What recent innovations do you think are influencing markets and the global economy?
Technology and venture capital are becoming increasingly global, significantly impacting the world economy in the coming years. Despite a trend among many governments and political leaders towards introspection and a perceived decline in globalization, I believe that entrepreneurs and a select group of leading investors are pursuing a counter trend by developing more “borderless” global businesses.
How should investors incorporate emerging markets into their investment strategies based on your experience? What opportunities should they recognize?
Many investors fail to fully grasp the vast opportunities present in emerging markets, especially outside of China and India. Emerging economies in regions like Latin America and Southeast Asia exhibit rapid economic growth, favorable demographics, and an increasing amount of technological innovation. Much of this innovation is primarily accessible through private markets, such as venture capital, though this is beginning to shift. For instance, Latin America presents a prime example: Mercado Libre, originally part of our Endeavor portfolio over two decades ago, went public on the Nasdaq in 2007 and is now part of the Nasdaq-100 Index, boasting a market capitalization exceeding $100 billion.
Companies like Mercado Libre, Nubank, and DLocal are merely the beginning of a wave of substantial technology firms in Latin America reaching impressive sizes and scales. To capitalize on this trend, investors should focus on two main actions: First, they should monitor the emerging venture capital landscape in countries like Brazil and Mexico, where recent research by Atlantico indicates that Latin American VC funds are disproportionately represented among the top quartile of VC funds worldwide. Secondly, they should keep an eye on the impending IPOs of more than a dozen Latin American technology firms expected to list on New York exchanges within the next two to three years, including globally ambitious companies like Wellhub and Hotmart, alongside regional successes like iFood, Ebanx, and Creditas in Brazil, as well as Kavak and Clip in Mexico, and Rappi across the region.
What do you anticipate for the evolution of emerging markets in the next decade?
Currently, emerging markets account for 61% of the global population and 38% of global GDP, yet they receive only 8% of global private capital investment. This dynamic is set to change.
Advances in technology will facilitate the establishment of global businesses from unexpected locations.
For instance, Brazil is home to the world’s largest digital bank, and the leading Edtech company is based in India. Emerging markets have produced several globally recognized technology brands that now have a presence in the United States, such as Auth0 from Argentina and UI Path from Romania. This trend is likely to persist, particularly with the rise of AI.
Our venture capital fund, Endeavor Catalyst, has made four recent investments in AI, with companies located in Morocco, Romania, Spain, and Vietnam, among other nations.
Additionally, we are substantial international investors in emerging technology businesses throughout the broader Middle East, focusing on markets like Egypt, Saudi Arabia, and the UAE. I recently attended investor and technology gatherings in Riyadh, Abu Dhabi, and Dubai, and I can share that the atmosphere at these events is incredibly inspiring. Participants are optimistic and forward-thinking, leaving a strong impression that the future indeed lies with emerging markets!
