Central Asia Doesn’t Need Its Own European Union, Perhaps a Startup Treaty

As venture funding accelerates across the region, investors argue that regulatory friction — not capital scarcity — may be the biggest obstacle to building a truly integrated Central Asian startup ecosystem.

Central Asia’s startup ecosystem is entering a new phase of development. Venture capital activity has increased significantly over the past few years, governments are introducing policies to support innovation, and international investors are beginning to pay closer attention to markets that were once largely overlooked by the global startup community.

According to data presented at the Central Eurasia Venture Forum (CEVF 2026) in Tashkent, venture investment across Central Asia reached approximately $320 million in 2025, reflecting growing momentum in countries such as Kazakhstan and Uzbekistan. The figure, drawn from a RISE Research report surveying more than 200 startups and 40 investors, marks a record for the region — though it is worth noting that two landmark deals, Higgsfield’s $130 million Series A and Uzum’s $65.5 million round, together accounted for 61 percent of that total. Startup accelerators, venture funds, and technology parks — including Kazakhstan’s Astana Hub and Uzbekistan’s IT Park — have emerged across the region, helping nurture a new generation of founders building products for both local and global markets.

Yet despite the growth, one challenge continues to limit the region’s ability to scale: fragmentation. Unlike Europe, where startups can often expand across borders within a relatively harmonized regulatory framework, Central Asian founders frequently encounter different registration requirements, tax systems, banking relationships, and licensing rules when entering neighboring markets. These barriers can increase operational complexity and slow regional expansion, even as funding becomes more accessible.

For some investors, solving these challenges may be more important than introducing additional capital into the ecosystem. Speaking exclusively with AsiaTechDaily, Shakhzod Ismailov of Yoshlar Ventures argued that Central Asia’s future depends less on replicating existing models and more on creating practical frameworks that make it easier for startups to operate across borders.

The Limits of Copying Established Ecosystems

As emerging startup ecosystems mature, comparisons with successful innovation hubs often become inevitable. Central Asia is frequently measured against Silicon Valley or the European startup ecosystem, both of which have benefited from decades of institutional development, capital formation, and talent concentration.

However, Ismailov believes direct replication can be counterproductive.

“That is a very interesting perspective, yes and no,” he told AsiaTechDaily when asked whether Central Asia would benefit from a structure similar to the European Union.

“The region could benefit from some of what the EU provides, but trying to copy-paste or directly replicate the European Union itself would be a very wrong model. It is the same mistake as trying to take Silicon Valley’s community atmosphere and programs and copy-paste them into Uzbekistan; it is more about adapting.”

His comments reflect a broader reality facing many emerging innovation ecosystems. While successful models can provide valuable lessons, local economic conditions, political structures, market dynamics, and founder needs often require region-specific solutions. The European Union evolved through decades of political and economic integration. Silicon Valley emerged through a unique combination of academic institutions, defense spending, entrepreneurial culture, and venture capital concentration. Central Asia’s development trajectory is fundamentally different.

Rather than attempting to recreate these ecosystems wholesale, stakeholders increasingly appear focused on identifying the specific structural barriers that limit startup growth today.

Why Regulatory Friction Matters More Than Funding

Conversations about emerging startup ecosystems often center on access to capital. While funding remains important, Ismailov argues that operational friction may now be a greater challenge for regional founders.

“What Central Asia needs is easier cross-border capital flow, perhaps harmonized company registration, mutual recognition of payments or e-commerce licensing, and clear rules for founders who want to operate in multiple countries,” he said.

The issue becomes particularly relevant as startups begin expanding beyond their home markets. A founder operating in Uzbekistan may face entirely different regulatory requirements when entering Kazakhstan, Kyrgyzstan, or other neighboring countries. Establishing legal entities, opening bank accounts, navigating tax obligations, and securing operational approvals can consume resources that would otherwise be invested in growth.

“If a founder doesn’t have to reincorporate, register for taxes, or renegotiate banking relationships, they can operate in multiple regions simultaneously,” Ismailov explained. “That friction holds back more expansion than capital scarcity does.”

The observation highlights a shift taking place in many developing ecosystems. Early-stage startup communities often struggle with access to funding. As capital availability improves, structural issues — such as market fragmentation, talent mobility, and regulatory complexity — become increasingly visible. For Central Asia, these challenges are amplified by the region’s geographic and political diversity. While the countries share historical, cultural, and economic connections, they continue to operate under distinct legal and regulatory frameworks.

A Startup Treaty Instead of a Political Union

While some observers have suggested that deeper regional integration could help accelerate startup growth, Ismailov cautions against viewing the European Union as a blueprint.

“The EU is a supranational regulatory body; it unifies currency and allows for the free movement of labor,” he said. “It carries a different political agenda, and the region is not structurally ready for it.”

According to Ismailov, Central Asian countries remain at different stages of economic development and reform, making comprehensive integration difficult to achieve in the near term.

“The countries have different economic and political priorities and different paces of reform. If we say, ‘Let’s copy-paste the EU,’ it feels like forcing alignment on a scale that would stall rather than accelerate the things we want to solve.”

Instead, he proposes a more focused and pragmatic approach.

“Personally, I would like to see something lighter — essentially a ‘Central Asia Startup Treaty’ focused narrowly on the things founders actually need: better capital flow, business registration, talent mobility, perhaps a regional startup visa, and a cross-border investment framework.”

Such a framework would prioritize startup-specific challenges rather than broader political integration.

Potential areas of cooperation could include:

• Streamlined business registration processes across participating countries
• Simplified cross-border investment mechanisms for venture capital firms
• A regional startup visa allowing founders and skilled workers to move more freely
• Harmonized approaches to digital payments, e-commerce operations, and technology licensing

Importantly, these initiatives would not require the creation of a supranational political institution. Instead, they could be implemented through bilateral or multilateral agreements focused specifically on entrepreneurship and innovation.

Building the Foundations for the Next Decade

The proposal arrives at a moment when Central Asia’s startup ecosystem is gaining unprecedented visibility. Kazakhstan has emerged as one of the region’s leading venture markets, supported by initiatives such as Astana Hub and growing international investor participation. Uzbekistan has introduced a range of reforms aimed at attracting technology companies and supporting entrepreneurship, including an IT Visa, government-backed venture funds, and the growth of IT Park Uzbekistan, which now supports more than 2,800 companies. Meanwhile, regional startup events, accelerators, and venture networks are creating stronger connections between founders and investors.

This progress has helped position Central Asia as one of the world’s most closely watched emerging startup regions. Yet growth alone does not guarantee long-term competitiveness. Many successful startup ecosystems eventually evolve from collections of individual national markets into interconnected innovation networks. Southeast Asia, despite its own complexities, has benefited from increasing cross-border venture activity and regional expansion strategies. Europe’s startup ecosystem became significantly stronger as founders gained easier access to larger markets beyond their home countries.

For Central Asia, the next stage of development may depend on whether startups can access the region as a unified opportunity rather than a collection of separate jurisdictions.

The debate over regional integration is ultimately not about politics. It is about reducing friction. As venture capital flows into Central Asia and startup activity accelerates, investors are increasingly looking beyond funding rounds and valuation growth toward the infrastructure required to support long-term ecosystem development. For Central Asia, the path forward may not involve becoming another European Union. It may involve creating something uniquely suited to the region’s own realities — a practical framework that enables startups to scale faster, attract investment more efficiently, and compete on a larger stage.