1. There are challenges for emerging market startup ecosystems including a lack of experienced investors, entrepreneurs, customers, and viable exit opportunities. However, these ecosystems have grown significantly with increased internet access, smartphone adoption, and the ability for local startups to access global markets. 2. Accelerators and incubators play an important role in supporting emerging markets but many struggle due to lack of funding, expertise, and focus on short-term gains rather than long-term growth. For accelerators to succeed, they need sustainable models with corporate, academic or government partners. 3. Both founders and investors in emerging markets often lack confidence compared to Silicon Valley. However, the biggest startups started elsewhere and moved to Silicon Valley

1. 1 0 C H A L L E N G E S F O R
E M E R G I N G M A R K E T
S TA RT U P E C O S Y S T E M S
@ D A V E M C C L U R E @ 5 0 0 S TA R T U P S 5 0 0 . C O

2. Dave McClure
Founding Partner & Troublemaker, 500 Startups
00’s & 10’s:
• VC: Founders Fund, Facebook fbFund, 500 Startups
• Angel: Mashery, Mint.com, SlideShare, Twilio
• Marketing: PayPal, Simply Hired, Mint.com, O’Reilly
80’s & 90’s:
• Entrepreneur: Aslan Computing (acq’d by Servinet/Panurgy)
• Developer: Windows / SQL DB consultant (Intel, MSFT)
• Engineer: Johns Hopkins‘88, BS Eng / Applied Math

3. • What is 500?
– $200M under management
– 100+ people / 30 investing partners / 18 Countries
– 2500+ Founders / 250+ Mentors
• 1300+ Portfolio Co’s / 50+ Countries
– Wildfire (acq GOOG, $350M)
– MakerBot (acq SSYS, $400M)
– Viki (acq Rakuten, $200M)
– Simple (acq BBVA, $117M)
– Credit Karma (~$3.5B)
– GrabTaxi ($1B+)
– Twilio ($1B+)
– Ipsy
– SendGrid
– VivaReal
– Udemy
– Zozi
– The RealReal
– Virool
– BarkBox
– Tradesy
500 Startups
Global Seed Fund & Startup Accelerator

4. 1 ) T H E R E A R E N ’ T M A N Y I N V E S T O R S .
M O S T O F T H E M A R E E V I L O R S T U P I D .
• low valuations and crappy terms: “51% for
$100K”
• supply vs. demand problem; fewer investors
than startups, lack of competition = no
urgency,
• NO to business plans / revenue projections
• YES to mktg plans, expense projections
• wins & exits => FOMO, competition increases

5. 2 ) T H E R E A R E N ’ T M A N Y E N T R E P R E N E U R S .
M O S T O F T H E M A R E C L U E L E S S .
• more mentorship,
more founder
experience
• product management,
design & UX, growth
hacking & marketing
• changes after 1st gen
founders exit -> 2nd
gen startups

6. 3 ) T H E R E A R E N ’ T M A N Y C U S T O M E R S .
M O S T O F T H E M D O N ’ T PAY.
• no longer true; 3B+ smart
phones; massive mobile market
• increasing internet availability +
rising consumer GDP
• improved payment & logistics
• local/regional markets are BIG
• access to global markets easier

7. 4 ) S TA RT U P S D O N ’ T H AV E T R A C T I O N ,
A N D N O I D E A H O W T O G E T I T.
• Growth Hackers -> DISTRO
• STOP building product features;
START growing customers (via online
platforms)
• unit economics: CAC vs. CLV, timing
of revenue & expense, conversion
metrics
• find profitable, high-volume customer
acquisition channels that convert to
KPIs, learn how to grow them

8. 5 ) T H E R E A R E N ’ T M A N Y E X I T S .
M O S T O F T H E M A R E S M A L L .
• where are the unicorns?
• acquirers crossing borders to find
talent (US, EU, China, Japan, etc)
• non-tech companies acquiring
startups for innovation
• global companies looking for
emerging market footprint
• local -> regional -> global growth

9. 6 ) I N V E S T I N G I N R E A L E S TAT E I S B E T T E R
B E T T H A N I N V E S T I N G I N S TA RT U P S
• startups aren’t real estate!
• real estate doesn’t go up
forever
• most startups fail completely
• but a few startups grow up to
be unicorns
• use real estate to lower risk,
drive liquidity

10. 7 ) M O S T A C C E L E R AT O R S S U C K .
A N D T H E Y ’ R E G O I N G T O D I E . S O O N .
• Accelerator economics are tough.
• Most startups fail. Most wins are small.
Big wins take time (5-10 years).
• Most accelerators are under-staffed,
under-capitalized, short time horizons.
• Accelerators should verticalize, focus on
industry-specific expertise, get
corporate / academic / govt sponsors
• Create operational capital via investment;
use real estate to hedge risk, be creative

11. 8 ) E M P L O Y E E S D O N ’ T U N D E R S TA N D E Q U I T Y.
F O U N D E R S D O N ’ T G I V E I T T O T H E M .
• equity should be distributed widely
among team (not just founders and
management)
• when exits happen, a thousand
angels are born
• US: PayPal, Google, Facebook
• CHINA: Alibaba, TenCent, Baidu
• MENA: Souq + ?
• create equity culture, angel investor
culture

12. 9 ) M O S T S TA RT U P S N E V E R G O G L O B A L .
M O S T T H AT T RY W I L L FA I L .
• startups have to start SOMEwhere
• some local & regional markets are BIG
India, Turkey, Brazil, Indonesia, MENA
• 50-100M customers good place to start
• hard to jump to global markets without
local market MVP, product/market fit
• you don’t need to go to Silicon Valley,
get Silicon Valley to come to YOU.

13. 1 0 ) M O S T F O U N D E R S & I N V E S T O R S D O N ’ T
T H I N K T H E Y ’ R E A S G O O D A S S I L I C O N VA L L E Y.
• Silicon Valley isn’t a place, it’s a
State of Mind.
• Most startups in Silicon Valley
came from somewhere else
(PayPal, WhatsApp, FreshBooks)
• The biggest problem isn’t lack of
experience, it’s lack of confidence
(for both investors & founders)
• You’re Good enough. You’re
Smart enough. Get Going!