bank estimates, roughly three times Uzbekistan’s — and its richest per person, at an income level that places it among upper-middle-income economies. The wealth comes from the ground: oil, gas, uranium, copper and other minerals account for the bulk of exports, and the state, through its sovereign wealth fund and national holding companies, owns or controls a large share of the economy’s commanding heights. The consequences for entrepreneurship are the familiar ones of resource economies. The exchange rate has swung with oil prices, most brutally in 2014–16 when the tenge halved and dollar incomes with it; the highest-paid careers have been in extraction, banking and the state; and the private sector that grew up in the 1990s and 2000s was oriented to trade, construction, services and supply to the resource sector rather than to products for export.
The chart shows the income story and, within it, the volatility. Rapid growth through the 2000s commodity boom, a sharp fall with the oil price and the currency in the mid-2010s, and a recovery that has now carried income per person past its earlier peak. The pattern matters for founder programs because it shapes the calculation every Kazakh professional makes: a salaried career in oil, mining, banking or government has, for most of the past twenty years, been the rational choice, and a founder program competes against it.
The institution stack
Against that backdrop, Kazakhstan’s government set out in the late 2010s to build the institutions of a technology economy, and it built them faster and more completely than any of its neighbours.
| Institution | What it is | What it does for founders | Design note |
|---|---|---|---|
| Astana Hub (2018) | International technopark in the capital | Multi-year exemptions from corporate and personal income taxes and VAT for registered technology companies; accelerators, including a program run with Google for Startups; relocation support; a venue and a community | Membership is a tax status; the numbers it reports are registrations and exports, which are not the same as companies built |
| Astana International Financial Centre (2018) | Financial jurisdiction with English common law, an independent court with British judges, its own regulator and an exchange | A place to domicile funds and holding companies, raise capital and resolve disputes under familiar law; long tax holidays for participants | Built for investors and financial firms; founders benefit indirectly, via funds and holding structures |
| Damu Entrepreneurship Development Fund (1997) | National SME development institution | Loan guarantees, interest-rate subsidies and business training through partner banks, at scale, for more than two decades | Debt-oriented and bank-mediated: reaches established small firms far better than pre-revenue ventures |
| Digital state | National e-government platform and digital programs | Company registration, tax, licensing and most public services online; Kazakhstan ranks among the world’s leaders in United Nations e-government assessments | Removes the entry friction the transition-economy literature identifies as the first barrier |
| Tech Orda and coding schools | State-funded vouchers for IT education; a campus of the 42 coding-school network in the capital | Tens of thousands of people trained in software skills at public expense | Supply-side: produces employees for services exporters faster than founders |
| Public venture instruments | State-backed venture vehicles under the national development holding | Co-investment and fund-of-funds capacity | Constrained by the same pipeline gap as private investors |
Read as a system, the stack has two striking features. It is complete — every instrument in the menu set out in article 39 exists in some form — and it was built in roughly the reverse of the order that Israel’s or Singapore’s experience recommends: capital and jurisdiction first, technopark second, founder pipeline last. The government built the roof, the walls and the plumbing, and is now working out where the residents come from.
The digital state as an entry lever
The least glamorous of Kazakhstan’s institutions may be the most consequential for founders. The country’s e-government platform, built over two decades and consistently placed among the world’s leaders in the United Nations’ periodic assessments, means that a company can be registered, a tax account opened, a licence applied for and most interactions with the state completed online, in hours rather than weeks. In the transition-economy research summarised in article 41, entry cost is the first and largest barrier to entrepreneurship, and the relationship between heavy entry regulation, corruption and informality is one of the best-documented findings in the field. Kazakhstan has, in effect, removed the barrier that most of its peers still spend years dismantling. The consequence is visible in the country’s registration statistics — new-firm formation is high by regional standards — and invisible in its output statistics, because low entry cost produces many small firms and few ambitious ones. Cheap entry is necessary; it is not sufficient. The digital state solved the problem the 1990s literature identified, and left the problem the 2010s literature identified — growth aspirations, and the institutions that encourage them — for the current decade.
Capital: what exists, and what it lacks
Kazakhstan’s financing landscape is the region’s deepest and still thin by the standards of the economies it compares itself with. The Damu fund and the banks it works through provide guaranteed and subsidised debt to established small firms in volumes no neighbour matches; the financial centre offers funds a familiar domicile and an exchange; the national development holding has venture vehicles; and a small but growing group of private funds, family offices and angel groups — many of them staffed by alumni of the country’s largest technology and banking employers — has begun to invest at seed and early stage. What is missing is the middle of the ladder described in article 46: pre-seed and seed capital in the volumes that a national founder program would require, and the follow-on capital that turns a seed-funded venture into a regional company. Policy interest rates that have stayed in the double digits for most of the past decade make debt expensive and equity unfamiliar, and the banks that dominate finance are, understandably, more interested in a guaranteed loan to a trading company than in a convertible note to a software startup. The fix is a fund-of-funds discipline that backs private managers at the early stages and measures what it crowds in, alongside a pre-seed grant instrument tied to program milestones — instruments the country has the institutional capacity to build faster than any of its neighbours.
