Steve Case’s Rise of the Rest bus tours have celebrated overlooked startup ecosystems in the U.S., including Indianapolis, New Orleans and Pittsburgh. Just as the vast majority of U.S. venture capital flows to a handful of cities and bypasses entrepreneurs who may be best positioned to solve fundamental challenges in local markets, so too does global VC funding.
U.S. firms have attracted 60% of all venture capital since 2012. Firms in China (15%), India (5%), UK (4%) and Germany (3%) round out the top five. Who are “the rest”? Jakarta, Dubai, Vienna, Istanbul and Kuala Lambur are among 50 “frontier startup markets” that have collectively attracted a mere 5% of global venture capital deals since 2012, according to a new report from CB Insights that’s worth a read.
Deal activity and total funding in these markets have grown each of last five years and now totals $32 billion across 5,749 deals. Why does this matter?
Venture-backed startups in such markets are “providing internet connectivity in Africa, delivery addresses via mobile phones in the Middle East, financial inclusion through alternative credit scoring in Mexico, and much more,” writes CB Insights’ William Altman. “Increased access to venture capital will continue to enable entrepreneurs to execute on impactful ideas that will ultimately transform the societies in which they grow for the better.”