Emerging markets

Perspective and opportunities

Agenda

01 Market definition and key dynamics

02 Investment activity overview
03 Regional analysis and local perspective
What are Emerging Markets?
Lower CAGR Growth
Developed countries
§ The most advanced economically
§ Highly developed capital markets
with high levels of liquidity
§ Meaningful regulatory bodies
§ Large market capitalization
§ High levels of per capita income
Main regions:
North America, Western Europe,
Japan, and Australasia
SOURCE: Nasdaq
Emerging market
§ Country in the process of rapid
growth and development
§ Lower per capita incomes
§ Less mature capital markets
than developed countries
Example regions / countries:
Latin America, Southeast Asia, Africa, India, China, Middle East, and
Eastern Europe
High CAGR Growth
Frontier market
§ Subset of emerging markets
§ Little market liquidity
§ Marginally developed capital markets
§ Low per capita incomes
§ Yet to undergo much meaningful
economic development
§ Potential for rapid growth and
outsized returns make these markets
interesting to high-risk investors
 Emerging markets led by Asia will drive economic growth in the next 5 yrs.
Absolute gross domestic product (GDP) by region; current prices
USD Trillion 2018-2023 2018-2023
2018 GDP 5 Yr Growth 2023F GDP Incremental GDP CAGR

MEA 4.0 1.6 5.6 1.6 7.0% • By 2023 >50% of

Global economic
output will come from
Southeast Asia 2.9 1.2 4.2 1.2 7.3% outside NA + Europe
(from ~45% today)

Latin America & • ~60% of incremental

5.2 1.3 6.5 1.3 4.4%
The Caribbean GDP (growth) in the
next 5 years will come
from emerging
APAC - excl. SEA 27.2 11.1 38.3 11.1 7.1% markets1 (primarily
Asia)

Europe 21.8 3.9 25.7 3.9 3.3% • Growth rates in

emerging regions
outweigh developed
North America 23.5 5.0 28.5 5.0 3.9%
markets by
1.1x – 2.2x

24.1 5.0%

SOURCE: International Monetary Fund

1) For calculation adjusted regional numbers by extracting Australia/New Zealand and Japan which are developed countries and adding back eastern Europe which is considered Emerging markets
Large and younger population in emerging markets will sustain economic
growth, reaching ~90% of world population by 2025
Overview of population and median age by region; 2019-2025

Region Population. 2019E Median age Population, 2025E Median age

In Million % of World Years In Million % of World Years

Asia 4,627 60.0 31 4,843 59.2 34

Southern Asia (incl. India) 1,914 24.8 27 2,040 24.9 29

Eastern Asia (incl. China) 1659 21.5 38 1,677 20.5 41

SEA 662 8.6 29 700 8.6 32

Western Asia (Inc. Middle East) 277 3.6 27 303 3.7 29

Central Asia 73 0.9 27 78 1.0 30

Oceania (Inc. Aus. & NZ) 42 0.5 33 45 0.5 35

Africa 1,320 17.1 20 1,522 18.6 21

Europe 743 9.6 42 742 9.1 44

LATAM 658 8.5 30 693 8.5 33

North America 366 4.7 38 383 4.7 39

SOURCE: United Nations; Worldometers

Near 80% of Global Internet users are based in emerging markets; lower
penetration rates in these regions outline opportunity for growth
Global internet users by region (2018)
Millions
947 Internet users (emerging)
Internet users (developed)

673
Internet penetration

380
320
290
215
175 175
147
118 118 116 110 98
36 34 28 21 20

57% 36% 58% 88% 68% 74% 65% 90% 39% 77% 27% 49% 61% 94% 50% 51% 69% 48% 51%
Eastern Southern Southeast Northern South Eastern Western Western Western Southern Eastern Northern Central Northern Central Southern Oceania Caribbean Middle
Asia Asia Asia America America Europe Asia Europe Africa Europe Africa Africa America Europe Asia Africa Africa

2017 – 2018 adoption sample growth rates: Kenya 35%, Vietnam 28%, Thailand 24%, Mexico 12%, China 3%

Penetration <60%

SOURCE: We are social “Digital in 2018” report

Agenda

01 Market definition and key dynamics

02 Investment activity overview
03 Regional analysis and local perspective
VC global investments quadrupled in past 6 years; ~45% of all investments
now made outside NA and Europe vs 25% in 2012
Aggregate value of VC deals by region; 2012-2018
USD Billion
64 58 114 168 159 180 223
100%

46% 43% 46% North Am.

57% 55%
62% 64%

10%
11% 10% Europe

10%
11%
13%
16% 42% 36% APAC (ex-ASEAN)
40%
29% 34% ASEAN
24% 17% LATAM
3% 5% MEA
1% 2% 1% 1% 2% 1% 1%
0% 1% 0% 1% 0% 0% 0% 0% 1% 0% 2% 2%
2012 2013 2014 2015 2016 2017 2018

SOURCE: CB Insight; Preqin; Web search

Close to $80B of VC funding in emerging markets contributed to the rise of
120+ unicorns (out of 346 worldwide) in the past 6 years
Deal value by region, 2012-2018 Absolute CAGR growth Featured
Region
USD Billion growth, in funding, unicorn
2012 vs 2018 2012-18 companies
250
USD Billion Percent No.

