TechCrunch - A Tale of Two Emerging Markets┃StrictlyVC Greece
The panel discusses the motivations and strategies of entrepreneurs investing in emerging markets outside Europe. John, founder of Revo Tech, shares his journey from a voice social network startup to creating InstaOP, a successful on-demand marketplace in the Middle East, which was sold for $360 million. He emphasizes the importance of choosing markets with less competition and the ability to scale quickly with low capital. Nate, co-founder of Time, a digital bank operating in cash-heavy economies like South Africa and the Philippines, explains their strategy of combining digital banking with physical retail partnerships to overcome challenges in digital adoption and trust. Both entrepreneurs highlight the importance of understanding local markets, taking calculated risks, and the potential for high returns in less competitive environments. They also discuss the challenges European entrepreneurs face in entering emerging markets, such as cultural differences and financial risks, and the need for a mission-driven approach and grit to succeed. The conversation concludes with advice for ecosystems like Greece to foster entrepreneurship, emphasizing education, reducing bureaucratic hurdles, and leveraging local partnerships.
Key Points:
- Entrepreneurs are investing in emerging markets due to less competition and high growth potential.
- John's InstaOP success was due to a scalable model with low capital requirements, leading to a $360 million exit.
- Time's strategy involves combining digital banking with physical retail to address cash-heavy economies and trust issues.
- European entrepreneurs face challenges in emerging markets due to cultural and financial barriers, requiring a mission-driven approach.
- Advice for fostering entrepreneurship includes improving education, reducing bureaucracy, and forming local partnerships.
Details:
1. 📈 Introduction to Emerging Markets
- Entrepreneurs are increasingly exploring opportunities outside Europe, focusing on emerging markets due to market saturation in Europe.
- Emerging markets offer higher growth rates, attracting businesses looking for expansion and increased profitability.
- For example, Africa and Southeast Asia have shown significant potential with GDP growth rates exceeding 5% annually, compared to stagnant growth in Western Europe.
- Companies investing in these regions are seeing returns on investment increase by up to 25%, highlighting the lucrative nature of these markets.
2. 🤝 Meet the Entrepreneurs
2.1. Introduction to John
2.2. Entrepreneurs' Investment Focus
3. 🌍 Entrepreneurial Journeys and Market Insights
- Nate is the co-founder of Time, a multi-country digital bank aiming to replicate the success of Revolute and Monzo in countries like the Philippines.
- John was the founder of a voice social network called Vound, requiring huge funding and ultimately not pursued.
- John launched InstaOP, an on-demand marketplace in the Middle East, which grew from a $100,000 deficit to a $360 million valuation in 5 years.
- InstaOP was acquired by Delivery Hero and is considered the largest technology exit for a Greek entrepreneur at the time.
- The success of InstaOP was attributed to its hyper-local grocery marketplace model, which allowed for rapid scaling with low capital investment.
4. 🏦 Innovative Neo Banking Strategies
- Time has raised $215 million in funding to date, supporting its innovative approach combining digital and physical banking.
- Time's strategy involves embedding digital banking services within physical retail ecosystems, crucial for penetrating cash-heavy economies like South Africa and the Philippines.
- Partnerships with large retailers allow Time to set up kiosks that issue Visa debit cards in real-time and facilitate cash in and cash out, replicating traditional branch network reach.
- Addressing cash handling is essential for building a successful digital bank in these regions, along with enhancing financial literacy, digital literacy, and trust.
- Over 17 million customers have been acquired, with more signing up through physical channels than digital, indicating higher trust and lower acquisition costs in these settings.
5. 🌐 Challenges and Opportunities in Emerging Markets
5.1. Challenges in African and Middle Eastern Markets
5.2. Opportunities in the Philippine Banking Market
6. 💡 Launching Revolutionary Tech Ventures
- Building in emerging markets like Egypt requires significantly more effort due to infrastructure challenges, often 2-3 times more than in developed markets.
- Strategic timing is critical when entering emerging markets; entering too early can result in failure due to lack of infrastructure, while entering too late may lead to missed opportunities.
- Founders often see emerging markets as adventurous opportunities with high returns, despite some investors perceiving them as too risky.
- A strategic example includes Revotech's decision to not pursue a banking license in Pakistan, recognizing the competitive landscape as a potential risk.
- Revotech is focused on applying cutting-edge technologies to lagging industries, creating revolutionary changes, with current efforts in healthcare aimed at preventive diagnostics.
- The upcoming launch in healthcare by Revotech aims to revolutionize personal health management through innovative preventive diagnostics solutions.
7. 🚀 Entrepreneurial Advice and Investor Dynamics
- Entrepreneurs should adopt a proactive, future-proof mindset to thrive in emerging markets, shifting away from reactive strategies.
- Successful entrepreneurs often have a personal connection to the problem they are solving, which drives innovation; for example, dissatisfaction with existing supermarket delivery and healthcare services led to new solutions.
- Grit and perseverance are crucial for entrepreneurs in emerging markets due to the challenges in raising capital, as demonstrated by experiences of facing near failure.
- European investors are generally more risk-averse compared to US investors, who are willing to take immediate financial risks, influencing the investment landscape in regions like South Africa and the Philippines.
8. 🌍 Navigating Emerging Market Ecosystems
8.1. Investment Challenges in Emerging Markets
8.2. Engagement with International Investors
8.3. VC Market Comparisons
8.4. Strategic Advice for Emerging Markets
8.5. Lessons from Emerging Markets
8.6. Education and Ecosystem Development
9. 👋 Closing Remarks and Networking Invitation
- Encourage networking by inviting attendees to connect over drinks and exchange contact information.
- Express gratitude to TechCrunch, Strictly VC, colleagues, and the TechCrunch team for their support and collaboration.
- Announce a future event to be held in Athens, encouraging ongoing engagement with the community.