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The Case to Invest in Data Driven Companies in Emerging Markets

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The Case to Invest in Data Driven Companies in Emerging Markets

  1. 1. The Data Fund The Case to Invest in Data Driven Companies in Emerging Markets 1@prasannalaldas
  2. 2. • All views personal • Idea still under development; use with caution Disclaimers! 2@prasannalaldas
  3. 3. • The data ‘sector’ and the economic opportunity • The ecosystem approach • The role of DFIs In this presentation 3@prasannalaldas
  4. 4. 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 Distributed 8000,000,000 Structured and Unstructured (mixed) Data ATA Limitless Data @prasannalaldas
  5. 5. 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 5@prasannalaldas
  6. 6. Data Driven Companies – Data as a Strategic Asset USA Emerging Economies From Our Pipeline Analysis 6@prasannalaldas
  7. 7. Some Data Business Models Suppliers Aggregators Developers Enrichers Enablers The Data Fund 7@prasannalaldas
  8. 8. • 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 8@prasannalaldas
  9. 9. How do you take the benefits of data driven development to emerging economies at scale 9@prasannalaldas
  10. 10. 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
  11. 11. An ecosystem approach Data Policy Capacity Innovation The enabling environment (governments and partners) Private sector investment (VCs and partners) Gov Financing Pvt Sector Financing The Data Fund 11 Early stage investments ($1-5 million) – systematic development of the data sector (supported by government activities)@prasannalaldas
  12. 12. 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
  13. 13. 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
  14. 14. • 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 14@prasannalaldas
  15. 15. Thank You! 15@prasannalaldas

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