LATAM 2 31% Nubank, LifeMiles, iFood, Rappi,

200 Pagseguro, 99, Ascenty

ASEAN 10 75% Grab, Go-Jek, Traveloka, Razer,

Tokopedia, Bukalapak, Lazada, Sea
150
MEA 3 75% Infinidat, Promasidor, ironSource,
Africa Internet Group, Cell C

100 EUROPE 15 19% Spotify, Global Switch, Deliveroo, The

Hut Group, BGL Group, Auto1, Klarna,
BlaBlaCar
APAC 70 32% Xiaomi, Meituan Dianping, Didi
50 (ex-ASEAN) Chuxing, Toutiao, Flipkart, Luckin
Coffee, Snapdeal, Coupang, Mercari

North Am. 60 17% Uber, Airbnb, SpaceX, WeWork,

Pinterest, Lyft, Dropbox, Infor, Stripe,
0
2012 2013 2014 2015 2016 2017 2018 Vice Media, Slack, Magic Leap

SOURCE: CB Insight; Preqin; Web searches

Agenda

01 Market definition and key dynamics

02 Investment activity overview

03 Regional analysis and local perspective

In depth review and local perspective for selected markets

05 China

04 Southeast Asia

03 India

01 Latin America 02 Sub-Saharan Africa

SOURCE: […]
01 LATAM – Nascent market. Exits picking up, expected to drive additional investment
Brazil Mexico Chile Colombia Argentina Peru Venezuela 2017-2018 VC Investments by sector
2018 VC Investment % à 55% 21% 11% 4% 4% 2% <1%
USD Billion, %
Total population, mil 210 130 18 49 45 32 32
73% Logistics / Dist. 46%
GDP per capita PPP 2.0
16.7 21.1 27.1 15.6 20.4 14.9 10.9 Fintech 25%
(current price), USD’000 1.1 Transportation 7%

Median age, years 33 29 35 32 32 29 29 SaaS 4%

Proptech 4%

Rural population, % 15% 21% 10% 20% 11% 21% 10% Others 14%
2017 2018

Smartphone penetration, % 41% 46% 44% 40% 47% 32% 38%

Selected exits / success stories
Internet penetration, % 70% 67% 73% 61% 70% 51% 60% • Openpay (payments) acquired by BVVA (2017)
• Linio (e-commerce) acquired by Falabella $138M (2018)
Unbanked population, % 30% 65% 26% 54% 51% 57% 27%
• Cornershop (delivery) acquired by Walmart $225M (2018)
• Didi acquires 99 (ride sharing) for $1B (2018)
• Stone Pagamentos raises US$1.1B on NASDAQ (2018)
Credit as % of GDP 62% 35% 116% 50% 16% 44% n/a
• PagSeguro (payments) raises $2.7B in IPO NYSE (2018)
Competitiveness index score (Global Rank out of 140 countries where 1 is the top performer)
Unicorns in the region
Infrastructure (out of 140) 81 49 41 83 68 85 118

Health (out of 140) 73 56 30 35 53 32 59

Digital bank On-demand1 Food delivery Loyalty program
Skills/education (out of 140) 94 86 42 80 51 83 78 (BRA) $4B delivery (COL) $1B (BRA) $1B (COL) $1B

SOURCE: World Economic Forum; Worldometers; United Nations Population Division; IMF; eMarketer; The World Bank; United Nations Development Programme, CB Insights, online research
1) Latest investment is part of Softbank’s $5B recently announced commitment to the region
01 Local perspective: “there are huge problems that need (profitable) solving”
Attractive Other / country or
Opportunities Challenges Capital ecosystem
Sectors region specifics

§ LATAM’s § Not enough talent § Healthcare – § Low access to § We need more

Entrepreneur
population 2x (administrative access to quality, capital at early success stories
perspective greater than US and engineering) affordable stage although § Startups need to
Investor:
§ “Plenty of § Access to capital medical services; improving plan for
Nathan Lustig
opportunities (fear / skepticism, information § Exit environment downturns (i.e.
Managing
because a lot of risk perception, transparency, has been a funding)
Partner (as
things just don’t lack of exits) longevity, challenge but § Advice to
Founder: entrepreneur
work” § Legal environment diagnosis starting to entrepreneurs is
Angel Sahagun sold 2 startups)
§ “People here are (particularly for § Cleantech (solar improve (Openpay “don’t give up”
Industry: hustlers, they’re fintech) is panels, market and Cornershop Industry focus:
Fintech hungry and improving but still and product exists from Invests in
ambitious” in development development) strategic) Fintech,
Business Insurance tech,
description: § Large market with § As an investor § Extremely low § “The most § Argentina and Blockchain in
(Raised Series A) enough people exits are a penetration of underfunded per Venezuela Latam, and
Neo-bank. and talent to solve concern financial services capita region of sociopolitical Global firms with
Provides the the issues they see § Only a handful of (only ~10% have the world” ($2B in environment has Latam based
freedom to own § There are huge funds can do $2- svcs. normal to 2018, $2B 1H-19) implications; teams
a digital neo- problems that $5M+ investments middle class in US) § Market dynamics everywhere else
banking account need (profitable) § Confusion § Infrastructure: closer to Asia than no major concern
without having solving between logistics, delivery, US (education, risk § Brazil big but hard
to ever step foot § Immense need for companies that transportation. averse, low access to operate without
in a physical capital need tech and true § Insurance (US capital); who gets local presence, Investor
branch tech companies spends 4x as % of lead financing has more competitive, perspective
GDP than LATAM) a huge advantage costs are higher

SOURCE: Direct interviews

02 Sub-Saharan Africa – demographic opportunity and structural challenges
Kenya S. Africa Nigeria Tanzania Ethiopia Senegal Ghana 2017-2018 VC Investments by sector
2018 VC Investment (estimate) % à 16% 23% 29% NA NA NA NA
USD Million, %
Total population, mil 52 58 201 61 110 17 30 Fintech 39%
272% 726 Cleantech 20%
GDP per capita PPP
(current price), USD’000
3.9 13.9 6.1 3.6 2.5 3.9 7.0 Ecommerce 13%
Edtech 4%
Median age, years 20 27 18 18 18 19 21 195 Agritech 3%
Healthcare 2%
Rural population, % 73% 34% 50% 66% 79% 53% 44% 2017 2018 Others 18%

