At 500 Global, one of our core beliefs is that great talent exists in all corners of the world. Over the past eleven years, we have explored various regions, from Latin America to MENA and Asia to invest in great founders. As a result, nearly half of our portfolio companies today are based outside the U.S.
This was not a long distance endeavor. As our involvement in emerging markets grew, we relied on team members on the ground who were familiar with the local tech startup community. These ecosystems varied in terms of development, specifically with regard to talent pool, density of startups, access to capital, support network, market reach, and government policies. Those six components came to form the basis of our ecosystem framework as we worked closely with our customers to deliver more than 70 bespoke programs globally, with our latest being in Alberta, Canada.
When we first launched our ecosystem accelerator programs, we were typically the ones approaching local stakeholders about the benefits of a comprehensive innovation program. We sense this is starting to change, as governments appear to increasingly recognize the importance of diversifying their economies, and seek to leverage technological innovations to create quality jobs and establish themselves as regional and global hubs.
It started with Kobe in 2016. Mayor Kizo Hisamoto wanted to attract founders from all over the world, not so much to get them to set up offices in Kobe, but to create the kind of diverse environment that sparks innovation and economic development through knowledge exchange. Half of the companies we selected for the 500 Kobe Accelerator originated outside of Japan, and we had 30 expert mentors deliver the eight-week program in English and Japanese.
The results appear promising. Over the past five years, more than 70 startups graduated from the Kobe accelerator program and went on to collectively raise over ¥12 billion (in excess of USD$105 million).
Just this past August, batch 5 company Osana Salud announced a $20 million Series A round. That’s right, a startup from Argentina aiming to make healthcare more accessible to patients in Latin America, graduated from 500 Kobe Accelerator. The city is a life-sciences hub and innovation in the health sector is a focus for Kobe, so we adapted programs to emphasize health tech, and subsequently tech solutions to Covid-19.
The potential for success for startups was apparent from the start, and the program received strong support from Mayor Hisamoto. Without the commitment of local governments, we believe initiatives to create a thriving startup ecosystem would be hard to sustain.
The same can be said of our partnership with Enterprise Singapore, where the objective is also to attract international startups to Singapore and make it a launchpad for their expansion in Southeast Asia. Part of the curriculum of Global Launch Singapore focuses specifically on how to expand in the region, in addition to growth experiments, go-to-market and sales, and networking with potential customers and partners.
Since October 2019, 30 startups have participated in the Global Launch Program, and we have facilitated more than 200 introductions between startups and potential partners, including corporates and industry stakeholders. One example is Metigy, an Australian marketing platform, which raised AUD$20 million (around USD$15M at the time of writing) in a series B round last year, and is looking to acquire customers in Southeast Asia. This past summer, Malaysian digital health startup Naluri also received USD$5 million from a number of Asian venture capital firms to launch its services in Thailand and the Philippines, and to establish a presence in Singapore and Indonesia.
On the other side of the world, we partnered with Georgia’s Innovation & Technology Agency and Bank of Georgia to launch the country’s first international accelerator and connect the country’s ecosystem to global industry stakeholders. We selected startups from Slovakia, Ukraine, Estonia, Poland and the UAE, among other countries, leveraging Georgia’s location at the crossroads of Asia and Europe. Batch 1 company Stack, which allows users to manage emails, social media and messaging in one place, went on to graduate from our San Francisco global flagship accelerator (Batch 27) last year, as well.
But building nascent startup ecosystems takes time–it can take three years to start seeing progress–and more importantly it requires a framework so we can set startups up for success. We look at six key factors when evaluating an ecosystem:
Startup Performance: A robust pipeline of technology-powered startups, across stages, experiencing continuous growth and exits.
Talent Pool: Skilled and experienced talent pipeline and role models, generating new employment opportunities in the region.
Investment: Sufficient funding and financing mechanisms for startups, offering founder-friendly terms and the right risk-reward for venture.
Platform: Mentorship, support and professional services, enabling companies to avoid common mistakes and rapidly expand.
Market Reach: Access to large venture-friendly markets. Either domestically or through regional or global connectivity.
Government: Policy, regulation, and tax incentives and exemptions, enabling to easily establish, operate, close and exit a startup business.
The latter is crucial, since we believe a healthy startup ecosystem would not be possible without government support.