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The nascent market of IT startups in Uzbekistan: “Nobody says it will be easy”


The market of technological entrepreneurship in Uzbekistan is only starting to emerge. However, despite the problems facing the sector, local experts are confident that in the next two years the country will become the leader in the IT sphere among the Central Asian countries.

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The Ministry of Innovative Development of Uzbekistan allocated about $ 160 thousand in 2019 for the development of startups. Screenshot from Youtube channel of the Ministry of Foreign Affairs of the Republic of Uzbekistan.

Uzbekistan is the largest country in Central Asia. More than 33 million people live there. 68 percent of them, that is, 22.8 million as of 2018, are mobile service subscribers, which means they are active or potential Internet users.

The government of Uzbekistan has taken certain measures to improve access to the Internet. In the same 2018, the bandwidth of the international data network grew 10 times from 110 to 1200 Gigabits per second. The corresponding order at the beginning of that year was given personally by President Shavkat Mirziyoyev.

Abdulahad Kuchkarov. Photo from personal Facebook page.

Experts are sure that all this serves as fertile ground for the creation of IT startups in the country, which have been actively developing since 2017. In addition to private players, government agencies also participate in this process.

“If we talk about how the state helps in the development of start-ups, it can be noted that in 2019 the Ministry of Innovative Development of the country allocated 15 billion soums (about $ 160 thousand) in the form of grants for this purpose. In addition, this year the first scientific accelerator C.A.T.science was opened, which has already released 17 startups, ”says Abdulakhad Kuchkarov, IT Park Innovation Director.

State and business interest

The emergence of its own IT-Park in the country is the next stage in the development of this sector, Kuchkarov believes. The Park was opened on July 24, 2019 as part of a government decree. Together with the Youth Union, the Chamber of Commerce and Industry, the Ministry of Innovation, the Ministry of Labor and UNDP, a large-scale Start-up Initiative project is being implemented in the country. In the near future, 10 projects will be implemented for the development of a startup ecosystem.

IT-Park in Uzbekistan was opened as part of a government decree. Photo it-park.uz

“These are hackathons (Forum of software developers), and contests, and ideatons (competition of IT start-ups), both jointly implemented with government departments within Uzbekistan, and interstate, also involving private corporations. Currently, IT-Park has launched free incubation and acceleration programs. In the first selection, we received 103 applications, of which 15 startups were chosen”, says Kuchkarov.

According to the expert, the Uzbek authorities are interested in developing the IT industry. Ministry of Education, the Youth Union, and the Ministry of Labor are implementing their own IT projects. Technological leaders of foreign countries are also interested in the Uzbek market – the Russian company Yandex and the American EPAM.

“This year, for the first time, an IT company from Uzbekistan completed a deal for more than $ 5 million. The Uzbek payment service provider Payme has entered into a deal with the Georgian bank TBC Bank Group PLC in the amount of $ 5.5 million to sell 51% of its shares ”, Kuchkarov recalls.

Problems faced by IT Startups

Akmal Payziev. Photos from your personal Facebook page.

Nevertheless, the expert believes that the market of technological entrepreneurship in the country is only emerging. Entrepreneur Akmal Payziev agrees with this. He is the author of two successful IT projects – Express24 food delivery services and MyTaxi taxi order service.

In his opinion, startups in Uzbekistan today are facing several problems. This is a lack of experience, an underdeveloped market and a lack of sufficient funding.

“The government and business are not ready to invest money in IT sector, because IT startups require venture (long-term) financing. Meanwhile, IT startups are a business on their own, and they are very much in demand. There are a lot of areas where new projects can appear and develop”, says Payziev.

 Farrukh Rakhimov, the author of the online booking service of hotels in Uzbekistan “MyBooking”, partially agrees with this opinion. He believes that the problems of IT startups are similar throughout the world, but a truly interesting and useful project will surely attract attention.

“Whether in Uzbekistan, Europe, and even in Africa, the problems of IT startups are very similar. It is not enough to have an idea; efforts must be made in order to realize it. It will require the involvement of developers, investors. There is a project, an idea, but there are no opportunities for implementation. This is probably the main problem of most startups. Nevertheless, a really “cool project” can easily interest an investor. The main thing is to offer a product that is useful and pleasant in every sense. Business will appreciate it”, said Rakhimov.

At the same time, experts say that developers should create a product that is from the start is focused on foreign markets. The market of Uzbekistan is comparatively narrow, and the competition with world players is very tough. It should be understood that any successful IT product is a long-term project, where it will be quite difficult to achieve immediate results.

Prospects for the best

In general, according to experts, the prospects for the development of the market of IT startups in Uzbekistan look very encouraging. Of course, new projects will be born, international players will come who will contribute to the development of the sphere. In September this year a venture capital fund was opened under the aegis of IT-Park.

Farrukh Rakhimov. Personal photo

“Today in Uzbekistan there is a fresh consumer market, super opportunities, people are ready to use useful and effective solutions,” says Farrukh Rakhimov.

Therefore, in the next two years, Uzbekistan will become a leader in the IT sphere among the countries of Central Asia, Abdulakhad Kuchkarov is consident.

However, Akmal Payziev believes that for all this to happen it is necessary to take a number of very “important steps”.

“Here we need clear rules of the game, which are equally important for the business as a whole. This is a legislation that really works in practic, a properly functioning judicial system and protection of the rights of entrepreneurs. Only then the investor will come to the market, and it will develop. And, of course, a reduction in the tax burden will also help, ” Payziev says.

In any case, Rakhimov believes that  the main path to the success of any project lies in the endless struggle for survival.

“Most of the barriers are hidden inside the person himself. But the best will win. No one says it will be easy. Think your product has value? Fight for it to the end! ”, – advises a successful startup owner.

This article was prepared as part of the Giving Voice, Driving Change – from the Borderland to the Steppes Project

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