Smartphone penetration, % 21% 36% 13% n/a 11% n/a 24%

Exits / success stories
Internet penetration, % 18% 56% 28% 16% 19% 30% 38% • Visa acquired Fundamo (Fin Svcs.) for $110M (2011)
• Uber Eats acquires SA founded tech firm orderTalk (2018)
Unbanked population, % 44% 33% 61% 79% 65% 80% 58% • Jumia (ecommerce) raised $196M IPO in NYSE in Africa first
tech IPO in NYSE (2019)
• Andela secures $100M Series D from Chan Zuckerberg
Credit as % of GDP 28% 148% 11% 13% n/a 28% 14%
Initiative, GV, and others (2019)
Competitiveness index score (Global Rank out of 140 countries where 1 is the top performer)
Unicorns in the region
Infrastructure (out of 140) 105 64 124 119 120 111 116

Health (out of 140) 110 125 119 116 113 114 112
Food & Bev. (S. Telecomm
Skills/education (out of 140) 95 84 124 120 135 118 104 Africa) $2B (S. Africa) $1B

SOURCE: World Economic Forum; Worldometers; United Nations Population Division; IMF; eMarketer; The World Bank; United Nations Development Programme, CB Insights, online research
02 Sub-Saharan Africa – “…spend time in the ecosystem and understand how to help”
Attractive Other / country or
Opportunities Challenges Capital ecosystem
Sectors region specifics

§ In Africa there are § Gvmt. won’t solve § Education § We have an § I wanted to show
Entrepreneur
many fundamental the issues and § Employment abundance of seed Africa as a large
perspective social problems people don’t § Health care capital and not attractive market
that require expect it to do so § Human capital / enough C rounds not individual Investor:
private sector § Solutions can’t human § Investors like small countries Eghosa Omoigui
Flutterwave solutions depend on single development models that have (payment system) (ex Intel Capital)
§ Being an efforts it requires § Services been validated § Be present, visit
entrepreneur is scale (Google, FB) often, spend time Industry focus:
aligning difficult § It does require in the ecosystem, Consumer
Andela problems with precision and engage and internet, smart
solutions and attention to key understand how data, Mobile,
financial returns metrics you can be helpful SaaS,
Founder:
Iyinoluwa § Structural § Lack of capital § Healthcare access § Capital is scarce – § You have to Brief description
Aboyeji opportunities that § Infrastructure (e.g. Lifebank). “you have to unlearn what you Early stage in
you won’t find friction: electrical Primary medical sweat a lot for the learned in the sub-Saharan and
Industry: anywhere else power, safety delivery vehicle little there is” valley / be acutely Africa-focused;
Flutterwave - § Markets are very working hrs. are pharmacies § Main concern are aware of the partner w/ TPG
Global payments early in the digital § Entrepreneurs less § EdTech – work to exits (you need region’s dynamics
revolution mature than other be done to get creative deal § “Product design
Andela - § Entrepreneurs regions i.e. more secondary degree structuring e.g. should eliminate
Distributed have a lot of grit, handholding from kids to “baseline” dividends, access stress”
engineering they fight through investors § Telecom to FCF) § 30% of people are Investor
teams a lot § Talent pipeline § Supply chain is not in 3G, 70% are in perspective
(foreign hiring) digitized 2G / 1G or no G

SOURCE: Direct interviews

03 India – Consumer technologies driving the creation of new Unicorns
India 2015-2018 VC Investments by sector
2018 VC Investment % à 100%
USD Billion, %
Total population, mil 1,369 12%
12.7 12.7 Fintech 18%
GDP per capita PPP 9.0
Foodtech 15%
8.5
(current price), USD’000 Ecommerce 13%
4.0 Hospitality 9%
Median age, years 28
AI 3%
Others 41%
Rural population, % 66% 2015 2016 2017 2018

Smartphone penetration, % 28%

Exits / success stories
Internet penetration, % 45% • Ride-hailing startup Ola acquired food-delivery startup Foodpanda (2017)
• Walmart acquires online retailer Flipkart for $16B (2018)
• Amazon acquires all in one aggregator app Tapzo (2018)
Unbanked population, % 20%
• IndiaMart IPO in the Indian National Stock Market (2019)
Credit as % of GDP 50%
*Regulations don’t allow Indian companies to list in international markets before listing in National ones
Competitiveness index score (Global Rank out of 140 countries
where 1 is top performer)
Unicorns in the region1
Infrastructure (out of 140) 63

Health (out of 140) 108

ePayments / Value-focused Online
ecommerce marketplace education Ride-hailing Hospitality Food delivery
Skills/education (out of 140) 96
(Delhi) $10B (Gurgaon) $7B (Bangalore) $5B (Koramangala) $4B (Gurgaon) $4B (Bangalore) $3B

SOURCE: World Economic Forum; Worldometers; United Nations Population Division; IMF; eMarketer; The World Bank; United Nations Development Programme, CB Insights, online research
1) Others include: InMobi (adtech), Udaan (ecommerce), BigBasket (ecommerce), Shopclues (ecommerce), ReNew (energy, utilities), Policy Bazaar (Fintech), Hike (social), Zomato (social/rest), Dream 11 (fantasy sports), Delhivery (logistics)
03 India – local perspective: “…need for Indian-based solutions to real problems”
Attractive Other / country or
Opportunities Challenges Capital ecosystem
Sectors region specifics

