Angel Investing in Central Asia: The Market Is Growing, the Funnel Is Narrowing
Together with our author Anuar Lenzat, we look at how angel investing is developing in Central Asia and why, amid the growth of venture capital, it is the angel stage that is becoming the ecosystem's key bottleneck. The market looks increasingly mature, but without systemic support for business angels, the region risks facing an investment funnel crisis within the next few years.
Central Asia's startup ecosystem has made a qualitative leap in recent years. New accelerators, venture funds and corporate innovation programs are emerging, and the number of tech teams keeps growing. At the later stages and in institutional venture capital, the market looks increasingly mature.
However, this growth conceals a systemic risk that is not yet being discussed loudly enough: the capital market is growing faster than the market for early-stage startups. If this imbalance is not corrected now, the region may face a classic investment funnel crisis in the coming years.
The capital is there. What is missing is the start
Venture infrastructure is developing rapidly in Central Asia today: Kazakhstan is launching the Alem Ventures fund of funds, Uzbekistan has required banks to set up venture funds and already has two funds of funds in operation. According to market data, Kyrgyzstan may soon get a national venture fund.
This is a positive trend. But venture capital, by its very nature, does not work “from scratch.” Funds need projects with a product, first customers, revenue and a proven business model.
If the number of funds keeps growing while the number of quality Pre-Seed and Seed startups does not, the market inevitably runs into a pipeline shortage. There is money, but there are no deals.
Where the ecosystem’s bottleneck is
That bottleneck is the angel stage.
The very earliest stage, when a startup needs:
— its first $10,000–50,000
— mentorship
— market access
— belief in the team rather than in metrics.
This is exactly where business angels play a key role. Yet it is this very segment that remains the least supported in Central Asia, both by the state and at the institutional level.
Business angels exist, and the market is alive
It is important to stress that claiming there are no business angels in the region would be wrong. They exist, and their numbers are growing.
In 2025, Kazakhstan has at least five active angel clubs:
— MA7 Ventures
— MOST Investors Club
— Astana Venture Club
— Silk Road Innovation Club
— Activat Invest Club
Together they have more than 359 business angels, and the total volume of their deals has already exceeded $12,250,000, with MA7 Ventures accounting for the lion’s share of this figure.
For an emerging market, this is a strong signal. It points to growing interest from private capital in tech startups and shows that a culture of co-investment is beginning to take root.
Anuar Lenzat, Head of Investor Relations, Activat VC
It is encouraging that venture capital is increasingly drawing the attention of traditional asset managers and business representatives. This year we held two business angel schools, which attracted many applicants from the business community, and that is a signal for the market. We see demand growing despite the looming domestic crisis and market uncertainty.
But growth has a flip side
Despite the positive momentum, the angel investing market faces a number of systemic problems.
First, a lack of professionalization.
Many private investors back startups without a portfolio approach, putting significant sums into just 1–2 projects. In venture logic, this almost always means a high risk of losing capital. What is needed here is outreach to the market, inviting renowned angels, supporting angels and providing training.
Yelzhan Kushekbayev, CEO, MA7 Ventures
When investing in early-stage startups, you need to build a diversified portfolio. If you invest in 10 projects a year, within 3–4 years you can assemble a safe portfolio, improve your chances of landing a would-be unicorn, and return the entire portfolio and much more. Rather than looking for a needle in a haystack, it is better to buy the whole haystack.
Second, a weak institutional environment.
The region still has no tax deduction mechanism for failed investments.
Third, an imbalance in government support.
The state actively invests in startups through grants, accelerators and venture funds. This is important and the right thing to do.
But angel investing as a distinct element of the ecosystem receives virtually no support.
Many countries lack tax incentives for angel investments, mechanisms for recognizing and writing off investment losses, and programs for co-investing alongside angels at the early stages.
As a result, private investors are left on their own with the riskiest stage of a startup, without a helping hand from the state.
Why this is a risk for the entire ecosystem
If the current imbalance persists, the region may find itself in a situation where:
— venture funds compete for a limited number of deals
— startups “skip” the early stages without sufficient preparation
— the quality of projects at Seed and Series A falls short of investor expectations.
It is business angels who can narrow this gap, build a sustainable funnel and prepare projects for institutional capital.
What needs to be done now
Developing angel investing is not an alternative to venture funds but their foundation.
The region needs:
— systematic education programs for business angels
— support for investment clubs and help in scaling them
— standardized legal instruments for early-stage deals
— government co-investment programs and tax incentives for angel investments.
Conclusion
Central Asia is at a unique point of growth today. There is capital, there is interest, and there is entrepreneurial energy.
The only question is whether a solid foundation will be built under this growth.
Without a strong layer of business angels, the venture ecosystem risks facing a funnel crisis within the next few years.
And right now is the best time to turn angel investing from isolated initiatives into a systemic driver of the region’s innovation economy.
https://the-tech.kz/biznes-angelstvo-v-czentralnoj-azii-rynok-rastet-voronka-suzhaetsya/
