Kyrgyzstan enacts venture financing law to boost startups

Kyrgyzstan has enacted a new law on venture financing, signed by President Sadyr Japarov, to formalize and stimulate its burgeoning startup ecosystem. The legislation, passed by the Jogorku Kenesh in June, introduces crucial definitions such as venture fund, venture manager, business angels, and venture investor into the country's legal framework.

The law clearly delineates the rights and responsibilities of all parties involved in agreements between investors and startups. It also integrates international financial instruments, including convertible loans and option agreements, and establishes clear operational procedures for venture funds. These funds can be structured in various legal forms, such as unincorporated entities or limited partnerships, in accordance with the Kyrgyz Civil Code.

Discussions during the bill's parliamentary review highlighted that Kyrgyzstan hosts between 300 to 500 startups, with a significant portion focused on social impact initiatives. The country's venture financing landscape has already shown considerable growth, reaching 1.5 billion soms in 2024. The new law is expected to solidify the legal foundation for this dynamic market, encouraging further investment and innovation.