§ Improving health, § Large part of § There isn’t any § Capital § “Government

Entrepreneur
productivity and population industry in India environment in should let the
perspective life expectancy of economically that is not ready India is rich if you startups solve the
users challenged for disruption can show traction big problems and
§ Jio effect + Telco. § Large rural § There’s a need for § Exits take longer focus on enabling Investor:
war price dropped population with quality services and are harder them through Nitin Sharma
data cost1 low connectivity § EdTech than in US; the appropriate (Wharton MBA,
Founder ex-NEA investor)
§ Opportunity to § Consumers are § Healthcare hockey stick is not regulation”
Amit Munjal
help refine/define highly price § Fintech as steep
(ex-Citi / BoA Industry focus:
legal framework sensitive § VCs funding India § Smart money
investment bank,
along with (freemium vs pay local problems e.g. understands these Blockchain,
LA & NYC, ex- AgriTech, EdTech
regulators them to try) water ATMs cycles
Deloitte) Consumer,
Industry § Size of the market, § Fragmentation: § Retail, education, § True disruptive § India is the only Media
Healthcare demographics and diverse regions, health care, these ideas are not 1B + people open
growth, a lot of languages, culture, can only scale being funded yet, market society,
Business demand creation opportunities to with technology, only what worked with regulations
description will happen solve for each teachers / doctors in other countries § 1B people market
India's 1st Video § Big opportunity § It’s a poor country ratios are very low § No specialist VCs but in reality 5% is
Medicine because there are (GDP per capita § Ecommerce yet, only generalist similar to US, 25%
Company where a lot of broken bottom quartile) § Media § Valuations high like SEA, and rest
One can consult things § Tough to monetize § Digitization and § Exits M&A better is similar to Africa
Care-Givers § Huge source of § Infrastructure Mobile in every § Only 4% of funds § Need for India Investor
anytime, talent § Bureaucracy industry (cheapest are domestic (vs based solutions to perspective
anywhere § Gvmt. Pro startups (improving) mobile data) 80% in China) real problems

SOURCE: Direct interviews

1) India has global lowest cost per mobile gigabyte at ~$0.26/GB
04 Southeast Asia – Multi-vertical giants driving both investments and exits
Indonesia Vietnam Thailand Philippines Malaysia Singapore Myanmar 2017-2018 VC Investments by sector1
2018 VC Investment (estimate) % à 42% 8% ~2% <1% <1% 45% <1%
USD Billion, %
Multi-vertical 60%
Total population, mil 270 97 69 108 32 6 54
93%
eCommerce 23%
11.1
GDP per capita PPP Fin Svcs. 5%
14.0 8.0 20.5 9.5 32.5 103.7 6.7
(current price), USD’000 5.8 Real estate 3%
Median age, years 30 31 38 24 29 35 28
B. Automation 2%
Logistics 2%
Rural population, % 45% 64% 50% 53% 24% 0% 69%
Payments 1%
2017 2018
Others 4%
Smartphone penetration, % 27% 38% 44% 45% 58% 76% 22%
Exits / success stories
Internet penetration, % 32% 50% 53% 60% 80% 84% 31% • Lazada acquired by Alibaba Group (2018)
• Grab acquires Uber’s Southeast Asia (2018)
Unbanked population, % 52% 70% 19% 68% 15% 2% 74%
• SEA Group IPO Nasdaq (2017) / Sea Group trying to raise
US$1.5 billion likely aimed at Shopee (2019)
• Tokopedia acquires Bridestory (2019)
Credit as % of GDP 39% 133% 145% 50% 120% 122% 24%
• Go-Jek acquired local e-wallet company Coins.ph (2019)
Competitiveness index score (Global Rank out of 140 countries where 1 is the top performer)
Unicorns in the region2
Infrastructure (out of 140) 71 75 60 92 32 1 n/a

Health (out of 140) 95 68 42 101 62 1 n/a Ride-hailing,

Ride-hailing, food food delivery, Online Travel
Skills/education (out of 140) 62 97 66 67 24 20 n/a delivery, payment payment (ID) marketplace aggregator E-commerce
(SIN) $14B $10B (ID) $7B (ID) $2B (ID) $1B
SOURCE: World Economic Forum; Worldometers; United Nations Population Division; IMF; eMarketer; The World Bank; United Nations Development Programme, CB Insights, online research
1) Breakdown based on disclosed/available data, not covering the full $11B investment amount. Education only $10M and Healthcare only $16M reported. Over 70% of funding in 2018 was captured by top 5 investments
2) 6 Unicorns in the region as of May 2019. Other include: Revolution Precrafted (Construction Tech) $1B
04 Southeast Asia – “SEA is 10 countries with different cultures and growth stages”
Attractive Other / country or
Opportunities Challenges Capital ecosystem
Sectors region specifics

§ Large population § Each country has a § Travel and § VC ecosystem § High Government
Entrepreneur
with raising middle very distinct experience much more support, moving
perspective class and ~40% culture - Grab has § Digitizing developed now, from cheap labor
younger than 24 its own UI style for Healthcare in capital flowing to a technology Investor:
§ Economy growing each country Vietnam (handing from China, Japan, economy Julian Ting
~7% consistently § Banking out paper work) Singapore, etc. § Program 844 (Columbia MBA,
§ GDP per capita infrastructure and § EdTech (“people § Exits are a concern (Funds, off. space, LSE law)
Founder: similar to India regulations (not here learn using as more unicorns mentorship, tax)
Huy Nghiem § Young people are direct connection YouTube”) appear and public § Not much Industry focus:
tech savvy and e-wallets) § Remittance markets not big innovation, they’re Direct
willing to try new § Fintech customer § e-commerce is too enough replicating models investments.
Industry: things education hot (i.e. expensive) § Copy cat models from the west Multi-vertical,
Fintech
multi-stage
§ GDP an excess of § It’s not one § Consumption § A few industries § Background and
Business 2.5 trillion, ~700m contiguous block, themes will absorb most reference checks Brief description
description: people, median it’s 10 different § Education of the capital e.g. are important as Private
Wealth age in the 20s countries, with § Healthcare ecommerce and corruption and investment
management § These places can different cultures § Fintech: credit, logistics, while bribery are hidden company based
platform that leapfrog existing and growth stages there’s a need for healthcare /digital business costs in Hong Kong
helps millennials technologies; § Some of these cheaper credit health are a bit § Myanmar /
micro-invest in unencumbered by economies are too (some charge 1% / neglected as these Cambodia hard
mutual funds in existing infrastr. small for investing day), high are more complex sociopolitical
Vietnam e.g. China skipped in replicating underbanked and harder to environment; Investor
CCs into WeChat successful models population understand for others are stable. perspective
mobile payments from the west external investors Gvmts pro biz.

