The landscape of venture capital has undergone a significant transformation, becoming increasingly global as the tech sector disperses power. Recent data from the National Science Foundation (NSF) reveals that more than 50% of venture capital deployed globally in 2022 was directed towards startups outside the United States, a stark shift from two decades ago when U.S. companies received nearly 80% of global venture capital.
Countries like China, India, Israel, and the U.K. have been at the forefront of this transition, with smaller ecosystems in Europe, Latin America, Southeast Asia, the Middle East, and Africa also playing a significant role.
Endeavor Global, an organization dedicated to supporting founders in building impactful companies worldwide, reports that about 26% of the world’s unicorns currently hail from these emerging markets. Endeavor Catalyst, the co-investment fund of Endeavor Global, has backed over 50 unicorns across 30 countries, including companies like Jobandtalent, Kavak, eFishery, Flutterwave, Tabby, and Peak Games.
While the surge of unicorns in these markets was fueled by investments mainly from the U.S. during the high-growth years of 2020/21, the global venture capital activity has since slowed down, resulting in fewer unicorns, a decrease in dealmaking pace, and a pullback of global investors from emerging ecosystems.
This shift in dynamics along with a reevaluation of valuations has created some unease among stakeholders in these ecosystems. A significant drop in unique participating investors in the African ecosystem in 2023 reflects a cautious approach from investors, according to a report by Partech.
In a recent interview with TechCrunch, Endeavor CEO Linda Rottenberg elaborated on the importance of local investors stepping up their engagement, emphasizing the need for patient and long-term capital infusion in emerging markets.
This interview has been edited for brevity and clarity.
Endeavor has made over 300 investments, predominantly outside the U.S., with a significant unicorn presence in its portfolio. How has the organization achieved this global reach?
Our approach centers on supporting entrepreneurs first. Even when investments do not yield expected outcomes, we witness the emergence of a new wave of founders who create impactful companies and ecosystems. Silicon Valley’s success lies in this cycle of talent growth and reinvestment.
We maintain unwavering support for entrepreneurs, regardless of economic fluctuations or currency devaluations. With a vast network of 600 professionals worldwide, we blend local insights, global perspectives, and a deep understanding of patterns to nurture sustainable growth. This strategy has resulted in 58 unicorns and 24 successful exits within our portfolio.
Endeavor is preparing to launch its fifth fund, maintaining a commitment to invest $2-3 million in each startup. Our extensive network ensures participation in 96% of investment opportunities within our ecosystem, as entrepreneurs, investors, and ecosystem stakeholders trust our long-term vision.
Could you elaborate on the co-investment process and its role in engaging with the global entrepreneurial community?
Upon selection as an Endeavor entrepreneur, individuals gain access to a supportive network comprising venture capitalists, successful entrepreneurs, and industry experts. We facilitate international expansion, offer strategic guidance, and assist in overcoming operational challenges.
Endeavor Catalyst, our co-investment arm, steps in when startups secure significant funding rounds of $5 million or more, contributing up to 10% of the investment, capped at $2 million. The challenge lies in expanding the pool of qualified institutional investors for Series A, B, and C rounds in regions like Africa, where a robust seed-stage investor base is crucial to fuel growth and innovation.
