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Source: The Guardian

The Opportunity of “Fringe” Markets

In the last couple of years tech entrepreneurship has truly become global and investors (local and global) have followed suit. Some examples include:

-African Internet Group raised $225 million to consolidate its leadership position in e-commerce in the continent.

-Matahari Mall launched in Indonesia with a mere $500 million to back its own ambition to lead e-commerce in South East Asia.

-Souq raised $250 million in their last round from Naspers and Tiger Global (who have made a killing investing in emerging markets) to become the e-commerce leader in the Middle East

And it’s not only e-commerce.

-Founders Fund recently led the latest $52 million into NuBank, a FinTech company in Brazil

-OlaCabs, the Indian cab-hailing service has raised over $1.3 billion to date

-Facebook recently purchased Belarus-founded photo-app Masquerade

My point, is that there is some very interesting stuff happening outside of the usual “hubs” of the Valley, NY, Boston, London or Berlin, and that investors of all sizes are noticing.

The investors themselves are also creating new “startups” to support the opportunity:

500 Startups, as an example, is currently fundraising for geo-focused funds for North Africa, Turkey, Vietnam and Thailand. Former DST and Tiger Global exec Nazar Yasin launched Rise Capital to invest in emerging market opportunities from Africa to Asia to Latam (and I thought I had a crazy travel schedule!).Seedcamp, the leading European accelerator has helped to identify and fund companies from all across Europe, including founders from Slovenia, Macedonia, Belarus and Bulgaria.

Endeavor has become a bridge between global investors and exciting companies from under-served markets.

And I believe this interest (and momentum) in “fringe” markets will continue to accelerate. In part it is being driven by access as billion new users will come online for the first time (primarily via smartphones).

But also by the validation of established models in “developed” markets and the opportunity for geographic arbitrage (which Rocket has so successfully exploited), combined with local-driven innovation such as mobile-centric labour marketplaces and payments. Finally, with mobile OS platforms and distribution platforms like WeChat and Facebook, local entrepreneurs can scale much more broadly and cheaply.

Fred Wilson of USV recently blogged on the opportunity that smartphone penetration offers in emerging markets and he finished with a quote that I feel will certainly come true in the decade ahead.

Entrepreneurship is now global. Those that have taken early bets on emerging markets (like Naspers and Tiger) have reaped the rewards. There is a question where institutional investor appetite will support those seeking to blaze these new trails, but the platforms, the skills and the ambitions from entrepreneurs are certainly there to make “fringe” the new core.

Partner at @2150-vc backing technologies that make our world more resilient and sustainable. Salvadoran-born Londoner. YGL of the @wef Father ^3

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