SOURCE: Direct interviews

05 China – most advanced ecosystem in emerging markets, unicorns in diverse verticals
China 2015-2018 VC Investments by sector1
USD Billion, CAGR , %
Total population, mil 1,420
40% 71.0
GDP per capita PPP 46.4
19.52 Fintech 36%
(current price), USD’000 36.0
26.0 Others 64%
Median age, years 37

Rural population, % 41% 2015 2016 2017 2018

Smartphone penetration, % 54%

Exits / success stories
Internet penetration, % 55% • Alibaba (B2B ecommerce) IPO raised $25B in NYSE (2014) – Largest IPO
• JD.com (ecommerce) IPO raises $1.78 billion through Nasdaq (2014)
Unbanked population, % 20%
• Xiaomi (smartphone manufacturer) IPO raised $3B in HK Exchange (2018)
• Meituan (food delivery – ticket svcs.) IPO raised $4.2 billion in HKEX (2018)
• Tencent Music (top 4 music apps) raised $1.1B in NYSE (2018)
Credit as % of GDP 161%
• Ant Financial raises $14 billion in world's largest-ever single fundraising (2018)
Competitiveness index score (Global Rank out of 140 countries
where 1 is top performer)
Unicorns in the region2
Infrastructure (out of 140) 29

Health (out of 140) 44

Bitcoin mining Drone Tech. Car Manbang
Digital Media Ride sharing HW (HPC) (Shenzhen) marketplace Truck hailing
Skills/education (out of 140) 63 (Beijing) $75B (Beijing) $56B (Beijing) $12B $10B (Beijing) $9B (Beijing) $6B

SOURCE: World Economic Forum; Worldometers; United Nations Population Division; IMF; eMarketer; The World Bank; United Nations Development Programme, CB Insights, online research
1) Based on KPMG quarterly reports
2) There are 89 Unicorns in China as of May 2019. Categories include ecommerce, Fintech, Hardware, AI, Robotics, Big Data, Biotechnology, Cibersecurity, Healthcare, EdTech, etc.
05 China – local perspective “Technology leapfrogged lack of infrastructure”
Attractive Other / country or
Opportunities Challenges Capital ecosystem
Sectors region specifics

§ Starting a § I can’t tell the § Sharing § Available capital § Talent is not an

Entrepreneur
business is really difference economies was a comparable to US, issue, and it’s
perspective easy and between US and big thing; now the better than the much cheaper
everything’s online China (same model is being rest of the world § Local jurisdictions
Investor
(Shenzhen-based) challenges: find reconsidered § B2B lower support startups
Jonathan Nelson
§ Technology right people, (Mobike, ofo, valuations B2C with land, grants,
leapfrogged lack investor, and eUmbrella) closer to US and act as LPs
of infrastructure convincing § AI is receiving § US investors are § Many firms focus Industry focus
§ Rural population customers) attention but how industry experts, only on local, large Fintech,
Founder: Blockchain, AI,
Di Wu will fuel growth for § Capital flow to make money is in China harder to markets that are
the next 10-20 restrictions (you still to be seen explain the tech “cohesive and Hardware,
(Duke MBA, Dell AgTech,
Tech. & Huawei years require to set VIE) § Consumer led § Profitable for IPO homogeneous”
Corp. Strategy) –
§ Massive market § Too expensive, avg § Market is huge for § Chinese § Chinese Brief description
Series A
but unless you PE ratio 2-5x of US consumption government government very Venture Fund
Industry: know it well it’s § Entrepreneurs driven models / promoted a lot of involved, protects focused on
Enterprise PaaS difficult to operate difficult to scale technologies investment local IP, promotes global frontier
§ Level of HW outside China § Hardware § Very large innovation tech
Business innovation is years § Hard to move combined stock § Tariffs affecting
description: ahead of RoW money outside of market (Shanghai, investments
Unified cloud § “Go back home, China HK, Shenzhen) § A lot of regulatory
platforms for visit your family § Almost impossible § A lot of money gray areas
developers and and ask about to run a business flowing in and § Relationship Investor
businesses their frustrations” unless you are quality of deals driven, need local perspective
Chinese born not always good partner and team

SOURCE: Direct interviews

Key takeaways

Opportunities:
• Economic growth
• Young population entering labor market and driving consumption
• Increasing levels of internet and smartphone adoption
• Startups being fueled by growing VC investment globally, mainly implementing proven business models
What we
know Challenges:
• Emerging markets is not one single entity, need to understand local dynamics
• Technology application may be the only way to leapfrog lack of infrastructure / quality services
• Structural local issues getting less attention than consumption-driven proven models
• Talent exists but not always properly positioned

• Find those things that don’t work and (profitably) solve them; you can start small
What we • Leverage your potential, network, and Google’s resources to positively impact these communities
can do • Understand the local consumer; off-the-shelf solutions will not work in emerging markets
• Main concerns such as access to capital, talent, and exits should not be an impediment for A120 startups
Q&A
APPENDIX
LATAM – Other representative startups

