The Hidden Value in Emerging Market Startups

What if the next big tech giant isn't from Silicon Valley or Shenzhen but from Nairobi, Jakarta, or Bogotá? That’s the untapped potential that emerging market startups represent. These are the regions where traditional industries are getting disrupted at an unprecedented scale, largely due to the rapid increase in internet penetration and mobile technology.

Investors in the U.S. and Europe often overlook these regions, viewing them as too risky or underdeveloped, but that’s exactly why the returns can be exponential. Imagine getting into Alibaba or Amazon during their early days when few saw their potential. The same is happening now, but in different parts of the world. Emerging markets like Southeast Asia, Sub-Saharan Africa, and Latin America are now home to startups that are building solutions for massive untapped markets. They are innovating in fintech, healthcare, logistics, and e-commerce—industries that are exploding in these regions due to a growing middle class.

For example, in Kenya, the rise of mobile banking through platforms like M-Pesa has completely changed how people access financial services, enabling millions of previously unbanked individuals to manage their finances. And it doesn’t stop there. Latin America has seen its e-commerce market grow faster than nearly any other region, with companies like Rappi and MercadoLibre leading the charge.

But why does this matter to you as an investor? Because these startups often require less capital to get off the ground compared to their Western counterparts, making them a fertile ground for early-stage investors looking for high-growth opportunities. Sure, there’s volatility—political instability and currency fluctuations can be real risks—but the key is to diversify across multiple regions and industries to mitigate these risks while reaping the rewards.

Even if you’re more conservative, these markets can be a way to hedge against the volatility in more mature markets. For example, while the U.S. is experiencing rising inflation and market corrections, economies in Africa and Southeast Asia are growing at impressive rates, often insulated from Western economic cycles. It’s a different game, with different rules, but those who understand the dynamics stand to gain big.

How do you get started? First, find a knowledgeable partner or firm that specializes in these markets. Trying to go it alone can be risky, especially if you’re not familiar with the local economies or regulatory environments. Firms like Accion Venture Lab, for example, have a strong track record of investing in fintech startups across emerging markets, and they provide a good starting point for understanding the landscape. You could also look into region-specific venture capital funds or ETFs that target growth in these areas.

Additionally, don’t overlook the power of local knowledge. In markets where corruption or bureaucracy can slow things down, having someone on the ground who understands how to navigate these challenges is invaluable. Many successful investors in emerging markets build strong networks of local partners, business leaders, and government officials to stay ahead of the curve.

Lastly, stay patient. Emerging markets can take time to deliver returns, but when they do, the upside can be significant. The next wave of unicorns is likely to come from these regions, and those who position themselves early will be the ones reaping the rewards when these companies break out on the global stage.

A key takeaway? Don’t wait until everyone is talking about these regions. By the time it’s common knowledge, you’ll have missed the boat. Look at the growth metrics, the technological adoption rates, and the changes in consumer behavior happening now. That’s where you’ll find your next big win. The opportunity is here—you just have to be bold enough to take it.

Data from various sources shows that venture capital investments in emerging markets have consistently grown over the past five years, particularly in fintech and e-commerce sectors. The table below highlights the growth in venture capital across different emerging markets:

Region	VC Investment (2018)	VC Investment (2023)	Growth Rate (%)
Southeast Asia	$2.7 billion	$10.3 billion	281%
Sub-Saharan Africa	$0.8 billion	$3.1 billion	288%
Latin America	$1.2 billion	$6.7 billion	458%

This explosive growth is expected to continue as these regions build out their infrastructure and more consumers come online. If you’re still thinking about it, the time to act is now.