Silicon Valley is justifiably seen as the geographical center of digital innovation. From Google and Facebook to Uber and Netflix, the Valley is home to many global technology leaders. However, when searching for the next big startup, the time has come to look beyond Silicon Valley.
It seems that most Western startups are focused on “assisted living for rich hipsters” rather than solving some of the “big” needs the world is facing.
In the next five years, 2.5 billion new smartphone users will come online — 80 percent from emerging markets. This will inevitably lead to growing numbers of local entrepreneurs creating innovative solutions bespoke to the needs of their region and, in the process, building highly successful businesses. It’s highly likely that, in the future, some of the biggest digital innovations will come from markets outside of the West.
This trend has already started; an example can be found in our portfolio company redBus in India. Before redBus, travellers in India had to negotiate myriad bus companies with conflicting timetables, resulting in immense confusion when working out the various connections needed for cross-country trips. redBus aggregated this complex market onto one simple bus ticketing platform for all of India. It is now being rolled out to Malaysia, Singapore and other international markets.
GO-JEK is another shining example. This company has mobilized more than 200,000 motorbike riders in 10 major Indonesian cities to solve a number of logistics requirements, from couriering to food delivery.
The stage is now set for new digital innovation hubs to rise up in high-growth markets across the globe.
Similarly, TruckPad, another Naspers investment, began as a small venture that displaced physical advert boards at petrol stations using a mobile app. Now, more than 350,000 Brazilian truck drivers bid for more than a million truck loads on TruckPad every month.
These businesses would never have been created in Silicon Valley because they address problems that simply do not exist there. But they did solve problems that billions of people in high-growth markets face every day.
Opportunities to solve local challenges in high-growth markets are abundant across a range of industries.
Globally, 1.2 billion people still do not have access to electricity. More than one-third of the world’s population doesn’t have proper access to healthcare or education. There are around 2.5 billion unbanked people in the world and 2.2 billion live in high-growth markets such as Africa, Asia, Latin America and the Middle East.
These are profound social issues, but also large commercial opportunities. The 2.5 billion new smartphone users in emerging markets offer a powerful platform for local tech entrepreneurs and their businesses. Businesses like Jumo and M-KOPA.
Jumo is a money marketplace offering mobile users in Sub-Saharan Africa access to loans, by-passing the traditional banking system. Meanwhile, M-KOPA offers Kenyan households an affordable solar energy solution enabled by a pay-as-you-go mobile billing solution.
The world still faces some enormous challenges when it comes to social mobility and economic prosperity, and necessity is the mother of invention. The stage is now set for new digital innovation hubs to rise up in high-growth markets across the globe. The next billion-dollar entrepreneurs will likely come from São Paulo, Bengaluru or Shenzhen, and they won’t be serving rich hipsters.