Sontra iFood Spacedat

Bandit
Brazil Brazil Peru
Argentina
Transportation Delivery Agritech
Recruiting
Managing company of freight and Online food delivery portal from Capture critical crop data using satellites and
trucks that connects the cargo which users can order deliveries on Matches technology talent, primarily drones with multispectral sensors to optimize
shippers to truck drivers. the internet with no hassle. developers, to companies that need it. crop growth.
https://www.sontracargo.com.br/ https://www.ifood.com.br/ https://bandit.io/ https://www.spacedat.com/index.html

GuiaBolso Crehana
Kevlara The Not Company
Brazil Peru
Mexico Chile
Banking/Loans E-Education
Transportation Biotechnology
Helps track spending by category, gives E-learning platform for professionals, aiming at
Users can book rides in armored personalized saving and spending tips, Makes and sells plant-based foods to
creating a social network of users from the same
vehicles and charter security escorts. credit scores, and instant loans in the app. push sustainability and healthy diets.
field of work.
https://www.facebook.com/Kevlaraapp https://www.guiabolso.com.br/ http://www.notco.com/notco
https://www.crehana.com/
LATAM – Other representative startups

AppHive Tourbitz Net Worth Consulting Baubap

Mexico Colombia Mexico Mexico

Developer Tools Tourism Financial Services
Fintech
Advanced app builder without Developer for tour operators that Serves as an
the need to write a single line of aims to help users improve their intermediary between users Offers microcredits to users
code. sales through digital transformation and various investment from their phones
tools products.
https://apphive.io/ https://www.baubap.com/#!/
https://www.tourbitz.com/ https://networth.mx/

Slik
Etiner Vico
BrazilPlus
Argentina
Chile Colombia
Software Brazil
Tourism Tourism
Fintech
Realizes measurements and manages
the work environment of companies, Helps users better plan their trips Allows exchange students and
then offers feedback from its systems through other users’ opinions and professionals who have to work outside Asset management company specialized in
to improve the situation the firm faces information their country find a safe place to stay. Credit Receivables Investment Funds.

https://www.etiner.com/ https://getvico.com/ http://www.brazilplus.com/en/

https://www.slikpro.com/
Sub-Saharan Africa – Other representative startups

Bluewave
Kenya
Healthcare
Applies research, innovation, and
technology to low-cost innovative
insurance products to the masses.
http://www.blue-wave.co.ke/
Dundiza
Franc Group
Flock Tanzania
South Africa
South Africa Fintech
Fintech
Ecommerce Online site that helps young people and
Gives users access to low-cost
women in Tanzania and Africa to save
passive investments through its
Allows event organizers to better their money wisely either daily, weekly,
app on smartphones, while
engage with their attendees. monthly and yearly using their own
educating them on investments.
mobile phones.
http://www.flockplatform.com/ https://www.hifranc.com/
https://dundiza.com/index.html

Riby
Flow PiggyVest
Talklift (Biashara Bot)
Nigeria
South Africa Nigeria
Kenya
Fintech
Property Management Fintech
Marketing
Finance platform offers features that are tailored
App that rewards tenants for good Helps younger users with financial to suit users’ needs at any given period so they
Data-driven social media marketing tool for
behavior such as paying rent on time and intelligence through online savings and can plan, save and invest regardless of earning
business.
looking after the property. investment. power.
https://talklift.com/
https://flow.rent/ https://www.piggyvest.com/ http://riby.me/
Sub-Saharan Africa – Other representative startups

Telyscrypt Vizibiliti Insight Thrive Agric Sudpay

Tanzania South Africa Nigeria Senegal

Telehealth Information Technology Agritech Ticketing

Facilitates telemedicine Uses AI to help the Uses Crowd-sourcing model Mobile and Ticketing
in developing countries, commercial property sector and helps small-scale solutions. It develops service
and places patient pre-screen tenants and producers with access to platforms and adapted
information in the hands predict the chances of finance, best practices and link electronic payment
of physicians. them defaulting. up with buyers during harvest. platforms adapted to African
realities.a
https://www.facebook.c https://vizibiliti- https://www.thriveagric.com/
om/telescrypts/ insight.co.za/ https://sudpay.com/fr
SEA – Other representative startups

PayMongo
iMortgage2u Grab
MoneyMatch
Philippines
Malaysia Singapore
Malaysia
Fintech
Fintech Transport
Fintech
Allows users to easily collect
payments through credit cards, bank Mortgage solution platform for business Ride-hailing platform offering
Enables cross-border international partners to pre-screen the max loan booking services for taxis operating
deposits, electronic wallets or cash.
payments and remittances. eligibility amounts before applying loan. throughout Southeast Asia.
https://paymongo.com/
https://transfer.moneymatch.co/ https://www.imortgage2u.com/landing/ https://www.grab.com/sg/

TomoChain Otomo
Omise
Payo
Vietnam Indonesia
Thailand
Philippines
Fintech Transport
Fintech
Fintech
Public blockchain promising faster Automobile rental and driver hire portal
Develops and operates a
Manages and simplifies cash and cheaper transactions designed that provides anything from a simple
solution that accepts both
on delivery (COD) transaction to support decentralized sedan, to luxury cars or even yachts and
online and offline payments.
for E-commerce platforms. applications. private jets.
https://www.omise.co/
https://payo.asia/ https://tomochain.com/ https://www.otomo.co/en/
SEA – Other representative startups

Ami Lazada
Expa Ai Neurosensum
Vietnam Singapore
Myanmar Indonesia
Industrial Automation Ecommerce
Finance Artificial Intelligence
Helps property owners and Online shopping and selling
Unified solution for sales, Combine implicit data with explicit
managers to connect with destination.
marketing and customer support. survey data of consumer to give deep
residents and digitize their
insights for user’s brand.
information. http://www.lazada.com/
https://www.expa.ai/
http://neurosensum.com/
https://aminion.com/en/