Beyond the two capitals
Kazakhstan’s geography is the size of Western Europe, and its ecosystem occupies two cities. Almaty, the former capital and commercial centre, holds most of the technology companies, capital and talent; Astana holds the technopark, the financial centre and the government. The regional cities — Shymkent in the south, the third-largest city and the fastest-growing; Karaganda and Pavlodar in the industrial north; Aktobe and Atyrau in the oil-producing west; Ust-Kamenogorsk in the metallurgical east — have universities, industrial employers and founders, and almost none of the programs. The oil-and-mining west is a particularly striking gap: it holds the country’s densest concentration of engineers and the highest salaries outside the capitals, and its mid-career professionals are exactly the founder profile the evidence favours. A national program that ran cohorts in six regional cities, in Kazakh and Russian, with local universities and the regional offices of national companies as partners, would address a founder population several times the size of the one the technopark currently reaches — and would give the country’s institutions something to do that they were built for.
The Kaspi effect
The single most important thing to happen to Kazakh entrepreneurship in the past decade was not a policy. It was a company. Kaspi.kz, which began as a consumer bank, rebuilt itself around a mobile “super-app” combining payments, a marketplace and consumer finance, and became the country’s dominant digital platform — used, by its own reporting, by a majority of the adult population every month. It listed on the London Stock Exchange in 2020 and on Nasdaq in early 2024, in a listing that raised on the order of a billion dollars and gave the region its first widely recognised technology champion.
Kaspi’s effect on the ecosystem runs through three channels. First, rails: its payments, QR and marketplace infrastructure gave hundreds of thousands of small merchants a digital storefront and a payments system in a country where card acceptance had been thin, which is the same effect that Tavneet Suri and William Jack documented for mobile money in Kenya in Science — digital finance lifting households and enabling small enterprise at scale. Second, proof: Kaspi demonstrated to a generation of Kazakh engineers and managers that a product company built in Almaty could reach a global capital market, changing the career calculation described above. Third, alumni: its former employees are now among the country’s most active founders, angels and product leaders — the Saxenian mechanism, discussed in article 36, operating within a single city.
The caution is that one company is not an ecosystem. Kaspi’s dominance also sets a very high bar for any Kazakh consumer-facing startup, and its success came from a bank’s balance sheet and customer base rather than from the venture path the technopark was built to support. The lesson for policy is to build the institutions that let the next ten Kaspi alumni ventures reach scale, not to expect the next Kaspi.
Where the rank has not moved
Kazakhstan’s position in WIPO’s Global Innovation Index illustrates the paradox with uncomfortable precision. Despite the institutional building of the past decade, the country’s rank has oscillated in the seventies and low eighties, with strong scores on institutions, infrastructure and digital government offset by weak scores on knowledge and technology outputs, business sophistication and, in particular, the creative and technology exports that a founder pipeline would produce.
As article 32 argued, an index rank is a national-systems measure and not a verdict on any program; but the flat line is informative. The inputs Kazakhstan controls — institutions, infrastructure, education spending, digital government — are strong. The outputs that only a working pipeline produces are not yet visible. That is exactly the profile of an ecosystem with a roof and no residents, and it argues for a shift of policy attention from instruments to the founder funnel.
The pipeline problem, itemised
- Concentration. Almaty and Astana account for the overwhelming majority of technology companies, capital and program activity in a country the size of Western Europe. The regional cities — Shymkent, Karaganda, Aktobe, Atyrau, Ust-Kamenogorsk — have universities, industry and founders, and almost no programs.
- Talent outflow. Emigration of educated Kazakhs to Russia, Europe and North America has been persistent for decades, and the best technical graduates leave at the highest rates. The 2022 inflow of Russian specialists (article 45) partly offset it, but the structural outflow remains.
- Services before products. The technopark’s tax regime rewards software exports, and the fastest way to export software is services. The regime has produced a services industry; product companies with venture-scale ambitions remain rare.
- The state as competitor. National companies and state-linked enterprises dominate the sectors — energy, transport, telecoms, banking — where a Kazakh startup would find its first large customers, and their procurement is slow and risk-averse.
- Equity culture. Family capital, bank debt and state guarantees are the region’s financing norms; angel investing and venture equity are new, and the Estrin–Korosteleva–Mickiewicz finding that a large state sector depresses growth aspirations (article 41) applies with full force.
What a government founder program should do next
Kazakhstan’s next phase is a pipeline phase, and the design follows from the diagnosis and from the evidence this series has assembled.
- Recruit the mid-career founder. The engineers, geologists, bankers and managers leaving the resource and financial sectors are the country’s highest-yield founder population (article 40) and are almost entirely unreached by programs designed for students. Evening and remote formats, recruitment through employers and professional associations, and a curriculum that assumes domain expertise are the design changes that find them.
- Run regional cohorts. Four to six cities beyond the two capitals, in Kazakh and Russian, with local universities and industry as partners and the technopark’s accelerators connected remotely — the network model article 37 describes for thin environments.
