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8 Challenges For Startups in Emerging Markets

This article is written by Amira Ibrahim, a Contributor Author at Startup Istanbul.

Dave McClure is the founding partner of 500 Startups, a venture capital firm and startup incubator in Silicon Valley founded by PayPal and Google alumni, with over $150M under management. He has been an investor in hundreds of companies around the world such as Credit Karma, Twilio, MakerBot, Wildfire Interactive, Viki, Mashery, SendGrid, Mint.com, and SlideShare, among others.

1.There are more founders than investors in emerging markets: 

Investors are evil as they ask for a big share of your company but they do that because they are less investors than startups. This is not the case in Silicon Valley as they don’t accept this kind of behaviors because they have a lot of investors there. Dave asked investors to stop asking for business plans and revenue projections, good investors should ask for marketing plans not business plans. Good investors should ask for spending projections not revenue projections at least to test that the founders are not lying about their spending.

2. Entrepreneurs are always clueless and don’t know what they are doing:   

Most entrepreneurs need more mentorship. This is not a very bad thing as its normal to don’t know what to do, so you should ask for mentors. Ask for people who have experience in startups and entrepreneurship.

3. Entrepreneurs tend to build lots and lots of features: 

The measure of progress is not the features of your business, what is important is to build a financial model and to attract more customers.
New customers and returning customers are the best progress for your startup. You need to ask the questions:

  • What does it cost to acquire customer?  
  • What does it cost to build and deliver product?  
  • What does it cost to support that customer? 
  • When is the revenue coming in?
  • What is your financial model?
  • what are your payment plans from those customers?  
  • when to turn your startup and start making money?
  • how to grow your business?

4. There aren’t so many exits as most of them are small

5. Most of accelerators are not reliable

6. Employees don’t understand equity so the founders don’t give it to them: 

It’s important to create an equity culture for your employees.equity should be distributed widely among the team (not just founders and management)

7. Most startups try to go global and neglect their local market: 

You need to start somewhere. If your country population is as big as 50 million or more, you should start their first. If you can’t succeed in a country with 50 million citizens, you will probably not succeed in any place. It is very hard to jump to global markets without local markets first. You don’t have to come to Silicon Valley, you need to build a startup that can fit into any place but start in your own country first.

8. Most founders and investors don’t think that they are as good as Silicon Valley founders and investors: 

You need to know that Silicon Valley is not a physical place only, it’s a state of mind. Most startups in Silicon Valley came from places else Silicon Valley itself. The problem is in the lack of confidence not the lack of experience. Silicon Valley is composed of people like you.


14 May 2019

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