AirTrunk
aCommerce
Cohive
Kredivo Singapore
Thailand
Indonesia
Indonesia IT Services
Ecommerce
Communities
Financial Services Hyperscale and wholesale data
center platform for cloud, content Regional ecommerce enabler that
Provides individuals and businesses
Digital credit payment method and large enterprise customers provides end-to-end and ala carte
with coworking spaces, private offices
across Indonesian e-commerce across the Asia-Pacific region. ecommerce solutions for brands in
and event spaces.
merchant. Southeast Asia.
https://cohive.space/ https://www.airtrunk.com/
https://www.kredivo.com/ https://www.acommerce.asia/
India – Other representative startups
OlaCabs
Transport
Integrates city transportation for
customers and drivers onto a
mobile technology platform.
https://www.olacabs.com/
Instavans
Transport
On-demand platform that offers price
transparency, ease of access, and a better
end-to-end experience for both shippers and
truckers.
https://www.instavans.com/
CarDehko
Ecommerce
Vehicle-selling platform that gives
users complete details about vehicles
and connects them to automakers and
dealers.
https://www.cardekho.com/
Overcart
Ecommerce
India's first marketplace for over-stock,
unboxed, refurbished, and preowned
products.
http://admin.overcart.com/
Vedantu
E-Education
Offers a wide range of online classes
and test preparation live from India’s
best teachers.
https://www.vedantu.com/
Noos Technologies
Packaging & Security
Offers counterfeit-proof solutions for
brand protection and tracking.
https://www.noostechnologies.com/
RenewBuy
Finance
Provides an online Insurance Platform
to compare, choose and buy Motor
and Health Insurance Policy.
https://www.renewbuy.com/
Atlan
Information Technology
Data intelligence allows users to
manage their daily workflow.
https://atlan.com/
India – Other representative startups
DocTalk
Healthcare
Patient management platform
for doctors in India.
http://www.getdoctalk.com/
Acko
Insurance-tech
Digital insurance
company in India that
redefines insurance for
the consumers.
https://www.acko.com/
Practo Technologies
Smallcase
1mg Telehealth
Fintech
Healthcare Allows users to book appointments and
consultations with medical practioners while Simplified thematic investing
Online pharmacy network and doubling up as an online pharmacy and approach to the growing Indian
generic medicine engine. health insurance facilitator. middle class.
https://www.1mg.com/ https://www.practo.com/ https://www.smallcase.com/
ClearTax
WizCounsel
Ask Arvi Fintech
Compliance
Insurance-tech Helps individuals and businesses file
Helps users find Lawyers, taxes and also allows users to invest
Provides insurance to users via online CAs, Accountants & in mutual funds.
chatbox. Bookkeepers.
https://cleartax.in/
https://www.askarvi.com/ https://wizcounsel.com/
China – Other representative startups
Particle Fever
Sporting Goods
Specializes in developing and designing
sportswear.
http://www.pafev.com/
Leju Robotics
Consumer Electronics
Focuses on researching and
developing, marketing, and
manufacturing of robots.
http://www.lejurobot.com/
Souche
Automotive
Provides new and second-hand
car trading services.
https://www.souche.com/index
E-Quality
Automotive
Automotive industry
smart factory overall
digital solution provider.
http://www.eq2iqm.com/
Ruiyan Technology
Artificial Intelligence
Artificial intelligence video
identification service provider
http://www.ruiyanai.com/
Roobo
Artificial Intelligence
Hardware and AI company that
offers pre-orders of Domgy via
crowdfunding sites in China.
http://www.roobo.com/en/
Particle Fever
Artificial Intelligence
Data company aims to improve health
care using artificial intelligence and
biotech.
https://www.icarbonx.com/
Tujia
Tourism
Vacation rental booking
platform.
https://www.tujia.com/
China – Other representative startups
Untouch Technology
3D Technology
Develops and provides intelligent
vehicle cabin system, visual
interaction technologies, and
solutions.
http://www.untouch-tech.com/
Peilian.com
Music
online on-demand music tutoring
company that is offering quality
music education on a one-to-one
basis.
https://www.peilian.com/
Meicai
E-commerce
e-vendor for vegetables that
is helping farmers deal with
buyers directly.
http://www.meicai.cn/
Xiaohongshu
E-Commerce
Helps users find the best brands
and their products through each
other’s recommendations on the
social commerce platform.
https://www.xiaohongshu.com/
Liulishuo
E-Education
AI-driven educational technology
company that helps users to learn
English more efficiently and
communicate with the world.
https://www.liulishuo.com/
1d1d100.com
E-Education
Kindergarten information
service provider.
http://web.1d1d100.com/
Pico Interactive
Virtual Reality
VR company committed to
combining precision optics,
immersive video and sound
with fine industrial design.
https://www.souche.com/index
Deep Glint
Analytics
Computer vision startup providing
3D image analysis and pattern
recognition technologies for
mission-critical applications.
http://www.deepglint.com/
Representative countries by region

North America Asia Pacific Latin America Southeast Asia Sub-Saharan Africa Middle East

§ United States § China § Brazil § Indonesia § Nigeria § Iran

§ Canada § India § Mexico § Vietnam § South Africa § Israel
§ South Korea § Argentina § Philippines § Ethiopia § Saudi Arabia
§ Japan § Chile § Thailand § Kenya § Turkey
§ Australia § Colombia § Malaysia § Ghana § Syria
§ New Zealand § Peru § Singapore § Tanzania § Iraq
§ Venezuela § Myanmar § Zimbabwe § Lebanon
§ + other ~25 § Cambodia § Madagascar § Qatar
countries § Laos § Mozambique § Jordan
§ Brunei § Senegal § Yemen
§ Congo § Palestine
§ + other ~40 § + other ~7
countries countries
Frontier markets showing strongest performance
2017-22F IMF projected increase in PPP vs GDP growth; current prices
Percent % Size of bubble represents
GDP size in 2022
PPP 55
APAC
growth CHN MYN
INR
ASEAN
Percent, % 50
LATAM
45 BRU VN LAO MEA
EUROPE
40 CAM
PHP N.AM

