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The wide world of startups: Which markets are VCs missing out on?

In the ever-evolving landscape of business expansion, venture capitalists (VCs) are continuously seeking new investment opportunities. While established markets like the US and Europe remain attractive, astute investors are increasingly turning their focus towards the up-and-coming markets within Africa, Asia, and South America – which boast a wide variety of startups looking for investors.

So, where should VCs be thinking about globally when it comes to potential investments? Which locations offer the greatest potential for returns, and where should VCs be targeting their funds?

In this article, we will take a more granular view – looking at three countries within each region and noting the key cities with the best startup ecosystems, all with a focus on the investment opportunities that VCs might be missing out on.

Africa: An untapped frontier for VCs

Africa is an enormous and highly diverse continent, brimming with untapped investment opportunities. In this section, we’ll focus on three key countries – Nigeria, Kenya, and Mauritius – and assess what they offer.

  • Nigeria: With a population surpassing 200 million, making it the most populous country in Africa, Nigeria presents a substantial consumer market. Its growing tech ecosystem, often referred to as Silicon Lagoon, is drawing the attention of VCs from around the world. According to the Global Startup Ecosystem Index 2023, the country is recognised as ‘one of Western Africa’s best countries for setting up a startup’ with the city of Lagos ranking 82nd globally. In Q1 2022, it was the most funded geography in the continent, with a quarter-on-quarter growth rate of 84% compared to the same time the previous year. While this may not be news to experienced VCs, and some may have concerns over Nigeria’s challenges around infrastructure and power supply, its status as a regional hub makes it an attractive destination for those considering expansion into West Africa.
  • Kenya: A frontrunner in fintech innovation, Kenya boasts widespread adoption of mobile payment platforms like M-Pesa. While it hasn’t yet cracked the Top 100 in global rankings, the city of Nairobi is positioned 8th within the Middle East & North Africa (MENA) region and has improved its ranking by 25 places in the past year, signalling an upward trajectory. In Q1 of 2022, the country rose three ranks (compared to same quarter in the previous year) to become the second-most funded geography in Africa. Political stability and a diversified economy create a favourable business environment, but navigating Kenya’s regulatory landscape can be a challenge.
  • Mauritius: A surprising entry on our list, Mauritius’s city of Port Louis hosts incubators, accelerators, and a well-developed infrastructure supporting a close-knit community of entrepreneurs. Mauritius, in just two years, has become the second-highest-ranked African country in the Index (ranking fifth in MENA). This highlights an essential point for VCs – it’s not just about current rankings but also whether a country is on an upward trajectory. The introduction of the Variable Capital Companies Act in 2022 signifies a milestone for the country, reinforcing its position as a respected global financial hub and helping reshape the structure of its investment fund sector.

While Nigeria’s massive population and regional significance makes it our top choice from this list, those looking for unique opportunities should seriously consider Mauritius. The time to look into this emerging market is now.

Asia: Finding a niche in well-established markets

Much of Asia boasts highly-developed startup ecosystems. In this section, we’ll hone in on some of the powerhouses: India, Singapore, and China.

  • India: With a population exceeding 1.3 billion, India represents an expansive consumer market with diverse opportunities for various products and services. Several Indian cities rank prominently in the Index – Bangalore within the global top ten, New Delhi just outside the top 10 at 13th, and Mumbai at 25th. India is a hub of tech talent, making it an appealing destination for tech startups, with many new and established companies in this fiercely competitive market. However, investors need to navigate often confusing bureaucratic procedures. In parallel with the worldwide economic downturn, funding activity in India has experienced a decline, with the total deal value decreasing from $38.5bn in 2021 to U25.7bn in 2022. However, India’s ability to withstand global economic challenges continues to give the country a favourable economic outlook.
  • Singapore: Known for its business-friendly policies and ease of doing business, Singapore offers a welcoming environment for startups, and will have an air of familiarity for those already based in Dubai. Singapore ranks 20th globally, surpassing many Western cities, and serves as a gateway to diverse Southeast Asian markets. The city is home to some of Asia’s most successful startups, making it an enticing prospect for VCs. Singapore continued to assert its dominance as the primary hub for venture capital investment in Southeast Asia throughout 2022. Last year, the city-state represented 56% of the total deal volume within the six largest economies in the region.
  • China: As the world’s most populous nation, China provides an unparalleled consumer base. It’s a global leader in technology and innovation, making it a highly attractive location for VCs. On a city level, Guangzhou ranks 45th, and Chengdu just breaks into the top 100 at 97th. However, navigating China’s regulatory landscape can pose challenges. Nevertheless, foreign VCs continue to look to China – even if in recent years investment from the US in China has fallen slightly. During H1 of 2023, China (and the US) continued to be the two top choices for VC firms – together these two nations represented 70% of the volume and value of substantial VC deals.

While the immense markets of India and China are undeniably appealing, don’t overlook the smaller yet dynamic Singapore. With its ease of doing business it provides an accessible entry point for VCs exploring Asian markets. And it boasts a thriving startup ecosystem with both new startups and more established companies.

South America: A promising landscape for VCs

While South America is a ‘portion’ of a continent, as a region it has emerged as a vibrant hub for innovation and entrepreneurship. Let’s take a closer look at Brazil, Argentina, and Chile to explore the investment potential they offer for VCs.

  • Brazil: Sao Paulo, ranking first in Brazil, first in South America, and 17th globally, stands out as an attractive destination for investment. Brazil’s substantial middle-class population creates a robust demand for goods and services, and its startup ecosystem is flourishing with support from incubators and accelerators. Despite economic turbulence and currency fluctuations, startups in Brazil benefit from being part of BRIC, a group of countries projected to become dominant economic powerhouses by 2050. Brazil witnessed a remarkable surge in the values of venture capital exits (growing by a factor of four from 2016 to 2019), however this year there have been challenges due to the global interest hike and layoffs at late stage startups.
  • Argentina: Buenos Aires, globally ranked 75th, hosts a highly educated workforce with strong technical skills. In early 2022 there were 42 unicorns in Latin America – with eight of those in Argentina. Last year, Argentina boasted 12 deals worth over $250m. Argentina faces economic challenges, including inflation and currency devaluation, resulting in fluctuating rankings. Nonetheless, the country holds a place within the global Top 50, although investors should be prepared for a complex and evolving regulatory environment.
  • Chile: Known for its economic stability and business-friendly policies, Chile’s capital, Santiago, ranks 67th globally, with the country itself positioned within the Top 40. Chile is building a robust tech and innovation ecosystem, continuously attracting startups. While its domestic market is smaller compared to its regional counterparts – and geographical isolation can pose logistical challenges – within South America Chile is second only to Brazil in terms of potential. During 2021, Chile registered a remarkable increase compared to the previous year, with a total investment of $2,915m including 104 deals and the emergence of two unicorns.

Recently South America (like much of the world) has seen a slow-down, but there is still much to be optimistic about. Brazil, the top-ranked country in South America, garners global confidence in its economic future – as a destination for investment opportunities it offers major cities, strong ties to North America, and a substantial local market.


While we’ve provided recommendations, it’s essential to conduct thorough research and delve into the specifics of a country to determine its suitability. Factors to consider include the economy, ease of doing business, language barriers, and the regulatory landscape. What remains undeniable is that when we venture beyond the familiar territories of the US and Europe, there is a wealth of opportunities for VCs interested in investing in cutting-edge startups.

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