How Strategic Investments Can Help Foster Economic Stability

What are some of the recent innovations that you believe are shaping markets and, more broadly, the global economy?

Technology and venture capital are going global, and this will continue to have a profound effect on the world’s economy in the years ahead. More specifically, in an era where many governments and political leaders are looking more inward, and globalization would appear to be on the retreat, my view is that entrepreneurs — and a small handful of the world’s smartest investors — are actually going in the opposite direction, building increasingly “borderless” global businesses.

Based on your experience with the emerging markets, how should investors account for the emerging markets in their investment strategies? What are the opportunities that investors should realize?

Most investors under-appreciate the size of the opportunity in emerging markets, particularly markets beyond China and India. Emerging economies like those in Latin America and Southeast Asia are characterized by rapid economic growth, favorable demographics, and, increasingly, technological innovation. Much of this technological innovation is still only accessible via private markets – like venture capital – but that is starting to change. Take Latin America as one example. A company like Mercado Libre — an original portfolio company of ours at Endeavor from over 20 years ago — was listed on the Nasdaq in 2007 and today is even included in the Nasdaq-100 Index with a market capitalization north of $100 billion.

The reality is that companies like Mercado Libre, Nubank and DLocal are just the beginning of a wave of new technology companies in Latin America that are reaching significant size and scale. To tap into this trend, investors should consider doing two things: First, they should pay attention to the emerging venture capital industry in markets like Brazil and Mexico, where new research published by Atlantico shows Latin American VC funds disproportionately rank among the top quartile of VC funds globally. Second, they should “watch this space” as more than a dozen Latin America-born technology businesses prepare to do New York IPOs in the next two to three years. These include global companies born in Latin America — like Wellhub and Hotmart— as well as Latin American “regional winners,” such as iFood, Ebanx and Creditas in Brazil, Kavak and Clip in Mexico, and Rappiacross the region.   

How do you think the emerging markets will evolve in the next decade?

Today, emerging markets represent 61% of the global population and 38% of global GDP, but only 8% of global private capital investment. That is going to change.

Technology advancements will create the conditions for global businesses to be built from everywhere, and particularly from places many investors don’t expect.

The world’s largest digital bank is from Brazil. The biggest Edtech company on the planet is from India. Emerging markets have given us a number of today’s global technology “brands” we now know in the United States – companies like Auth0 from Argentina or UI Path from Romania – and this trend is very likely to continue with the advent of AI.

Our venture capital fund — Endeavor Catalyst — has made four new AI-related investments in the past few months, and those companies are based in Morocco, Romania, Spain and Vietnam, just to give a few examples.

We are also one of the largest international investors in new technology businesses in the broader Middle East, focusing on markets like Egypt, Saudi Arabia and the UAE. In fact, I recently spent a week at gatherings of investors and technologists in Riyadh, Abu Dhabi and Dubai, and I can tell you candidly that the mood at these events is nothing short of inspiring. Folks are hopeful, positive, and future-oriented. It’s awesome to be a part of and leaves you with the distinct impression that the future belongs to emerging markets!