Introduction – What is an emerging market?
Founders often prioritize building in developing markets when creating a new business. Drawing on the rich experience of Abhishek Aryaman, a product manager who specializes in building products within operations-oriented marketplaces like DoorDash and Lyft, this article delves into leveraging the untapped potential of emerging markets. Abhishek has built products used by millions and he understands the dynamics of working with high-growth, underpenetrated markets. His insights offer a roadmap for capitalizing on the tremendous growth potential that comes from engaging with these vibrant economies.
In the global landscape, emerging markets stand out as the new frontier for tech founders, presenting a fresh alternative to the saturated markets of developed economies. Characterized by rapid economic growth and an expanding consumer base, these markets offer fertile ground for innovation and scaling. When you encounter markets with significantly high GDP growth rates of about 4%+ and purchasing power concentrated within ‘lower-middle’ to ‘upper-middle’ income levels, you’re looking at the essence of an emerging market.
The combination of high growth rates, high technological adoption rates, and growing consumer bases make these markets a perfect breeding ground for bright founders to innovate and solve for the growing population. These markets also disproportionately reward founders offering faster growth rates and high TAMs.
Unlocking New Territories: A Demographic and Economic Goldmine
If you are a founder thinking of emerging markets as a potential option, there is tremendous upside to grow your company.
According to the World Bank in 2024, Emerging markets account for 80% of the world’s population. This demographic vitality, combined with an economic environment projected by the IMF to grow at 4% in 2023—surpassing the growth rates of more developed economies—signals a burgeoning arena for tech startups. This growth translates into enhanced purchasing power and an escalating adoption rate .
2024 creates ripe opportunities as the demographic variants combine with the digital revolution spanning regions like Sub-Saharan Africa, South Asia, and Southeast Asia.
The GSMA reports a surge in mobile internet usage, propelled by increasing internet accessibility and a digitally literate young population.Despite the rapid pace of technological adoption, many of these consumer needs remain unaddressed, painting a vast canvas for tech founders to introduce innovative and accessible solutions.
Navigating the Waves: Learning from the Uber-Careem Saga
The entry into emerging markets, while laden with promise, comes with its set of challenges,
Global estimates suggest that around 90%+ of startups fail worldwide within the first 5 years of their operations in emerging markets due to not understanding their market and their users, lack of capital and regulatory reasons.
If you could take one thing away from this article, it is to understand the users that you solve from not just behaviorally but also emphatically. It is key to understand what the user needs and wants – It gives local players in emerging markets a disproportionate advantage over other bigger players monopolizing these markets.
As exemplified by the narratives of Uber and Careem. Uber’s initial hurdles contrasted sharply with Careem’s flourishing success, underlining the essence of local insight, flexibility, and endurance. Careem’s journey from a local startup to a dominant market player elucidates that the turbulent waters of emerging markets are navigable with astute strategies and a deep understanding of the local milieu.
Charting a Course for Impact: Beyond Economic Gains
Building for emerging markets is not just profitable but also highly impactful given the tangible socio-economic impact. For tech founders willing to delve into the complexities of these markets, the rewards encompass both commercial success and the opportunity to contribute significantly to the regions’ development.
In Conclusion
As tech entrepreneurs set their sights on emerging markets, they embrace the role of navigators steering towards unexplored territories brimming with promise. This venture, while fraught with challenges, holds the key to unlocking unprecedented opportunities for growth, innovation, and lasting impact.
