The Ultimate Destination for Venture Capital

The Search for Yields & Matching Investment Horizons with Economic Growth Cycles.

Abhishek Kothari
7 min readApr 28, 2017

Story in Brief

Frontier markets represent countries growing at a blistering speed as well as countries with the most demand for disruptive but life enhancing startups. For VC’s building a global, diversified portfolio on a risk -adjusted basis, there is an urgent need to expand the scope of investments to include startups/entrepreneurs in Frontier markets. Today, soon to be developed economies such as China and India have many success stories but frontier countries could be the next dragons and tigers. Its time to ride this tsunami of growth. When it is a question of first among equal investments, entrepreneurs who put people before profits should always have the upper hand. Character trumps all other criteria.


One of the corporations I have worked for and have admired all my working life is Unilever – the Anglo Dutch conglomerate headquartered in Rotterdam and London. With revenues of €53 billion, it is an umbrella corporation that houses world famous brands in Foods & Beverages (Knorr, Lipton, Brooke Bond) and Home & Personal Care (Lux, Axe,Dove, Rexona, Sunsilk) categories. It was founded in 1930 with the merger of Dutch margarine producer Margarine Unie and British soap maker Lever Brothers, operates worldwide, employs 169,000 employees and is listed on the Euronext, LSE and the NYSE.

The list of achievements and the scale at which Unilever touches the lives of millions of consumers worldwide (including mine) is mind boggling.

My admiration for Unilever, though stems from my experiences as an internal auditor for the company. As a 21 year old young graduate fresh out of college, I was assigned to audit the entire supply chain of Unilever from third party suppliers to retailers and stockists. What struck me the most was:

  • The history of Lever brothers and the iconic Sunlight soap that helped Britain during a disease epidemic.
  • The scale, complexity and players involved in the supply chain and the intertwined nature of these relationships. Decisions cannot be taken without understanding the upstream and downstream implications within the supply chain.
  • The depth and span of the supply chain had reached the most remotest corners in India. Some of the places I visited, it felt like time has stood still for decades. Unilever’s supply chain had reached where some government initiatives hadn’t. From Bihar to Assam, Bangalore to Badi, my travels were nothing short of enlightening.
  • The process, structure and discipline enforced on a chaotic supply chain to bring standardization and to streamline management.
  • The quality of people employed and the entrepreneurs the company created in its wake as it grew rapidly within the country.
  • The introduction of hygiene,food and awareness in the smallest of villages.

More recently, Paul Polman, CEO of Unilever rekindled my love of the company when he said:

“I don’t think our fiduciary duty is to put shareholders first. I say the opposite. What we firmly believe is that if we focus our company on improving the lives of the world’s citizens and come up with genuine sustainable solutions, we are more in synch with consumers and society and ultimately this will result in good shareholder returns”

The intent of this lengthy backdrop is to provide the strongest argument in favor of what I consider is the ultimate destination for Venture Capital – Frontier Markets.

The social welfare argument posits putting purpose before profits. If the purpose is emancipation of people in these Frontier Markets, profits will follow.

I am in no way losing sight of cash flow, profits, return on investment. Nor am I advocating setting up of charities. I am advocating a different vision. A vision of enabling true growth and progress in countries that need them the most.

The other argument is that VC’s long term investment time frame may coincide with the economic development of these countries. In other words, it makes financial sense to invest at the beginning of the boom in these economies and not at their peak when bubbles could form and valuations may sky rocket.

Also, i am not recommending a complete portfolio of startups from frontier markets but rather a diversified portfolio that has frontier market startups in the mix.

Introduction to Frontier Markets

So, what is a Frontier market?

A frontier market is a type of developing country which is more developed than the least developing countries, but too small to be generally considered an emerging market. The term is an economic term which was coined by International Finance Corporation’s Farida Khambata in 1992. The term is commonly used[1] to describe the equity markets of the smaller and less accessible, but still “investable”, countries of the developing world. The frontier, or pre-emerging equity markets are typically pursued by investors seeking high, long-run return potential as well as low correlations with other markets.[2] Some frontier market countries were emerging markets in the past, but have regressed to frontier status (source:Wikipedia)

The MSCI Frontier Markets Index includes frontier markets across the world:

Economic Indicators

Obviously, overall economic growth is a very big reason to start looking at good investments within these economies:

Real GDP growth is led by Ivory Coast (9.16%), Senegal (6.49%) & Mali (5.96%). Bangladesh, Oman and Togo also show strong growth prospects.

Other indicators such as mobile phone usage also indicate potential for growth:

Political Risk

Its not all rosy as some of these nations rank high on Political Risk. However, VC’s can select countries with relatively lower political risk and high concentration of startups or entrepreneurial activity.

Early Success Stories

My first visits to Africa was East Africa and Kenya in particular. I was mesmerized by the Masai Mara national reserve and the beaches in Mombasa. But, what struck me more was that an emerging economy was being forged and on some indicators it was leap frogging the west.

A prime example of a great growth story in Frontier Markets is m-Pesa ( This is a story about a software designed by a student from Moi University in Kenya. This software allowed people to send and receive payments and withdraw money using their cell phones. In April 2007, Safaricom (owned by Vodafone and the Kenyan government) bought the rights to this software and launched M-Pesa — a money transfer service. In 2015, over 17m Kenyans used M-Pesa, equivalent to more than two-thirds of the adult population; around 25% of the country’s gross national product flows through it (source: theEconomist).

Another notable example of success in Kenya is Ushahidi (which translates to ‘Testimony’ in Swahili)is a non-profit platform for crowd sourcing information from the bottom up. It allows the common people to communicate as a group to the government. (

It is simply amazing to witness startups in places like Sweden as well as Kenya. A case of modernization in one and of leapfrogging in another.


There is a strong human development argument for both entrepreneurs and VC’s in frontier markets. Its a question of finders fortune very similar to prospecting for oil. There has to be a triangulation of potential opportunities using data points such as economic indicators, political risk, market size, regulatory climate, extent of liberalization, conflicts etc. These data points alone are not sufficient. Nothing compares to personal travel say for instance, using a tuk-tuk in Vietnam. Witnessing infrastructure development and growth in person helps validate the story told by numbers.

Any startup in the area of financial inclusion, digital identity management, payment services, access to education, health and hygiene could be a strong growth story. These markets could be risky but the pay-off could be tremendous. There could be a potential Unilever or at least a Unicorn out there that can revolutionize life as we know it. Humble beginnings are often overlooked in light of established businesses but the ‘Venture’ in Venture Capital is symbolic of a road not taken.

At the end, the question should be: which of these entrepreneurs puts clients first?

If you found this story insightful, please recommend it to others by clicking the green heart below! If you have comments, I would love to hear from you. You can also reach me on Twitter: @akothari_mba



Abhishek Kothari

Futurist@The Intersection of Finance, Tech & Humanity. Stories of a Global Language: “Money”. Contributor @ Startup Grind, HackerNoon, HBR