Are Innovative Industries One of the Kyrgyz Republic’s Few Opportunities to Prosper?
The emergence of AI is considered by many to be a major tectonic shift, much like the emergence of the internet in its time. It is hard to overestimate the role innovation plays in our lives, with founders all over the world trying to pioneer our way out of the next problem. At first glance, the Kyrgyz Republic’s tech sector does not represent anything particularly meaningful. The chances of the small landlocked country - the farthest from any ocean in the world, which is the most affordable mode of shipping mode - integrating into innovative global ecosystems on its own seem wholly unrealistic. However, if we look at the dynamics of development in its tech sector, the potential is there. Is there a chance that the Kyrgyz Republic can become a part of the global tech scene? [caption id="attachment_30359" align="aligncenter" width="1440"] Image: The World in Maps[/caption] According to Ashley Vance at Bloomberg, “It’s about a landlocked nation, one with very few natural resources, hoping to gen up a tech industry on the fly.” The Kyrgyz startup ecosystem is clearly in its nascent stages, meaning that you haven’t heard about the Kyrgyz Skype. Yet. The country’s position in the Global Innovation Index in 2024 is 99th, up from 106th in 2023. The Global Startup Ecosystem Index, meanwhile, has the Kyrgyz Republic lower than 100th place in its 2024 ranking, down from 99th in 2023. “The country has maintained second position in Central Asia and seventh in the Central Asia Regional Economic Cooperation Program (CAREC) business region,” according to this index. The Kyrgyz Republic’s VC ranking of 103rd in the Venture Capital & Private Equity Country Attractiveness has barely changed over the last couple of years. When compared to peer group economies, it is obvious that the Kyrgyz Republic needs significant improvements in the depth of the capital market, social environment, entrepreneurial opportunities, and economic activity. [caption id="attachment_30358" align="aligncenter" width="1796"] Image: Venture Capital & Private Equity Country Attractiveness Index 2023[/caption] In terms of the number of venture capital deals, the Kyrgyz Republic is still lagging behind its neighbors. Out of $110+ million of venture capital funding in the region in 2023, the Kyrgyz contribution was only a fraction at $1.1 million. In 2024, this increased to $1.7 million, however, with the country's first venture capital law soon to be adopted. [caption id="attachment_30357" align="aligncenter" width="826"] Image Venture Capital in Central Asia 2024[/caption] The High Technology Park of the Kyrgyz Republic, which is a special tax regime for IT companies targeting exports, is demonstrating a steady growth, with its revenue expanding from under a million in 2013, to a more impressive $130 Million in 2024. The park’s residents are mostly companies providing IT outsourcing for developed markets, but the signs of a turn towards launching their own IT products are there. A separate world-first Creative Industries Park has also been set up to support the country's creative industries, including startups. When it comes to the largest Kyrgyz startups, they are founded by Kyrgyz nationals,...
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