The former Soviet Republic of Kazakhstan may be well known as a major exporter of natural resources such as uranium or oil and gas, but less has been written about its technology industry or startup ecosystem.
At a time when countries across the globe are pouring money into building their own little version of Silicon Valley — or at least, developing a framework that will allow them to keep step with the new economy — it may seem like Central Asia’s largest country hasn’t quite caught up with the times.
But there are a few reports that suggest otherwise. According to a report by The Next Web, between 2010 to 2014, the Kazakh government invested US$47 million into 600 Kazakh startups, as well as relaxed certain corporate laws to help them grow unimpeded.
Despite these incentives, there is still little media coverage about these startups. Maybe it’s because the country is still fairly isolated economically so it doesn’t appear on most tech investors’ radar. In addition, while the country is actively trying to cultivate entrepreneurship — such as via its Smart Zholy programme — its economy remains rooted in traditional industries.
But there are a few success stories that have emerged over the years, such as internet router startup Nommi, which has raised over US$140,000 on crowdfunding platform Indiegogo. Nommi’s success, however, may not have been possible if it did not venture overseas to startup hubs such as the US, to seek additional financing and build business connections.
It’s a familiar story: Startups from nascent tech ecosystems often become ambassadors of their countries. They are not just selling their business propositions to foreign investors, but also the untapped potential that their country might hold.
One foreign investor who recently got sold on the Kazakh dream and now wants to spread the good word about its ecosystem is John Tan, the founder and CEO of Singapore-based children coding school Saturday Kids.
Tan is one of the few — and maybe only — Singaporean tech investor who has funded a Kazakh startup. He recently made an investment in Wunder, an online coding school for kids, through Saturday Kids, acquiring a 20 per cent equity stake in the company.
Wunder’s web platform makes learning coding easier through a collection of quizzes, video presentations, live support from instructors, mini-games, projects and more. Wunder currently has 3,000 students on its platform.
The platform’s language of instruction is currently in Russian, but through Saturday Kid’s strategic investment, it is looking to incorporate English.
Tan, who is also a partner at 8Capita and BWB Ventures, became enamoured with the country during his visit as part of e27’s Echelon Central Asia Summit in 2015, where he was a speaker.
“I believe Kazakhstan has talented and ambitious young entrepreneurs. I’ll be happy to make more investments there either through Saturday Kids or personally. I’ll also be happy to help bridge those connections both at a Government-to-Government level and at a B2B level,” says Tan, in an email interview with e27.
Here is the interview in full, edited for clarity:
How did you end up funding a Kazah company? Why were you drawn to Kazakhstan and how did you meet Wunder?
I went to Kazakhstan for the first time 2 years ago to speak at Echelon Central Asia at the invitation of e27. Back then, I decided to go because I was curious about the country and startup scene there. It’s a lovely country, and Almaty, in particular, is a very livable city with lots of youthful energy.
When I was invited to visit Kazakhstan again in April this year (as part of the annual Echelon Top100 Roadshow supported by the N.Nazarbayev Foundation and Zerde Holdings) to speak about my work at Saturday Kids and to judge the e27 Echelon TOP100 startup competition there, I naturally said yes and it was during that trip that I met Wunder.
You acquired a large stake — 20 per cent — in Wunder, Can you tell me why you decided on such a significant stake?
The tech ecosystem in Kazakhstan is still at a very early stage. As I understand it, there are very few VCs, and angels who have shown an interest in startups come from traditional businesses who have limited understanding of how startups work.
It’s not uncommon for an angel investors to ask for a majority stake. When local angel investors are asking for 80 per cent of the business, a 20 per cent stake doesn’t seem that much.
What’s your general outlook on the future of Kazakhstan’s startup ecosystem, and what challenges does it face?
I think for the Kazah startup scene to keep developing, local startups need access to sophisticated angels and VCs that can bring not just money, but also access to know-how and network.
ChocoLife (an e-commerce marketplace) is the poster child of the Kazakh startup scene. Kazakhstan needs more Chocolife – startups that are deemed successful in their own right and have a path to becoming very profitable or getting a good exit (IPO or trade sale).
What attracted you to Wunder? I know Saturday Kids and Wunder are coding schools geared towards kids, so there are clear synergies there, but what about the Founder and his team?
First of all, I think it’s quite noble that Bakytzhan Baizhikenov (the founder) quit his job as a software engineer in London, turned down the likes of Google to move to Silicon Valley, and go back to Kazakhstan because he wants to give Kazakh children access to good quality technology education.
I am passionate about giving children opportunity through education, and in that way, I see similarities between myself and Baizhikenov. Baizhikenov is also very strong technically and has built a team of very good developers (and to my surprise) designers.
His investor and business partner, Iliyas Issatayev, also flew to Singapore to meet me, and after spending a few days hanging out with Issatayev, I got quite comfortable with who I will be investing in and doing business with.
How will you be working with Wunder’s team to grow their business and maybe expand into Southeast Asia?
A couple of people from the Saturday Kids team actually spent 2 weeks in Kazakhstan this summer with the Wunder team to figure out ways to work together. The low hanging fruit is to tap on the technical ability of Wunder’s team to develop a platform where more of Saturday Kids’ curriculum and content can be delivered online.
In the longer term, it’s about sharing knowledge and content. There are a number of International Olympiad winners on the Wunder team, including Baizhikenov himself, so they certainly know how to develop curriculum that can get kids to a fairly high level of technical ability.
Will you be getting them to incorporate in Singapore?
I have no plans to get them to incorporate in Singapore.
What are the similarities and differences between Kazakh entrepreneurs and Singapore entrepreneurs, based on your observations?
I think Singapore entrepreneurs are very fortunate compared to Kazakh entrepreneurs because the startup ecosystem here is so much more developed. It’s much easier for Singapore entrepreneurs to access capital, talent, expertise.
Kazakh entrepreneurs have to try a lot harder to get that level of access. I think Kazakh entrepreneurs are driven and have strong technical abilities. Through this investment, I hope I can help bridge Kazakh startups with the Southeast Asian and perhaps even Silicon Valley ecosystems since I have investments in Asia and the US, and help these guys be in a better position to succeed.
One similarity between Singapore and Kazakhstan is that the population of both countries is relatively small (18 million in Kazakhstan), so entrepreneurs in both countries know they have to build a company that can go regional/international.
The Kazakhstan government has always been open to learning the best innovation practices and models globally. Thus, I am keen to see how my experiences can help in that creation and next iteration of their ecosystem.
Image Credit: Saturday Kids