Azerbaijan implements reforms to grow technology sector

Azerbaijan is implementing reforms to diversify its economy and reduce its heavy reliance on oil and gas exports by fostering a domestic technology sector. The government aims to transform Baku into a regional innovation hub on the Caspian Sea.

Recent legislative changes have established a legal framework for investment instruments, allowing startups and investors to structure deals within Azerbaijan. This is intended to reduce costs and simplify funding rounds. Additionally, the government is planning to launch a fund that combines local and international capital, though the specific size of the fund has not yet been disclosed.

While the technology sector accounted for 2.1% of Azerbaijan's GDP in 2025, the venture capital market remains small. In 2025, 22 startups raised a total of $2.62 million. Currently, three local venture funds—Caucasus Ventures, INMerge Ventures, and Tumar Ventures—operate in the country with approximately $11 million in disclosed capital. The central bank is also expected to finalize regulations for equity and debt-based crowdfunding within the coming months.