Instead of full business breakdown this week I'm sharing a presentation of a recent talk I gave for On Deck Investing, a 10-week program for investors to deepen their knowledge of public markets, investor psychology and sharpen their investing skills broadly.
You can check out the presentation here. I've pulled out a few slides where I think a little more context would be helpful.
Why invest in emerging markets? Because in absolute and relative terms, emerging markets experience tremendous GDP growth. When GDP grows by orders of magnitude, a country is completely transformed and for both entrepreneurs and investors numerous opportunities appear to make serious money.
What emerging markets am I most excited about? These six countries are some of the most promising economies globally. They have young, rapidly urbanizing populations and growing per capita GDP and discretionary income. More importantly, these countries have populations that are large enough to support deep and broad markets for startups to target. These markets are deep enough to create multi-billion dollar companies, while in other emerging markets with smaller populations companies have to expand to new countries to expand their addressable market.
Emerging markets don't all experience waves of innovation and digitization at the same time. These four inflection points - two quantitative, two qualitative - are preconditions for digitizing an emerging market economy.
Emerging markets go through three waves of innovation. First, a wave of companies copy successful startups in the US or other parts of the world and replicate their product for the local market. In wave two a new generation of startups is launched which build products that are highly localized to the market and often are highly distinct compared to other companies worldwide. Finally, in wave three, some of these localized startups with distinct products expand regionally and then globally, becoming global champions in the process.
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