the case to invest in data driven companies in emerging markets

The Data FundThe Case to Invest in Data Driven Companies in

Emerging Markets

1@prasannalaldas

• All views personal

• Idea still under development; use with caution

Disclaimers!

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• The data ‘sector’ and the economic opportunity

• The ecosystem approach

• The role of DFIs

In this presentation

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The Brave New Data World

4 I 3

Data Yesterday Data Today

Centralized

Structured

Static

23056 34

02011103 76023

Decreasing costs

New techniques,

technology,

and solutions

UNTAPPED

DEVELOPMENT

OPPORTUNITY

2200

459700

76900

240,000,000

34,567,900

Real-

Time

Distributed8000,000,000

Structured

and Unstructured

(mixed)

Data

ATA

Limitless Data

@prasannalaldas

The ‘Sector’ called Data

Open Data Big Data Internet of Things Digitization

$3 trillion $7 trillion $15 trillion$12 trillion

The data space combines several trends – each with significant commercial potential

The data space is transforming all major sectors of the economy

Government Health Energy Education Transport Agriculture Finance Tourism

Rather than a narrow niche, data is a new way of looking at the world with major economic and development potential

Google Library Mobile Phone

Data entrepreneurs want to work with people/investors that understand data

Data IT

Water

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Data Driven Companies – Data as a Strategic Asset

USA Emerging Economies

From Our Pipeline Analysis

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Some Data Business Models

Suppliers Aggregators Developers Enrichers Enablers

The Data Fund

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• Developed Countries

• Climate Corporation – acquired by Monsanto for about $970 million

• Nest Labs – acquired by Google for $3.2 billion

• iTriage – acquired by Aetna for an undisclosed sum

• Desire2Learn – raised $80 million in Series A funding

• Developing countries

• YourBus – Indian start-up acquired for $100 million

• MuSigma – Indian firm with VC investments of $133 million

• SkyMet – Indian company raised $4.5 million

• FrontalRain – Indian company raised $8 million

• Junar – Chilean firm raised $1.2 million

• Solapa – Argentine company raised $1 million

• Scanntech – Uruguayan company raised $10 million

• UrbanIndo – Indonesian firm raised $2 million

Illustrative Deals

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How do you take the benefits of data driven development to emerging economies at scale

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The challenge

10

Locked data

Restrictive

policy

Skills gap

Data

illiteracy

Poor ICT

infrastructure

Incubation/

Innovation

Financing

gap

Especially for

early stage

companies that

require small

investments.

Traditional VC

activity sparse

and ad hoc

@prasannalaldas

An ecosystem approach

Data Policy Capacity Innovation

The enabling environment

(governments and partners)

Private sector investment (VCs and

partners)

Gov

FinancingPvt Sector

Financing

The Data

Fund

11

Early stage

investments ($1-5

million) – systematic

development of the

data sector

(supported by

government

activities)@prasannalaldas

The Opportunity for DFI Investors

• The Data Fund is an opportunity to catalyze a brand new sector that has tremendous development

potential in emerging economies

• Retail, one-off investments do not offer the same transformative potential

• This is a true early mover opportunity – 60% of data will soon come from emerging economies;

early investment opportunities for investors in new businesses built upon this data

• The Data Fund differs from traditional VC investments in data driven companies in several ways –

• It targets companies at an earlier stage than typical VC investments

• The Fund will target companies with higher risk but the returns will be on a portfolio basis

• It will make smaller investments than VCs typically do ($1-5 million; which isn’t viable in the

standard VC model)

• The Data Fund will benefit from the enabling environment work done by governments in key target

countries

• More data, the right policies, data literacy, and incubation

• The market it too risky for investors who cannot affect the enabling environment

• The Data Fund can be a pipeline for larger scale VC investments in more mature companies down the

line

• Most suitable for investment managers with experience tying Silicon Valley expertise to emerging markets

(plus access to talent and technical expertise)

12@prasannalaldas

Data Fund

Investors

Investment Manager

Custodian &

Administrative Agent

Legal adviser

Investees

Custodian &

Admin. Agent Agreement

Mandate

Investment Management

Agreement

Commitment Agreement(s)

Financing Agreements

Founders Coordinating Unit

Founding partner(s)

- Joint fundraising

- Knowledge and learning

- New business development

- Pipeline development

A Potential Model

@prasannalaldas

• A pipeline study of data driven companies in emerging markets

• McKinsey paper on the economic potential of liquid data

• Open Data 500

• EMC paper on the Internet of Things

• WEF paper on big data

References

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Thank You!

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