A recent Financial Times article celebrates the flexible thinking of Indian businesses in the COVID-19 pandemic, as those companies have reacted in real time to the latest challenges and calibrated those reactions according to the local context.
Large sums of capital come with a plan to disrupt existing industries, to make a location a leader in a particular vertical, and to grow as rapidly as possible.
This “foie gras effect,” as an article in The New York Times put it, sees startups force-fed capital only to collapse under the weight of hypergrowth, according to a Harvard Business Review article.
In fact, research reveals that entrepreneurs in emerging markets have a better survival rate than those in the United States.
Instead, they work with smaller investments from the likes of accelerators, angel investors or by exploring alternative funding routes such as crowdfunding.
But considering that 86 percent of global consumers live in developing countries, innovation in these regions is driven by the biggest impact for the most people.
Local startups have been quick to respond, such as Amasar, a nutrition platform selling pesticide-free products produced by Puerto Rican farmers; and PRoduce, a subscription-based startup that delivers biweekly selections of seasonal and local products in eco-friendly packaging.
Compared to established startup hubs, emerging market ecosystems are smaller and more concentrated, and therefore are more easily able to foster connections.
In Latin America, 140 million people work in the informal economy — a huge pool that startups can offer secure employment to and leverage for on-the-ground knowledge.
In many ways, the startup grind in emerging markets is ahead of that of Silicon Valley-esque hubs.
Entrepreneurs in these regions therefore aren’t just creating more with less, they’re creating the blueprint for the startups of tomorrow.