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The New World of Borderless Innovation: 3 Business Models Scaling Beyond The Valley

By Alex Lazarow

The world of innovation is global. Indeed, more than 90 startup ecosystems are home to a billion-dollar startup. And it isn’t just that startups are scaling internationally—increasingly, global startup ecosystems are home to the largest global players. For example, the largest edtech in the world is in India, the largest neobank is in Brazil, and the largest superapp is in China.

Today, innovation is happening in interconnected waves: The best ideas are coming from anywhere and scaling everywhere.

In that vein, here are three business models that are scaling internationally while playing out in local markets.

Social commerce

In China, social commerce, or group buying, first became possible as mobile adoption, digital payments usage and social network penetration—including all-in-one via superapps like WeChat—skyrocketed. It offered the possibility to better serve the majority of China’s massive population—those in the low- to middle-income brackets, particularly in second- and third-tier cities, and other historically underserved customers.

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Pinduoduo1 is largely seen as the pioneer in this space. It became China’s second-largest e-commerce player in seven short years. But social commerce models are now on the rise in many similarly emerging markets from India (Meesho) to Latin America (Facily) and beyond.

Alex Lazarow, partner at Cathay Innovation

Why? By combining group buying schemes and social media, these platforms can onboard new consumers into the world of e-commerce at a viral rate. They’re creating a unique combination of solidarity with other users and trust. And by shortcutting supply chains, they can also be a boon for merchants, matching them with local demand.

Buy now, pay later

BNPL has been a global movement evolving in many digital ecosystems. Players such as Affirm and Klarna demonstrated the BNPL industry’s potential in the West. For customers, BNPL offers a convenient alternative way to check out with more flexible payment terms. For merchants, it drives higher basket size and lower cart abandonment.

Outside of Silicon Valley, particularly where underbanked rates are higher, the model is more impactful. By using alternative data coupled with lower-cost delivery models, BNPL can drive expansion of financial access and, like social commerce, help onboard customers. We’re seeing this in Southeast Asia (FinAccel; Rely), the Middle East (Tamara; Tabby), India (Zest), Latin America (Addi; Kueski), Africa (Credpal; Motitio) and the list goes on.

Entrepreneurial support

Entrepreneurship is the largest profession in the world. For many, it is of necessity. For the lucky few, it is by choice.

There are many solutions for specific verticals or pain points of managing a business, from e-commerce (Shopify) to HR (Gusto) to payments (Stripe). But now, new platforms are making it easier for anyone, anywhere to launch a business, manage finances, purchase domain names and so on—all under a single pane of glass.

By uniting the fragmented SMB market, these platforms help entrepreneurs manage the governance of their business so they can instead focus on growth. And with  SMEs representing around 90 percent of businesses and more than 50 percent of employment worldwide, we’re seeing this model take off globally from Texas-based ZenBusiness to Brazil-based Contabilizei and more.

Where does this take us?

The best ideas used to come from Silicon Valley and scale globally. No longer. They’re now coming from anywhere and scaling everywhere.

While it may seem as though borders are going up around the world, ideas are more borderless than ever. This cross-pollination of models is close to my heart and my recent book “Out-Innovate: How Global Entrepreneurs—from Delhi to Detroit—Are Rewriting the Rules of Silicon Valley.”

We are in the early innings of this global shift. But one thing is certain, the world will be better for it.

Alexandre (Alex) Lazarow is a partner at Cathay Innovation. An early investor in Chime and Sidecar Health, Lazarow is committed to expanding venture capital opportunities into the “frontier,” which he describes as the world beyond the Silicon Valley bubble and other major economic centers.

Illustration: Dom Guzman

  1. Disclaimer: Cathay Innovation is an investor in Pinduoduo, Facily, Kueski, FinAccel and ZenBusiness.

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