Enhancing the Effectiveness of Start-Up Ecosystems in Central Eurasia

Central Eurasiathrive as a high-value product hub by fostering start-ups, investing in human capital, and promoting regional integration, driving economic growth and prosperity.

FREMONT, CA: The development of start-up ecosystems is vital for fostering the creation of high-value products and driving economic productivity. In Central Eurasia, an emerging market with a growing start-up ecosystem, the ITU-Startup Central Eurasia platform provides coordination support. With adequate support and infrastructure, Central Eurasia has the potential to flourish as a hub for high-value products, contributing to enhanced economic productivity.

In the Fourth Industrial Revolution, which is driving significant shifts in productivity across all sectors, it becomes imperative to foster waves of innovation, science-driven breakthroughs, and the transition to Web 3.0. Numerous digital products, like OpenAI's Chat GPT, have emerged from research projects and technological start-ups. To expedite these waves of innovation and ensure the successful market testing of experimental ideas, leading to positive societal transformations, the establishment of effective start-up ecosystems is essential.

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A start-up ecosystem encompasses various components that rely on collaboration between public and private stakeholders, including entrepreneurs, academia, entrepreneurship support networks, and investors. These components work in unison to facilitate the growth of a start-up project into an innovative business. The effectiveness of an innovation ecosystem is achieved when all supporting components are developed and operational at each stage, including Pre-seed, Seed, Startup, Valley of Death, and SME stages.

Rise of the start-up ecosystem in Central Eurasia

In recent years, the Central Eurasia region, which includes countries such as Armenia, Azerbaijan, Georgia, Kazakhstan, Kyrgyzstan, Tajikistan, Turkmenistan, and Uzbekistan, has been steadily gaining importance in the global economic landscape. With a population of approximately 100 million, the region showcases the promising potential for economic growth and innovation. Currently, there are around 7,000 start-ups in the region, and the number of internet users is continuously increasing. The digitalization of Central Eurasia is transforming user behaviour, presenting opportunities for both business-to-consumer (B2C) and business-to-business (B2B) start-ups.

Efforts have been made to boost investments in research and development (R&D), although the region should aim to allocate at least one per cent of its GDP to R&D to actively participate in knowledge-intensive innovations. Currently, R&D support ranges from 0.09 per cent to 0.30 per cent of GDP across countries in the region.

Central Eurasian countries have actively integrated start-ups into their digital transformation strategies, establishing technoparks and hubs to foster innovation. Collaborations with international institutions such as UC Berkeley SCET, SkyDeck, and the International Telecommunication Union (ITU) have been formed to provide training, knowledge sharing, and access to resources for regional innovators. Initiatives like the Central Eurasia Venture Club and the Startup Central Eurasia platform play a crucial role in facilitating capital integration and support programs, granting innovative enterprises access to innovation infrastructure, financing, and other valuable resources. These initiatives and institutions contribute significantly to the growth of the start-up ecosystem in Central Eurasia, promoting innovation and providing support for aspiring entrepreneurs.

The Central Eurasia region has witnessed the emergence of numerous high-growth start-ups, particularly in sectors such as fintech, e-commerce, digital platforms, artificial intelligence (AI), education technology (ed-tech), agrotech, and advanced manufacturing. Notable success stories include Armenian start-up Picsart, which has achieved "unicorn" status, as well as Elvin Technologies, Cerebra, Voovoo, Billz, NBFit, Zypl.ai, IMAN, TASS, Hirelamp, Perkskit, Teneo.

To support founders in unlocking the full potential of their start-ups, it is crucial to address the following factors:

The public sector plays a vital role in establishing the necessary foundations for a thriving start-up ecosystem. It is crucial to conduct a comprehensive mapping of the start-up ecosystem in collaboration with the private sector. This mapping exercise helps identify the key components of the ecosystem and areas that require improvement. Government institutions should also prioritize entrepreneurship education in universities, ensuring that educational programs are regularly updated and that teaching staff possess the necessary qualifications.

Additionally, there is a need to expand the infrastructure that supports start-ups, not only in major cities but also in regional areas, taking into consideration their unique characteristics. This includes the establishment of technoparks and innovation centres that can serve as focal points for entrepreneurial activities.

Efforts should be continued to refine venture financing legislation, aiming to create an environment conducive to investment in globally scalable start-ups that embrace technologies such as artificial intelligence (AI) and the Internet of Things (IoT). Additionally, the establishment of a Fund of Funds can further facilitate investment in promising start-ups.

By focusing on these areas, the public sector plays a vital role in fostering a supportive environment for start-ups, driving innovation, and fueling economic growth in the Central Eurasia region.

With the right combination of support and infrastructure, Central Eurasia has the potential to become a centre of innovation. Effective coordination mechanisms between central, regional, and local authorities are crucial for fulfilling commitments to the start-up ecosystem. This can be achieved through the establishment of joint working groups involving various ministries, ensuring coordinated efforts in innovation policy initiatives. It is important to avoid creating redundant structures that duplicate the functions of existing organizations.

While challenges exist, there are also opportunities. By addressing these challenges and seizing the opportunities, Central Eurasia can emerge as a hub for high-value products and a driving force for economic productivity. Creating a nurturing environment for start-ups, strategic investments in human capital, and a commitment to regional integration are key factors for success. The start-up ecosystem in Central Eurasia will be enhanced when these elements converge, acting as a catalyst for growth and bringing greater prosperity to the region.

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