Mongolia Secures Silicon Valley Partnership to Develop Its Startup Ecosystem

Most U.S.-based readers of Icebreaker may find it difficult to name a Mongolian startup. The government of Central Asian Republic seems determined to change that.

Earlier this month, a Mongolian delegation of 100 participants traveled to Silicon Valley in an effort to highlight and strengthen Mongolia’s startup potential. 

The delegation included 30 startups, representatives from private tech companies, the IT Park of Mongolia, and the Mongolian Minister of Digital Development and Communications.

It wouldn’t be an official delegation without memorandum signings: Asset Abdualiyev, the founder of Silkroad Innovation Hub, and Zolzaya Jargalsaikhan, the director of the National Information Technology Park of Mongolia, signed a memo of cooperation on  February 1.

The memorandum outlined opportunities for growth and innovation for Mongolian tech companies in the global market. As a part of the agreement, Mongolia will also gain access to Silkroad Innovation Hub’s resources, mentorship programs, and network of global tech leaders that includes Chris Cox of Meta or Arsen Tomsky of inDrive.

“The integration of the Mongolian startup ecosystem into Silkroad Innovation Hub is a pivotal step towards global recognition and opportunities for Mongolian startups,” said Uchral Nyam-Osor, the Minister of Digital Development and Communications of Mongolia.

There is even a plan for producing the country’s first batch of unicorns: Mongolian government will work with the Silkroad Innovation Hub to create five tech companies valued at $1 billion over the next seven years, as a part of the agreement.

Still, the Mongolian startup ecosystem is just emerging, comprising just over 400 startups, 10 incubators and accelerators, according to information provided by Silkroad Innovation Hub.

The entire market value of startups operating in Mongolia is estimated at $125 million, with approximately $794,000 allocated to 154 startups in 2023.

The country’s eight VC firms raised around $28 million (96 billion MNT), but attracting funding remains challenging for startups. As a result, many startups depend on support from angel investors, private offerings to large corporations. 

There are a handful of Mongolian startups that have already gained international traction. These include AND.Global, a technology company dedicated to addressing global challenges in health, education, and sustainability through innovative solutions. Then there is Fibo Cloud, which provides scalable cloud services went through the Silicon Valley Immersion Program, Intel Mind that specializing in advanced data analytics, and Activision, renowned for creating popular gaming franchises.

Challenging Road Ahead

On the surface, Mongolia has a lot of favorable factors to foster digital transformation and business growth. With 65% of the population under age 35, gross domestic product (GDP) per capita tripling since 1991, a surge in investment, and increased innovation and digital connectivity. This year, the country’s GDP is expected to grow by 5.9%, according to Asian Development Bank.

Yet the startup scene remains a work in progress, with the bulk of the companies–around 63% of startups– set up in the past three years. Mongolia ranked 79th globally in the Startup Blink Global startup ecosystem index in 2023. 

Mongolia’s ecosystem faces multiple country-specific and universal startup challenges, mainly linked to limited funding opportunities, recruiting talent, difficulty attracting customers and growing sales.

In addition to these difficulties, there is also a need for improvement in education, the legal infrastructure, and business operations.

Given the range of these challenges, it’s no surprise that Mongolian government officials seemed enthused about the Silicon Valley visit and their new partnership..

“This is a historical event, we have reached this point in the midst of a monochromatic economy dependent on mining and the price of coal, with limited opportunities,” said Uchral Nyam-Osor in a Facebook post. “Only the IT industry offers us an equal footing in the endless competition of human development.”