Venture Capital Shifts Focus to Emerging Markets
Gone are the days when venture capital was solely associated with Silicon Valley. The landscape is evolving, with a new spotlight on emerging markets.
Despite a challenging global VC market performance in 2023, which saw a decline in investment levels, there are still plenty of opportunities beyond the traditional investment hotspots. Let’s explore how these changes are shaping the venture capital scene in emerging markets with expert Fiorenzo Manganiello.
Fiorenzo Manganiello is a seasoned entrepreneur with a wealth of experience in the venture capital industry. As the Managing Partner of LIAN Group, a firm specializing in technology-driven disruptions, he leads investments in companies that are reshaping traditional industries.
His accolades, including being named Blockchain Expert Switzerland for 2018, highlight his dedication to innovation and entrepreneurship. Fluent in six languages, Manganiello’s insights have been featured in top media outlets such as CNBC, CNN, and Forbes, where he is recognized as a thought leader in venture capital and technology.
The Resilience of Emerging Markets in the Face of Global Challenges
Fiorenzo explained, “Despite a 35% year-over-year decrease in VC investment levels compared to 2022, emerging markets are proving resilient. In 2023, VC-backed startups globally raised just over $140 billion, with $31.7 billion raised in Q4 2023.”
While VC fund formation dropped by 62% in 2023, an uptick in Q4 suggests a potential rebound, especially in regions with favorable investment climates, according to Fiorenzo.
Trends in Deal-Making in Emerging Markets
Mega-round financing saw a significant decline globally, with only 50 mega deals recorded in Q4 and a total of 228 for 2023, the lowest since 2017. However, in emerging markets, Series A investments saw a 9% increase quarter-over-quarter, indicating growing confidence in early-stage opportunities. Additionally, while most fund classes experienced a downturn globally, emerging markets show promise in sectors like energy, information technology, and healthcare.
Regional Dynamics and Investment Opportunities
Traditional VC hubs like the San Francisco Bay Area remained at the forefront in Q4, followed by Boston and New York. Yet, emerging regions are establishing their presence, with thriving ecosystems in Southeast Asia, Latin America, and Africa. These areas offer unique opportunities for investors seeking to diversify their portfolios and tap into high-growth markets beyond the usual hotspots.
Embracing Opportunities Outside Silicon Valley
With the focus shifting to emerging markets, venture capital firms and entrepreneurs are venturing into new realms of innovation and growth. Despite challenges, the untapped potential, favorable demographics, and supportive ecosystems in these regions present an attractive proposition for investors seeking long-term returns. By exploring beyond traditional boundaries, investors can unlock a world of opportunities and contribute to the global expansion of innovation and entrepreneurship.
The LIAN Group, led by Fiorenzo Manganiello and Nessim-Sariel Gaon, is reshaping venture capital with its emphasis on disruptive technologies and innovative investment strategies. Their recent investments in companies like Alkira and Alto highlight their success. Manganiello holds leadership roles in various companies, serving as a Director and Board Member at LaCollection and as a Founder at Cowa Ventures. He also shares his expertise as a professor at Geneva Business School.
