the case to invest in data driven companies in emerging markets
TRANSCRIPT
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!
2@prasannalaldas
• 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
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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
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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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