Kazakh Fund-of-Funds Backs Central Asia’s Startup Boom

Kazakhstan’s Alem Capital Management has made its first public bet on the region’s startup ecosystem, anchoring the final close of a venture capital fund that backs technology companies across Central Asia and the Caucasus. The fund-of-funds manager participated in the $25 million final close of Sturgeon Capital’s Emerging Opportunities II fund, joining the International Finance Corporation and other investors, according to a statement from Sturgeon.

Alem oversees a fund-of-funds with a $1 billion target, the largest vehicle of its kind focused on the region. Its $5 million commitment to the Sturgeon fund is small relative to that headline figure, but the signal matters more than the size. A Kazakh institutional investor is now backing the same London-based manager that the World Bank’s private-sector arm chose as its entry point into Central Asian venture capital.

Sturgeon Emerging Opportunities II, or SEO II, has made 11 investments and is completing a twelfth. The portfolio spans logistics, content infrastructure, and enterprise automation, with the latest addition being Geomotive, an analytics company that provides AI-powered solutions for advertising, retail, sports venues, and commercial real estate.

The IFC joined SEO II’s first institutional close in 2024, committing up to $5 million through its Startup Catalyst programme, which targets funding gaps in underserved venture ecosystems. Sturgeon Capital, founded in London in 2006, focuses on early-stage technology companies across Central Asia, the Caucasus, Bangladesh, and Pakistan, backing startups in fintech, business-to-business platforms, agritech, healthtech, and edtech.

The investment arrives as Central Asia’s startup scene is growing faster than at any point in its history. Total venture capital in the region reached $320 million in 2025, according to a KPMG report, with Kazakhstan alone accounting for $209 million of that total, nearly triple its figure from the prior year. Artificial intelligence attracted $73 million in Kazakh venture funding between 2023 and 2025, representing more than half of the country’s total venture activity.

The broader context is a region trying to build a technology sector while its traditional economies still run on hydrocarbons. Kazakhstan signed a $10 billion AI data centre deal with Nvidia-backed startup Firebird last week, aiming to build a computing hub that could host up to 100,000 GPUs. That deal is about infrastructure, the hardware layer that makes AI possible, while the Alem investment in Sturgeon is about the software layer, the startups that build applications and services on top of it.

Two large deals accounted for a disproportionate share of the 2025 total: $130 million for Higgsfield and $65 million for Tencent-backed fintech Uzum. Excluding those, the market reached $125 million, still a 31 percent increase over 2024 and a sign that the ecosystem is broadening rather than relying on a handful of outliers.

Uzbekistan has emerged as the region’s fastest-rising ecosystem. Venture funding there rose to nearly $34 million, an eleven-fold increase from 2022, with more than 750 active startups and 15 venture funds managing over $180 million in combined capital. Seven new venture funds launched in Uzbekistan in 2025 alone.

The fund-of-funds model that Alem represents is still unusual for the region. Global venture capital has concentrated into mega-funds that write billion-dollar checks into AI companies, a market that operates at a scale Central Asia cannot yet match. What Alem is building is closer to the institutional plumbing that more mature ecosystems take for granted: a vehicle that allocates capital across multiple fund managers, giving local and international investors diversified exposure to a region most global allocators still do not cover.

Qazaqstan Investment Corporation, a state-owned subsidiary, has separately committed $30 million to the Alem Ventures Fund and also entered Sturgeon’s SEO II directly, creating overlapping institutional support for the same ecosystem. The government’s strategy is to use public capital to crowd in private investment, a playbook familiar from Singapore’s Temasek or Israel’s Yozma programme, adapted for a commodity-dependent economy that needs technology to reduce its reliance on oil and gas.

Whether the model works depends on deal flow. Central Asia’s startup pipeline is growing, but it remains thin compared with Southeast Asia or Latin America, two emerging-market regions that faced similar early-stage constraints a decade ago. Sturgeon’s 12 portfolio companies represent the kind of infrastructure and enterprise software that commodity-rich, digitally underdeveloped economies tend to need first, before consumer and fintech startups can scale.

Alem’s statement framed the investment in explicitly regional terms, saying its mandate is to ensure founders in Kazakhstan and across Central Asia have access to the same calibre of capital as their global peers. That ambition outstrips the current reality, but the direction is clear: a billion-dollar fund-of-funds, institutional backing from the IFC and state investors, and a growing pipeline of startups suggest that Central Asia’s venture market is moving from novelty to infrastructure.