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Accelerating Startups in Emerging Markets: Insights from 43 Programs

Deloitte, GALI
May 1, 2017

The second major report from GALI, written in collaboration with Deloitte, compares acceleration in emerging markets versus high-income countries. Examining data from more than 2,400 early stage ventures that applied to 43 programs, it finds more similarities between emerging market and high-income country entrepreneurs and accelerator programs than commonly believed. 

Despite the numerous difficulties of running a startup in emerging market countries, accelerated ventures are often able to grow at similar rates to their counterparts in the United States and Canada. The average effects of acceleration on equity and debt raised were nearly identical in high-income countries and emerging markets, and emerging market ventures were just as likely to report rapid growth.

The report then tests commonly held beliefs about what might be holding entrepreneurs back in emerging markets and finds that:

  • Emerging market entrepreneurs are as credentialed and committed as their high-income country peers.
  • Emerging market ventures experience capital deficits despite being more established.
  • Emerging market accelerator programs are as robust as those in high-income countries.

For accelerators, investors, and other supporters of entrepreneurs in emerging markets, the report indicates a few areas for action:

  • The imbalance in lower levels of investment for the more established emerging market ventures may be due to a mismatch between what investors and entrepreneurs are looking for. It may also indicate investors’ cultural bias.
  • Entrepreneurs are more likely to emphasize business skill development, while much of the framing of accelerators’ value is around fundraising. Particularly for very early stage ventures, accelerators should align with the goals of the entrepreneurs entering their programs, as investment may not always be a top priority.
  • In the year of the program, accelerated entrepreneurs raised investment capital at levels that better match their stage of revenue and employee growth. However, the potentially weaker network building in emerging markets programs may indicate the need for more emphasis on alumni support to continue this momentum post-program.
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