Astana eager to boast a regional IT startups hub

Astana eager to boast a regional IT startups hub
Astana Hub is found in space created for last year's expo in the Kazakh capital.
By Kanat Shaku in Astana December 12, 2018

Earlier this year, Kazakhstan’s capital Astana saw the launch of the Astana International Financial Centre (AIFC), the Central Asian nation’s second attempt at forming a regional financial hub. The headquarters of the financial services nexus are found in the exotic buildings that hosted the Astana EXPO 2017 international fair last year. In an attempt to get the most out of the EXPO site, the Kazakh authorities don’t want to limit their ambitions to just a single type of hub, however.

The state-run EXPO-2017 company has also been tasked with developing a business centre for “stimulating economic activity” in the region following the examples of La Défense in Paris and Moscow City, among others. The prospects of success for such a large-scale effort mainly depend on the individual projects the EXPO-2017 company is planning to incorporate into it. One such project includes the launch of an international hub for IT startups, which has already existed for around a year despite holding its official launch ceremony last month.

Dubbed simply as the Astana Hub, it is to be complemented with an international IT university. It focuses on providing free co-working spaces, access to networking and potential investors and assistance in marketing efforts. The hub is subdivided into an accelerator, an incubator and a number of rentable office spaces mainly taken by veteran IT sector entities of the country.  

Support for smart startups
Startups already benefiting from Astana Hub support currently comprise of 146 IT companies. Notable examples include Smart Gas, a smartphone app offering cheaper petrol prices, which has partnered with 65 gasoline stations so far. Another startup, Kompra, focuses on providing background checks on business entities by compiling government data from over 20 open sources. The company is currently partnered with 12 big firms, including five local banks, and boasts 5,400 clients. In both cases, the only role taken on by the Astana Hub is that of providing PR support and placing the startups in a position where they might benefit from a network of contacts and prospective investors.

Among the larger IT businesses there is a fintech startup SENIM that offers smart wallet services via their app to consumers and businesses alike. The company, which launched prior to the hub’s existence back in 2016 and eventually took part in the hub’s accelerator, is also developing a crowdfunding and investments platform complete with "smart blockchain contracts".

"Our products need a big user base, when we launched [one and a half years ago] we expected that entering the market would be much easier [than it turned out to be]," the CEO of SENIM, Daulet Yermekov, told bne IntelliNews. "Then we participated in the hub's second accelerator, where we were taught by experts how to position ourselves—how to find a niche to enter the market."

SENIM's smart wallet, featuring QR-code-based payments, covers a wide variety of local goods and services, which are normally paid for online. SENIM's userbase automatically gets access to multiple services and enjoys 10% or higher cashbacks in return. It lists Kazakh firms such as Ticketon, Kazpost and Bank CenterCredit among its partenering businesses. SENIM also offers a business-to-business service for its partners allowing them to pay their suppliers at zero transaction costs via the same app—their suppliers, in turn, can pay other suppliers, who have joined SENIM's network. By building up this network, the startup hopes to expand beyond Kazakhstan by entering Uzbekistan next year and eventually entering the Russian market, at least in terms of Russian cities not far over the border.

“Our smart wallet gives [our user] analytics about [their] spending," Yermekov added. "In the future we are planning to incorporate an AI-based tool intended to help [users] save money more efficiently.”

"We are planning to sell the analytics based on this big data to merchants within our system," he noted. The company also hopes to incorporate performance data of the businesses within its system into its plans for the crowdfunding and investment platform. The goal is to allow small but successful ventures within the company's network to showcase their business histories to investors in order to secure funding on the crowdfunding platforms. As opposed to most crowdfunding platforms, where there is no binding agreement involved, SENIM's blockchain-based contracts will function as “proof” of investors' stakes in businesses they decide to back.

Projects like SENIM, Smart Gas and Kompra may sound promising, but the question as to whether Astana can achieve full-blown growth to boast an international IT hub has not yet been answered.

Too ambitious?
Attempts at launching regional IT hubs are not uncommon and clear success for ambitious projects of such a scope are rare. Building a sprawling IT sector requires finding a niche not yet discovered by the other IT hubs of the world. Pavel Koktyshev, deputy chairman of the Zerde National and Communications Holding, the parent company of Astana Hub, suggested that Kazakhstan has the potential to build its IT sector around the agricultural sector and its derivative products.

The Kazakh government has been prioritising the agriculture sector as part of its efforts to diversify the economy away from over-reliance on hydrocarbon exports. Still a number of risks remain, as restructuring efforts made at the second largest Kazakh lender Tsesnabank demonstrated earlier this year—the bank found itself in need of assistance from the authorities in September as much of its portfolio was comprised of bad loans in the agriculture sector.

The saving grace of the Astana Hub project, so far, appears to be its efforts to allow the IT sector to grow organically by playing the role of a mediator, instead of trying to aimlessly throw money at it in anticipation of expertise and demand emerging out of a vacuum. If the Kazakh authorities manage to avoid such mistakes, seen in the examples of similar—albeit rather gargantuan—IT projects such as Russia’s Skolkovo, the hub may yet have a chance to grow. Astana Hub's current mediatorial approach appears to be shooting in the right direction.