Azerbaijan could become ICT hub in South Caucasus region

The first surge in the growth of startup projects in Azerbaijan began in 2013, Advisor to the head of the Agency for Innovation and Digital Development under the Ministry of Digital Development and Transportation of Azerbaijan Agahuseyn Ahmadov said.

According to him, during this period active measures were taken to develop and support startup projects.

“The relevant reforms were carried out at the legislative level starting from 2018. In turn, Agency for Innovation and Digital Development of Azerbaijan set a course to create the necessary infrastructure and develop ways to support this ecosystem. Agency’s support for the startup environment consists of financial, technical and technological, infrastructural, legislative support, transfer of knowledge and expertise, as well as of establishing relations between startups and relevant structures,” Ahmadov said.

“The support is aimed at developing cooperation between participants in startup ecosystem as well as creating new products and services. Other priority direction of agencies activities is development of human resources, i.e. IT specialists. This is necessary for the long term development of startup ecosystem of Azerbaijan. For example, the agency supported the training of 800 students in the field of information technology and this number is planned to be increased up to 2,000 in 2023. The agency believes that the more people are attracted to the IT sector, the better is the potential of these students to find workplaces and create new innovative companies, ” he stated.

“According to preliminary data, over the past two to three years, about $1 million have been invested in startups in Azerbaijan annually. The agency continues to actively negotiate on attracting potential investors to the country,” the advisor said.

Ahmadov pointed out that Azerbaijan is working to create a system of benefits and privileges for local IT companies.

“There are few factors that make Azerbaijani startups register their companies in foreign jurisdictions. First of all, this comes from the totality of benefits and privileges provided by a particular country. Companies that are registered in the US state of Delaware, or in the Cayman Islands and Singapore are more likely to attract American and European investments. If the case of registering a company in Azerbaijan is considered, the organization will first develop in the local market, and if successful, will aim to enter international markets. Accordingly, in order to enter, for example, the US market and attract US investments, it’s necessary that the company be registered in jurisdictions familiar to these investors. Based on all this, in Azerbaijan, Innovation Agency, together with other government agencies, is working to create a system of benefits and privileges for local IT companies and even more favorable environment for foreign investors,” he stressed.

“On the other hand, a start-up project leaving the country where it was created may be due to the fact that the project cannot develop further, since it has already completely covered this market. Of course, Azerbaijan is also working in this direction of analyzing the market, tools for creating demand for technologies, for example, in aerospace, oil and gas, financial and other areas. It’s planned to create the very elements and conditions that will lead to an increase in the number of registration of IT companies and foreign direct investment in Azerbaijan,” the Ahmadov said.

“The development strategy of Azerbaijan until 2026 provides for the development of the IT infrastructure of the country. Azerbaijani agency together with other government agencies is carrying out relevant work in this direction. In particular, work is underway to train IT, specialists, invest in projects and support this ecosystem. In addition, activities are being carried out to attract international experience and expertise to Azerbaijan. Conditions are also being created for the relocation of foreign companies to Azerbaijan. Azerbaijan will be an attractive country for relocation and substantiation of foreign companies and specialists in this field in the country,” he added.

Ahmadov also reminded a venture fund is expected to be launched in Azerbaijan in the fall of 2022.

“The project is almost completed and its launch is expected in the near future. The participants of the venture fund are Agency for Innovation and Digital Development, PASHA Holding and several private investors,” Ahmadov concluded.