Our guest for this episode is a long-time investor in emerging and frontier markets. He has identified some exciting, “untapped” opportunities for investment, and we asked him to share his insights with us.
Jim Chu is the founder and CEO of Untapped, a global tech-for-good company that aims to bridge the investment gap in frontier markets and enable entrepreneurs to scale to their full potential.
Jim has recognized a $5.2 trillion investment gap in SMEs in developing countries, as well as a $3.9 trillion chasm in the Global South. It’s something he likes to call a “VC blindspot,” because it cannot be accessed by traditional models of investing.
Untapped’s most recent efforts are focused on Africa, a booming market with a very high population growth rate and amazing FinTech opportunities. By creating better, more suitable financing instruments, the company aims to provide alternative funding opportunities for emerging market entrepreneurs.
In this episode, Jim shares his experiences of investing in the African market. We also discuss the differences between investing in Africa and the US, the limitations of institutional investing, and why passion and profit aren’t mutually exclusive.
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Why investing in emerging markets requires nuance and empathy
Emerging markets are a blindspot for VCs because their methods do not apply there, and the lack of innovation in the financing sector has only widened the financial gap.
Another reason why traditional investing doesn’t work for emerging markets is that it’s too rigid. Fund managers and institutional investors are all bound to a system that doesn’t allow any flexibility. Individual investors, on the other hand, can adapt their investing to new opportunities in emerging markets.
Simply copying and pasting methods used for investing in the US won’t do. Investing with nuance and empathy will be crucial for effectively bridging the gap. That is why Jim has dedicated himself to creating new financing instruments that fit these markets’ unique needs.
Impactful investment is an opportunity in itself
Is it possible to invest for both impact and profit?
Jim believes that almost any investment in Africa is impactful. In addition to creating jobs, investments also support innovations addressing real problems in society. And yet, investing in Africa is not just reserved for impact investors.
Profit and impact aren’t mutually exclusive. In fact, they can amplify each other. To make this happen, we need better ways of connecting entrepreneurs and investors all over the world.
One of the programs Untapped recently started is called The Nest. It provides a forum for emerging market entrepreneurs and promotes them to international investors.
Jim got the idea for the program while watching Shark Tank with his kids. For him, the most rewarding part about it was seeing how much it changed people’s perceptions about the African market and opened them up to a new world of investment opportunities.
The most exciting trends in investing today
During our conversation, Jim pointed out a couple of trends he’s most excited about.
Democratization of investing
Providing financing opportunities to under-represented sections of the population is challenging the status quo, and crowdfunding plays an important role here.
The traditional model for financing a startup is no longer the only option. Investing is becoming more democratized and accessible, which directly contributes to the decentralization of power and helps bring profit back to the people.
Increasing connectedness between investors and investees
The second trend Jim highlighted was connectedness, which is also one of the critical points of our mission statement here at Republic.
Newer generations of investors want their dollar to matter. They want greater insights into the projects and startups they’re backing.
Technological advances have already allowed us to create platforms that encourage meaningful connections between investors and investees. People can track their investments in real time, get updates from entrepreneurs, and engage with them directly at any time.
By facilitating these connections, we’re also introducing new levels of transparency into the world of investing.
Additional resources
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This content is provided for educational purposes only by Republic. Nothing discussed should be construed as legal, tax, accounting, or investing advice. The views of the presenters may not be the views of Republic and its affiliates. Always consult with trusted professional advisors before making investments. Private investments are inherently illiquid and may result in a total loss. All rights reserved.
