Innovation has globalized. Over 100 startup ecosystems have spawned a unicorn (and this is rising fast). Many of these are entirely new business models that have spawned global categories.
And they are leading to real exits. Just look at Pismo’s $1b sale to Visa, the largest announced M&A of the year so far anywhere.
Yet, technology’s myopic focus on Silicon Valley has not adapted to this new reality. Just look at CNBC’s disruptor 50 list. Less than a small handful were from the emerging world.
Ignoring the rest of the world is at your peril. Industry leaders like Pismo are getting built anywhere and scaling everywhere. Here are five examples.
1. Bkash
Bkash is the first unicorn in Bangladesh, providing critical financial infrastructure for the country. Over 23 million adults use the platform, and it completes over 110 million monthly transactions (with small average transactions of just over $15). They have over 120 thousand agents across the country.
Starting with mobile money services, Bkash scaled to become a platform. Today, they offer customers everything from deposit collection for partners, to payments to various providers, and beyond.
The Bkash model has also played a role in catalyzing the mobile money movement (spearheaded originally by M-Pesa in Kenya among others). Bkash demonstrated the ability for a startup model to execute this at scale with sufficient capital and partners.
2. Toss
Toss is a fintech super app in South Korea. While their roots were in mobile payments back in 2015, the company rapidly evolved into a financial supermarket, offering a range of products from loans, to insurance or savings.
The U.S. analogy is imagining combining Venmo, Mint, Credit Carma, Robinhood and Wealthfront under one hood. Oh, and they just launched Toss Bank, so throw in Chime for good measure. There are over 40 products total on the platform. Toss recently raised $400m at over $7 billion valuation.
Their model borrows from U.S. products to be sure, but in many ways has more in common with PayTM in India or Chinese superapps like Ant financial.
Critically, they also invented their own strategy to support innovation, notably around supporting a network of semi-autonomous teams that experiment and find product-market fit and then scale with the support of the broader platform.
3. OfBusiness
OfBusiness is a B2B marketplace for materials and industrial goods. They are best known for scaling by combining the procurement solution with embedded fintech, notably working capital solutions.
OfBusiness was most recently valued at $5b as part of a $325m round. The unique thing about their story is not their valuation but that they were profitable.
Two other vertical B2B marketplaces in the category, Moglix and Infra.Market also deserve honorable mention as multi-billion dollar businesses.
The B2B marketplace offers two of the 3Ds in Fintech: Distribution Data. They can offer capital at the moment it is needed, and because of OfBusiness’ visibility into the transaction can make educated decisions on credit worthiness. Of course, this is not the end-all-be-all of lending. As the Founder notes, “Convenience is secondary to the cost of credit…If you really want sustainable use of your credit, you have to be the cheapest.”
4. Sabi
Arguably one of Africa’s fastest growing startups (for full disclosure, my employer Fluent Ventures is a Sabi investor), Sabi is a three-year-old business focused on connecting merchants with manufacturers and distributors. The Sabi platform allows users to buy products, wholesale, while managing inventory and tracking business performance. The platform even helps merchants access financing via offline and online channels.
The company has reportedly already scaled to over 300,000 merchants and reached $1 billion in annualized gross merchandise volume. This B2B marketplace model flies in the face of what was conventional best practice a few years ago. Looking to the future, African companies like Sabi are well-positioned to show how B2B marketplaces can disrupt exiting players.
5. Kavak
In the developed world, buying or selling items like cars is a major decision but not necessarily a dangerous one. A number of established platforms make discoverability simple. Banking infrastructure makes payment manageable.
Not so in many emerging markets. Purchasing a car starts with safety concerns. In unbanked markets, where payments are made in cash, should a buyer just bring an envelope? What is the risk of theft in used car transactions? And that is if you find the car to buy – discoverability has historically been pen-paper and word of mouth. And then there is of course financing.
Kavak built the leading marketplace for used cars in Mexico. The used car provider offers customers a modern experience, and a range of other services like refurbishment, loans and importantly trust. They were last valued at $8 billion.
Fintech Trends To Watch From The Global South
These five businesses are just a few examples of global leaders emerging around the world. You should take three things with you.
First, they are building new business models – not copy pasting what was started in Silicon Valley.
Second, they inspire a whole new generation of other players who take the insights and explore elsewhere. I’ve seen models similar to Sabi in Indonesia, Vietnam and Colombia already. And Sabi itself shares similarities to companies like Udaan in India and Bukalapak in Indonesia which have created FMCG focused marketplaces. I call this the innovation supply chain.
Third, these models are targeting the mass market, offering customers and SMBs critical services. They are high impact builders.
Ultimately, the best ideas are coming from anywhere, scaling everywhere and impacting real people.
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