Azerbaijan will be in the spotlight this November when global leaders will meet in the country’s capital of Baku for COP29, the United Nations’ annual climate change summit.
While critic’s voices have questioned the idea of holding a climate-focused summit in a country largely known for its fossil fuels, there is an up-and-coming tech hub in Baku that wants to show off its wings of innovation.
Lately the Azerbaijani government has been busy introducing a series of initiatives to attract technology startups and foreign investors. These measures include tax breaks, streamlined visa processes for foreign workers, and an aggressive push toward digitization and modern infrastructure.
Other initiatives like the establishment of the International Financial Center in Baku have also pointed to diversification of financial services. Some pending tasks for the country include motivating top corporations to build research and development (R&D) facilities, attracting technology giants, and setting up an international university capable of attracting the brightest minds of the region.
An ecosystem between East and West
The goal is clear for the ecosystem: to position Azerbaijan, particularly its capital Baku, as an emerging player in the global tech landscape. In line with this, the Absheron Valley program was recently established with ambitious objectives in incubating startups. Another initiative is the newly inaugurated Azerbaijan Innovation Center (AIM) that hopes to streamline efforts between private companies and the government to foster innovation.
But what does this shift mean for local entrepreneurs? The country has already made waves with its first generation of startups, but now they are going for more.
Curious about this, we spoke with Ayaz Ahmadov, CEO and founder of Dosty, an innovative app that’s revolutionizing pet care.
“Developing a tech hub requires much more than just a label; it demands significant work in building infrastructure, attracting skilled professionals for mentorship, and creating various tech spaces, programs, and organizations that advocate for technology. Azerbaijan is making progress in all these areas, though some aspects are still a work in progress,” said the entrepreneur.
Ayaz Ahmadov is no stranger to the entrepreneurial world. Before founding Dosty, Ayaz made a name for himself in sports marketing, playing a key role in hosting major events like UEFA Euro 2020 in Baku. His transition into the tech industry was driven by personal experience. As a pet owner, Ayaz found himself frustrated with the need to use multiple apps to manage his pets’ care. This inspired him to create Dosty, an all-in-one platform that simplifies pet care by offering tools like symptom checkers, daily routine planners, and health trackers.
What about the funding scene?
Attracting private investors is one of the main goals of every ecosystem. What is the scenario when it comes to Azerbaijan? For Ayaz, the funding depends very much on angels, while VCs are beginning to emerge. This paints an opportunity for investors looking to invest in under-the-radar founders and startups.
“Growing with the ecosystem has its advantages—being part of the growth allows us to become a prominent representative of the ecosystem if our product meets the criteria. However, since the entire industry is developing simultaneously, it takes more time to attract funding and integrate into local processes, as these are also in the development stage,” mentioned Ayaz.
Startups as national symbols
The push by the Azerbaijani government to establish Baku as a tech hub is something to celebrate and encourage, but what really pushes an ecosystem is success stories. The country has to build a track record of successful entrepreneurs and ventures if it wants to be at the forefront of innovation.
For Ayaz, startups can significantly elevate a country’s global presence. “For instance, if Dosty becomes a billion-dollar startup, it will capture the attention of the global business community and millions of pet parents worldwide. They will all recognize that this product originated from Azerbaijan. This kind of success changes perceptions, making it easier for future Azerbaijani startups to gain recognition”, added the Dosty founder.
As an example he mentions Masquerade, a Belarusian startup acquired by Meta. Its success, Ayaz suggests, led to Belarus being recognized for its top-quality IT specialists and attracting substantial investment. A similar success from Azerbaijan could have a comparable impact.
Recently Epoint.az became the first startup to obtain fintech license from the Central Bank of the Republic of Azerbaijan. Ayaz celebrates this milestone as a win for the ecosystem. “The government’s recognition of a fintech startup as a legitimate financial operator is a significant achievement. It indicates forthcoming changes in taxation, registration, and benefits for startups, which are essential for ecosystem development,” he added.
Moreover, Azerbaijan startups are receiving support from the country’s Innovation and Digital Development Agency to participate in both local and international events like “InMerge Innovation Summit” and “TechCrunch Disrupt 2024: Global Innovation Stage”.
As a locally grown event, InMerge just celebrated its fourth year featuring notable speakers like Steve Chen, co-founder of YouTube, and Werner Vogels, CTO of Amazon, which surely turned the heads of investors who were formally not taking the Azerbaijani tech scene seriously.
TechCrunch Disrupt, where startups can showcase products, gain expert feedback, and secure investment, will take place in San Francisco from October 28-30, 2024. Some of the Azerbaijani startups participating include Dosty, Recepta, Adviad, Polygraf, and IOMETE.
Despite the hurdles that are still in place, in terms of attracting capital and talent, Ayaz remains optimistic about the future. He believes that with continued government support and growing interest from foreign investors, Azerbaijan has the potential to become a significant player in the global tech scene. And, as COP29 approaches, Azerbaijan’s rebranding efforts as a place of tech and innovation are ready to hit the spotlight, hoping to illustrate the promising road ahead for the country.