The prevalence of copycats leads to false comfort senses potentially sapping the creativity needed to generate tech innovation and diversify ecosystems. Central Asia and the Caucasus are not immune to this fact, but we see key changes occurring on that front.
TUZ Ventures ran a deep ecosystem analysis in Uzbekistan (performed with ITP) and Kazakhstan (with Zerde NIH, Astana Hub, AIFC Fintech Hub, MOST, Tech Garden) -- please stay tuned for the release of the Uzbek report within weeks and Kazakh report in March. It turns out that large proportions focus on well-explored verticals and “neglect” innovative ones such as medtech, greentech, gaming, logitech, retailtech, traveltech (to be fair these require more technicality, funding and fruition time).
The case of Uzbekistan is of particular interest as the country launches its tech journey, and its progress could be symptomatic of how the region as a whole develops. Following are a few key statistics:
Uzbekistan's tech ecosystem is mostly concerned with traditional industries, such as edtech, e-commerce, fintech, and agriculture. According to the data collected, the largest industry was e-commerce (15.6%) followed by ed-tech (12.7%), whereas traveltech (1.2%) and gamedev (0.5%) are found as unpopular verticals.
The majority of the Uzbekistan founders (62%) develop their product/service for the Uzbekistan market, whereas only 21% of the founders plan to scale up to CIS countries.
In Central Asia as a whole, many engage in competitive sectors where bringing something new increasingly means huge prowess. Indeed, "beating" Amazon or Chocofamily would be incredibly difficult in the marketplace or ecommerce verticals. Similarly, standing out in fintech and education - serious issues in those 2 regions - is now quite a feat, given the (over) abundance of solutions.
Undeniably, lack of sophistication, expertise, funding, experience, role models and mentoring lead founders in those 2 regions to go after low hanging fruits: why change a winning formula? The answer is: because there are other formulas and scores of unexplored spaces.
We recently spoke with a future trend expert in the cosmetics industry who indicated tech is currently offering scores of opportunities as it penetrates the beauty & health spaces. Beauty is one sector that, regardless of the state of the economy and buying powers, always attracts clients. It is currently ripe for disruption, which could be a brand new vertical for this multiethnic region.
Scores of issues await to be solved and converted into lucrative tech solutions, if one looks around. And the good news is that we see pockets of "avant-gardism" in the region, which is very encouraging. Noticeable examples include, Game of drones in gaming, SmartBaby Cardiography in medtech, Tourbox in traveltech, Tazalyk in greentech,
MobiGruz in logitech, and SlickTag in retailtech.
Given how Central Asia and the Caucasus are strategically located between economic powers (China, Russia, India, Turkey, and Iran), the horizon could be crowded with gaps to fill. As the 2 regions unleash forces into new(er) areas and verticals, we can expect more diversified investment opportunities