For tech startups in emerging markets, does success mean an HQ address in the U.S.?
Ndubuisi Ekekwe, founder of the African Institute of Technology, recently wrote of the difficulty attracting investor funds in Nigeria. With low value placed on Nigerian tech stocks, along with limited acquisition opportunities, his potential investors had few exit strategy options. The meeting ended with smiles and well-wishes but no dollars.
Entrepreneurs in other emerging markets face similar challenges. Small investor pools, no stock options, and shallow pockets leave them stuck in the planning phase.
What recourse is there for the would-be digerati?
Ekekwe suggests incorporating in the U.S., and then operating in your own country. This widens the playing field, opening your business to more potential buyers or partnerships.
Though Ekekwe makes a solid case for incorporating overseas, local investment would offer the greatest economic benefit for the community. His model thus raises several questions: Is it efficient to run a fledgling tech startup on two continents? How does diverting initial investments from local economies affect growth? What can we do to lure investors to emerging markets?
There has to be another way, right?
Crowdfunding is a nifty innovation that connects investors with tech startups across the globe. Companies such as Kickstarter, Seedups, and Crowdcube use online accounts to raise funds for tech developers, wherever they live. There’s even a site solely focused on technology innovations, FundaGeek.
Still, it appears that many new companies are choosing a U.S. address in hopes of gaining the capital they need to then work abroad.
Do you think startups from emerging markets need to leave the nest to find funding?