Given my recent rants about Silicon Valley’s ratio of stinginess-to-wealth and the current trend against “changing the world,” it’s not a huge surprise that more blog posts and tweets were coming from Demo or the B-list-celebrity-studded 140-The Twitter Conference than at the Clinton Global Initiative summit that was also held this week in New York.
Techies who did follow the conference likely did so through the tweets and TwitPics of eBay founder Pierre Omidyar. After founding one of the biggest successes in Silicon Valley history Omidyar bucked the serial entrepreneur trend and turned to angel investing and do-gooding. At the conference he announced another big move: His philanthropic investment firm, The Omidyar Network, is committing $30 million towards backing high-impact entrepreneurs in emerging markets, specifically Sub-Saharan Africa and India.
It’s an interesting fill-the-gap strategy between mainstream venture capitalists looking to benefit from the emerging world’s booming demographics but frequently stymied by cultural and logistical challenges and micro-loans, which the Omidyar Network has already done a good deal of in these regions.
VCs look for companies that could be worth hundred of millions or even billions of dollars and a lot of the infrastructure for that kind of growth like management teams, attorneys and the like are still lacking in many emerging economies. The result is the bulk of US investments for emerging markets goes to China, and a smaller but still substantial amount to India and not a lot in the rest of the world. On the other end of the scale, micro-loans are frequently aimed at lifting individuals out of poverty by funding a trade, not an entrepreneur building a business that could serve hundreds of thousands or millions of the world’s poor.
Omidyar’s $30 million investment is a step in between. These will be investments, loans and sometimes grants for entrepreneurs looking to build high-growth, high-impact ventures that can have an out-sized affect on the poverty stricken region where some 10 million people live on $2 or $3 a day.
I grabbed Omidyar and managing partner Matt Bannick for a quick call in between their elevator rides with the former President of Nigeria and hitting up Ted Turner for business advice. I asked them the question that would-be-backers of my own book on global entrepreneurship asked me when I was selling it: Why should we care about entrepreneurship in Africa and India, when we can’t even fix poverty-stricken areas of the United States like Detroit?
“We think while everyone may have been born equal they don’t have access to equal opportunities and the greatest disparity is in the developing world,” Omidyar said. “That’s also the most vastly growing population and the place where we can have the greatest impact.”
And certainly $30 million goes a lot farther in the poorest areas of Africa and India than it does in the U.S. But the core point Omidyar added last: “This will have a huge impact on humanity overall. If you’re an American, you’re going to benefit from this.”
Let’s ignore altruism for a minute. There’s the self-interested humanitarian case that the more stable emerging economies with exploding populations become, the greater the likelihood they’ll form stable governments, or even adopt free-market economies. But there’s also the self-interested business case: The reality is the world’s economic growth is no longer happening in the U.S.. It’s happening in India, China, Africa, Russia, Indonesia, Brazil and a host of other smaller countries. There is innovation and entrepreneurship already there. Billion dollar companies will be formed. The question is, does America and the Valley want to play a role in that?