35 IDR
PNM
THB MAL
30
KOR
HK CRC PER URU
RUS
Average of 25 TWN SPA PAR TUR BOL
selected IRE
BRA ARG
UK
countries, 20 SIN
NZ
25% AUS
JAP GER MEX
15 FRA
USA
CAN
NOR ITA UAE
10 SWZ SAF
SAU
5

0
0 1 2 3 4 5 6 7 9 10 11 12
World GDP GDP growth 2017-22F
growth, 5.4% Percent, %

SOURCE: IMF; Worldbank

 82
United Kingdom
Netherlands
Germany

79 79 79
Sweden
United States
Belgium
% of total population

77 77 76
France
Spain 73 72
Canada

SOURCE: Newzoo Global Mobile Market Report

Australia
69 68

South Korea
Kazakhstan
Poland
65 64 64

Russia
Top 50 Countries by smartphone penetration

Taiwan
60 58

Italy
Malaysia
China
58 55 55

Japan
54

Romania
Ukraine
48 47

Argentina
Saudi Arabia
Mexico
Philippines
46 46 45 44

Chile
44

Thailand
Brazil
Venezuela
41 41 40

Colombia
Turkey
Morocco
38 38 38

Vietnam
South Africa
36 35

Iran
Peru
32 31

Uzbekistan
Algeria
Egypt
India
29 28 28 27

Indonesia
Smartphone penetration still lagging from that of developed countries

Ghana
24 22

Myanmar
Kenya
21 20

Sudan
Bangladesh
16 16

Uganda
Pakistan
Emerging countries
Developed countries

14 13

Nigeria
11

Ethiopia
Internet user base / time spent in Asian and Latam markets to grow significantly

Time spent on Internet vs year-on-year change in Internet user base; selected countries
Hours; Percent
Average time 10.0
spent on APAC
9.5
Internet per ASEAN
day; 9.0 BRA PHP
THB LATAM
IDR
computer 8.5 MAL
MEX MEA
and mobile ARG
8.0 UAE SAF INR EUROPE
Hours NAM
7.5
SAR
7.0
TUR VN
Average of 6.5 US
SIN CHN
selected CND RUS ITA
6.0 HKG
countries, UK POL
6.7% 5.5 SPA
AUS
5.0 KOR FRA
4.5 GER
JAP
MYN
0.5 CAM
0.0
0 1 2 3 4 5 6 7 8 9 10 11 16 21 22 23 43 51 91

Global YoY change in Internet users;

average, Jan 2017 vs Jan 2016
10% Percent %
SOURCE: Internet Live Stat; Internet World Stat; We Are Social; Web searches
Emerging economies, particularly from Asia, are expected to drive growth across
Consumer industries
Projected consumption growth by sector; CAGR 2013-2050E
Percent %
Clothing & Housing & Recreation
Food Footwear Energy Furnishing Health Transport Comm. & Culture Education Restaurant

China 2.2% 4.6% 7.3% 5.8% 6.4% 5.3% 3.8% 7.8% 5.9% 7.4%
India 3.5% 4.8% 6.3% 5.0% 6.2% 7.3% 5.8% 7.8% 5.9% 7.3%
APAC Turkey 3.2% 4.5% 4.8% 4.6% 5.1% 4.7% 3.8% 5.1% 4.0% 5.2%
Russia 0.9% 3.3% 5.9% 4.5% 5.1% 4.0% 2.5% 6.4% 4.6% 6.0%
Pakistan 3.9% 4.1% 3.7% 3.6% 4.1% 6.1% 5.7% 6.0% 2.8% 4.9%
Philippines 4.7% 5.8% 8.2% 7.0% 7.1% 6.4% 5.7% 8.4% 7.7% 7.9%
Indonesia 2.5% 3.6% 5.9% 4.7% 4.8% 4.1% 3.5% 6.1% 5.4% 5.6%
ASEAN
Malaysia 4.0% 5.3% 5.6% 5.4% 5.9% 5.5% 4.6% 5.9% 4.8% 6.0%
Thailand 2.2% 3.3% 5.6% 4.4% 4.5% 3.8% 3.2% 5.8% 5.1% 5.3%
Peru 2.1% 4.5% 7.2% 5.7% 6.4% 5.2% 3.7% 7.7% 5.8% 7.3%
Mexico 2.4% 3.6% 4.0% 3.8% 4.2% 3.8% 2.9% 4.3% 3.2% 4.4%
LATAM Argentina 1.9% 3.1% 3.5% 3.2% 3.7% 3.3% 2.4% 3.7% 2.6% 3.9%
Brazil 2.7% 2.7% 3.1% 3.1% 2.6% 2.8% 3.2% 4.2% 2.1% 3.1%
Colombia 3.7% 3.8% 4.2% 4.2% 3.7% 3.9% 4.3% 5.3% 3.2% 4.2%
Egypt 4.4% 4.5% 4.9% 4.9% 4.3% 4.6% 5.0% 6.0% 3.9% 4.9%
MEA
Saudi Arabia 2.2% 3.5% 3.9% 3.6% 4.1% 3.7% 2.8% 4.1% 3.0% 4.3%
Poland 2.1% 3.3% 3.7% 3.4% 3.9% 3.5% 2.6% 3.9% 2.8% 4.1%
EUR
Eurozone (big 4) 1.7% 1.7% 1.7% 1.7% 1.7% 1.7% 1.7% 1.7% 1.7% 1.7%
N.AM US 1.7% 1.7% 1.7% 1.7% 1.7% 1.7% 1.7% 1.7% 1.7% 1.7%

SOURCE: HSBC analysis