- Make the state a customer. Procurement set-asides and pilot budgets at the national companies, with a sandbox for regulated sectors, would give Kazakh ventures the first revenue that is now the hardest thing to find.
- Separate the metrics. The technopark’s registrations and export figures measure a services industry and should be reported as such; the founder pipeline should be measured by cohort — ventures operating, revenue, external capital — on the model of article 32. Conflating the two is the single most damaging habit in the country’s ecosystem reporting.
- Point the capital at the pipeline. Public venture instruments should carry a pre-seed layer tied to program milestones, and the financial centre’s fund infrastructure should be used to domicile regional early-stage funds with Gulf and Asian limited partners (article 46).
- Use the diaspora deliberately. Kazakhs abroad are a network of mentors, angels and returnees waiting for a structured invitation; the alumni of the country’s international scholarship programs are the obvious first cohort.
A composite case: the technopark that measured the wrong thing
A composite from several regional engagements; details altered and no single institution described.
A technopark in the region reported, three years after launch, more than a thousand resident companies and export revenues that had multiplied several times. A ministry review asked a different question — how many residents were product companies with external investors and teams larger than ten — and found the answer was a few dozen. The rest were services firms, freelancers and the technology subsidiaries of established businesses that had registered to obtain the tax status: valuable, legal and precisely what the incentive had been designed to attract, but not what the park had been sold as.
The response was not to change the incentive, which was working as designed, but to add what the park had never had: a founder pipeline with its own funnel. A national program was commissioned with regional cohorts and a mid-career track; a pre-seed grant instrument was attached to program milestones; the park’s accelerator partners were given selection thresholds and outcome reporting; and the park’s annual report was split into two sections — the services industry, measured in registrations and exports, and the venture pipeline, measured by cohort. Two years later the second section was still small. It was also, for the first time, true.
What could go wrong
- More instruments. Another fund, another park. Antidote: pipeline programs before new supply.
- Capital-city programs only. Antidote: regional cohorts, local languages, remote mentoring.
- Registrations reported as startups. Antidote: separate services and venture metrics.
- State enterprises as gatekeepers. Antidote: procurement set-asides and sandboxes with service standards.
- Oil-price cycles resetting priorities. A downturn cuts programs; an upturn removes urgency. Antidote: multi-year charters with horizons written in.
- Waiting for the next Kaspi. Antidote: build for ten mid-sized companies, not one champion.
Questions ministers and investors actually ask
“Is Kazakhstan the region’s best ecosystem?” It has the region’s best institutions and its only global technology champion. Its pipeline is thinner than Uzbekistan’s is becoming. The two countries are complementary, and regional strategies increasingly treat them together.
“Should we domicile a regional fund in the financial centre?” For Gulf, Asian and Western investors, yes — it is the region’s most familiar legal environment. The fund’s deal flow, however, will come from programs in Almaty, Tashkent and the regions, not from the jurisdiction.
“Why hasn’t the technopark produced more product companies?” Because tax status rewards exports, and services export fastest. Product companies need a funnel — selection, training, customers, capital — that a tax regime does not provide.
“Where are the founders?” In oil, mining, banking, telecoms and the state — mid-career, experienced and unreached. And in the regions.
“What is the one program to commission?” A national founder program with a mid-career track and regional cohorts, measured by cohort, with a pre-seed instrument attached. The institutions to absorb its graduates already exist.
Methodology & data notes
Income figures are approximate World Bank estimates in current dollars and are sensitive to exchange-rate movements; the trajectory, not the decimals, is the point. Global Innovation Index ranks are as published in each annual edition and vary with methodology. Descriptions of Kazakh institutions reflect public information as of 2025; tax terms, program names and mandates change and should be verified with the institutions. Kaspi figures are as reported by the company. The composite case combines several engagements with details altered. Companion articles cover the regional map (41), Uzbekistan (43), the 2022 migration (45), finance (46) and program design (50).
References & further reading
- World Bank Open Data — Kazakhstan GDP, income and trade indicators
- Bureau of National Statistics, Kazakhstan — official statistics
- Astana Hub — technopark programs and resident reporting
- Astana International Financial Centre — jurisdiction, court and exchange
- Kaspi.kz investor relations — listing documents and results
- Damu Entrepreneurship Development Fund — SME finance programs
- OECD — Economic Surveys and Eurasia Competitiveness Programme reports on Kazakhstan
- EBRD — Kazakhstan country strategy and Transition Report
- WIPO — Global Innovation Index country profiles
- United Nations DESA — E-Government Survey
- Suri, T. & Jack, W. (2016) — The long-run poverty and gender impacts of mobile money, Science
- Estrin, S., Korosteleva, J. & Mickiewicz, T. (2013) — Which institutions encourage entrepreneurial growth aspirations?, Journal of Business Venturing
HexGn designs and runs founder programs with mid-career tracks and regional cohorts for governments and technoparks — the pipeline layer that lets an institution stack like Kazakhstan’s finally fill.