We asked five venture capitalists to tell us where in the world they were seeing growth, opportunities, and change.
Jalak Jobanputra is the managing partner at Future Perfect Ventures. She blogs from the perspective of a female VC at The Barefoot VC.
“Out of the BRIC countries, India and Brazil are the most interesting to me, given the size of the emerging and growing middle classes in those countries,” Jobanputra said in an email. “They are also developing significantly in terms of infrastructure, although admittedly challenges remain on that front.”
“There are pockets of innovation in many other countries, including Turkey, Mexico, Chile, Philippines, Vietnam and Eastern Europe. We are seeing many countries emulate business models that have succeeded in the US i.e. Etsy, Uber, Amazon, Groupon but countries with large local populations are also innovating on these models taking into account local needs. Longer term, I’m tracking Indonesia—it’s the 4th largest population in the world—and parts of Africa—mobile innovation is leapfrogging the west there, particularly in the financial services area, although per capita GDP is still very low.”
Scott Hartley is a partner at Mohr Davidow. He is on the mobile and consumer internet team at Mohr Davidow and previously worked at Facebook and Google in India.
“Innovation is a demographic, not a geographic phenomenon. Access to information is ubiquitous, and the costs of creating great products have come down. Consequently, great product creation has been democratized. Platforms matter more than political borders today; it’s, ‘Are you on Android, or iOS?’ The smartphone is the new CPU, and it’s in the hands of billions. Entrepreneurs are coming from increasingly diverse places, but opportunity is still concentrated in a few geographies.”
“International venture opportunities come in two forms. If you focus on BRIC markets, companies are high velocity, but they focus on their own domestic opportunity set–they won’t have a US tie-in. If you remain open to smaller markets, a domestic-only focus is unsustainable and typically impels three outcomes: startups seek international capital, they focus on more global problems, and they’re often move open to moving to the US. Example of this are Israel, Scandinavia, and the Baltic.
Jon Karlen is a general partner at Flybridge Capital Partners. He heads up Flybridge’s investment program in Brazil and just spent the last few months living there.
“Twenty five percent of consumers are going online.When you come online, you see the opportunity to do something for the first time. Those opportunities are presenting themselves in Brazil,” and Karlen said, “there is a lack of high quality venture capitalists.”
That may have something to do with financial obstacles. “You have heavy, heavy taxation and big, big tariffs on imported products,” which makes it harder for a startup to break-even and to import components that it may need, Karlen said.
Venky Ganesan is a managing director at Globespan Capital Partners. He focuses on investments in mobile communications, software and internet and infrastructure start-ups at Globespan.
“Think about India: they are roughly a hundred million internet users. 600 million mobile users. If you want to reach people in India there is only one channel: the internet phone,” said Ganesan. “You have to appreciate two things: the vast majority of people are not connecting to a PC, but to a phone—and not a smart phone, a feature phone [think your old flip phone]. Sometimes it’s hard for people in New York to imagine.”
Even so, the internet may present big opportunities, too. “It’s possible that the next big internet company doesn’t come from America, it comes from somewhere else,” Ganesan said. “The next Google or Facebook could comes from China, Brazil India, or Turkey.”
Roi Carthy is a managing partner at Initial:Capital. He started Initial, along with a Brazilian colleague, with the intention of focusing on startups in Israel and Brazil. He recently set up the first Brazil pavilion at TechCrunch’s Disrupt SF conference.
“Failure is frowned upon [in Brazil],” Carthy said. “It’s different in Israel. You can take risks, and it’s okay to fail.”
“Brazil is very hot in terms of buzz and in terms of startup businesses. And it’s been escalating in the past few years. There’s a lot of fad and noise, and with that also came a lot of opportunities for investors. However Brazil is also very unique,” Carthy said. “You can’t go to the bank and borrow money. Setting up a business can be a two-month ordeal.”
“Very few [investors in Brazil] have a local presence,” Carthy said. “We have an office there. We have a partner there. This is not a vacation for us.”