The anti-playbook of scaling outside of Silicon Valley

Scaling in emerging markets isn’t a harder version of the Silicon Valley playbook, it’s a different game entirely. If you’re looking for a familiar story, you’ll miss the fact that this calls for a whole other playbook.

Silicon Valley success stories tend to have the same happy endings—a hypergrowth phase, massive funding rounds, and a splashy IPO. But focusing too intently on one possible outcome can blind you to the opportunities, and the finish line can be a bit further down an exciting road if you have the ability to keep going.

Endeavor Catalyst, our rules-based, co-investment fund, holds an annual investor meeting dedicated to fund performance updates and keynotes from portfolio entrepreneurs and special guests. Held in London this year, it also offered a rebuke to those typical startup narratives. 

Three Endeavor Entrepreneurs shared insights from their strategies and successes in Latin America, South Africa, and the UAE. Along the way, they challenged three massive entrepreneurial myths.

The market might not be ready. You should be.

When Sergio Furio founded Creditas, the leading fintech platform in Latin America, “the ecosystem was not there,” he remembered. “The market was not ready. Smartphone penetration was at 5% and the middle class wasn’t online. But we could see a tremendous opportunity in disrupting existing markets, [especially because] the incumbents were not really moving.”

Similarly, when Michael Lahyani first launched Al Bab World in 2005, the real estate market in the UAE was still almost entirely offline. Property listings were printed in classifieds, posted as ‘For Sale’ or ‘To Rent’ signs on buildings, or passed by word of mouth. Internet penetration across the region hovered below 40%. The first iteration of his company was a print publication, an effort to bring some order and transparency to the chaos.

“We spent a good amount of time, two years, building the platform,” Michael said. “I’m not talking about building the tech – I mean bringing content online, bringing real estate agents from the Middle East up to speed to the digital world and how to use the platform. The real acceleration happened in 2009, right after the financial crisis. When that happened, real estate suddenly didn’t want to be locked into agreements with print publications that were inflexible with their prices. By the end of 2011, Property Finder was leading in that market.”

This means building a sustainable, careful business with a view to the long run. Asked what his advice to his younger self would be, Sergio said, “It’s going to take you a long time, so get ready from a mindset perspective.”

$50M or bust? Not anymore

Liquidity tends to be something you chase when you’re running a stressful operation with cash flow challenges, like all early ventures, said Michael Lahyani, referring to the ability to sell some or all of your business, usually through an acquisition or a public listing. 

“When you run and operate a business that is doing great things for the community, is successful, is profitable, is entering a territory where it’s actually distributing dividends, you don’t think about an exit in the same way as if you’re burning cash and you’re out of breath and the exit is the only thing that is going to free you. 

Michael has found repeated moments to change up the liquidity and exit narrative and there have been many key milestones in the Property Finder journey. In 2009, after the financial crisis, Property Finder’s first investor REA Group changed their CEO and the new expectations weren’t aligned with Michael’s vision for the company. Instead, he bought back REA’s shares, regaining full strategic control and using that power to broker Gulf-wide expansion.

A year later, Property Finder was at last breaking even and managing the ebb and flow of investors continued to be crucial to Michael’s journey, which offers a non-linear vision of startup success. In the last few years alone, Property Finder has bought back shares from BECO Capital, offering a triumphant exit for one of their earliest investors and, more recently, it announced a $525M strategic investment led by Permira, with Blackstone Growth also investing in the transaction, again providing partial liquidity to General Atlantic.

Similarly, Tjaart van der Walt and his co-founder Coen Jonker’s path to ownership of the company they founded is more of a spiral than a straight line. In 2012, Tjaart and Coen created a business with a clear vision to build a multi-country digital bank for emerging markets. Due to shallow capital markets in South Africa, they started as a “Banking-as-a-Service” provider. In 2015, they sold 100% of Tyme to the Commonwealth Bank of Australia (CBA).

Their new Australian owners kept the core team and platform, but in 2018, CBA began to retreat from international markets; Coen and Tjaart spotted an opportunity. With investment from South African billionaire Patrice Motsepe’s African Rainbow Capital, they bought back Tyme, freed the product roadmap, and relaunched as South Africa’s first digital-only bank. 

Since then, it has also launched a bank in the Philippines, raised a $250M Series D led by Nubank, reached over 18 million customers, and became the first digital bank to achieve profitability in Africa.

“Local investors just didn’t understand our aspirations,” Tjaart said. “They thought we were completely crazy. But we knew that it was important for us to get global investors if we really wanted to fulfil our dream, vision, and purpose of getting into multiple countries and servicing a large number of people, also beyond South Africa.”

A specific monetary goal is fine to start a company, but many entrepreneurs from Elsewhere markets have found that it shifts along the way. 

“When I founded the business in 2012, I had the very bizarre mindset that I wanted to make $15M,” said Sergio Furio. “Then you start building a company and 10 years later, you ask, ‘What the hell was I thinking?’ It’s not about that. It’s about building companies that can scale, it’s about changing society. At a certain point, you don’t really care how much money you’re going to make – you just want to learn every single day.”

Look up – build the ground around you.

Entrepreneurs from Elsewhere resist the urge to keep their heads down and “just build,” because they understand that they’re not just shaping one company. They’re shaping the economics, innovation, and community around them.

“I think the most damaging thing for an ecosystem is the lack of references,” said Sergio. The Creditas Mafia is now well-known amongst Endeavor’s community, where people that Sergio has trained or developed are starting new companies for themselves. 

One of those next-generation companies is Barte, founded by former Creditas executive Raphael Dyxklay and Caetano Lacerda and selected by Endeavor at the Dubai ISP.

For Tjaart, setting up for success the second generation of leaders is crucial not for his own personal legacy, but for sustainability. “It’s about making sure that people can really prosper and grow. I get a lot of joy just seeing how our second generation of leaders have come through.”

With that generation, there’ll be new deviations from the standard entrepreneurial story, new detours from the well-trodden startup path of Silicon Valley. There’s no single lesson to be drawn from any of these stories, and there will be more complexities and nuances further down the line. But that’s the point.

Silicon Valley offers us one model. Embracing Elsewhere markets means we have access to a multiplicity of models. That means we’re moving out of known territory. It also means there are a thousand new ways to succeed.