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  • Start-ups and accelerators in Kazakhstan

    Kapital.kz business information center organized an interview with Sanzhar Kettebekov, the general director of AKF Tech Garden, to know the most successful strategies start-ups use to survive the competition in the market.


    Question:  Sanzhar, tell me, are there any reasons why most startups fail at an early stage? What are the factors that affect their failure?

    Answer: startup is different from a corporation as it usually tests new ideas. And not necessarily all new ideas have the potential to be planned and executed successfully. It is extremely difficult to predict how good a plan is until it is tested in the real market. Only the market test shows how viable a project is in terms of commercial demand, market interest, etc. Therefore, we usually expect that 9 out of 10 new and untested start-ups will go bankrupt. If you consider the statistics of Silicon Valley, where conditions are even tougher, then out of thousands of startups, only 1–2 become will continue to function and become successful.

    But you need to evaluate it from a different angle. A startup is not only an idea, but also a professional team that is able to develop and promote a certain technology. And such a team is in a high demand and so it often happens that corporations buy not so much an idea but a team.

    Question:  And what about those who fail? What are the main reasons?

    Answer:  The main reason is that startups fail the market test. The second reason is misbalanced composition of a team. A professional team is usually able to identify many problems and challenges when evaluating business plan and technologies used. Therefore, we advise that there should be at least two co-founders with one specializing in technical aspects, and the other  in business. It is quite difficult to turn the technology you possess into a product that is well accepted by the market. This is a serious task for any business whether it is a corporation developing a new business line or a startup that offers a new solution in the market.

    Question:   How can a startup increase the chances of a project's success?

    Answer:  There are usually a number of tools for this. There are high-quality programs available for acceleration and incubation in the early stages of projects where a young team gets the basics on how to do business which investors to cooperate with, how to work with corporations etc. As a rule, an accelerator significantly reduces the risk of failure of young companies. The main task of an accelerator is often to provide the necessary set of competencies that a team lacks and to assist in entering the market.

    You know, the same solution can be presented in different ways to the market. This solution can be modified through structured training and working with the real corporate sector. That is, in the process of close interaction with potential customers, a startup adapts the original offer to the market and often changes the product for the target client. In other words, it is an opportunity to launch a project under controlled conditions.

    As a foundation, we notice a great interest of startups in acceleration programs. And here the main task of Tech Garden is to provide startups with a "safety net”, initial investments and assistance in acceleration. In turn, startups have not only the necessary competencies, but also the history of funding, which is very important for the subsequent evaluation of a project by private investors. In this case, the state is not responsible for all the work, but takes the necessary first step. It gives impetus to young companies through structured support programs, such as Startup Kazakhstan (implemented by Tech Garden with the support of the Ministry of Investment and Development of the Republic of Kazakhstan).

    Question:  So, does it mean that there is no known algorithm of success?

    Answer:  This is an individual approach and a case by case basis. It is impossible to fit a unified strategy. There are different businesses, products, applications. Every business sector has certain features that need to be considered.

    Question:   What sector of the economy is most in demand for startups?

    Answer:  The one that pays. This is an obvious answer, but truthful. Indeed, many aspects depend on the demand and readiness of large corporations to invest in innovation. The primary task is to try to restructure the mentality of the corporate sector, showing the specific advantages and benefits of working with startups. Moreover, it is necessary to provide clear mechanisms and tools for corporations to interact with startups.

    This is already a serious trend all over the world, and Kazakhstan has just started on this trend. Fortunately, we already have a whole group of corporations that adequately consider startups as a source of innovation. Some of these companies are from traditional sectors. It would seem that these are very conservative institutions, but today they are a driving force of demand. And this is very encouraging, because they really change the tendency to adapt innovations in the real sector of the economy. As a state foundation, we are doing everything possible to push startups in the initial stages and help them integrate their solutions into traditional, conservative sectors of economy.

    Question:   Do you believe that great efforts always lead to great results?

    Answer:  Not always. Of course, there are always unique people who can do everything on their own, but there are very few such people. It is much more effective to make concentrated efforts in a particular direction. It is very difficult for a young company without experience to independently determine the right path. Therefore, there are professional market participants – accelerators, incubators and mentors that support and promote startups through all the peculiarities of the market. Therefore, a startup has the opportunity to avoid many common mistakes and concentrate on its strengths, and these tools should be used.


    Please contact Russian Asian Business Union, if you are interested in doing business in Kazakhstan.
     
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