Cross-border tech pollination: Mutually assured disruption

One of the subtler macro hallmarks of the age of tech-enabled interconnectivity is the notion that two developing regions on opposite sides of the world with little historical overlap can support each other’s economic progress. Naturally, venture investors are both fascinated and wary of this high risk-reward concept.

As a result, experimentation has proliferated with a creeping recognition that the story is about global entrepreneur culture, not inter-government relations. Grassroots teamwork between founders and investors facing similar challenges in comparable regions is a growth theme made reliable by the laws of business; bilateral economic cooperation policy is not.

China has been the cross-regional co-development leader in recent years with its Belt and Road Initiative (BRI), which has attempted to lend some of the country’s economic momentum to less advanced regions, including Southeast Asia, Central Asia, and Eastern Europe. It is arguably the first time a developing country has wielded the economic capacity to stride the globe in search of other developing nations to partner.  

Much of the playbook is old school, however. In many respects, BRI echoes the developing market infrastructure initiatives carried out in decades past by sovereign and treaty-based organizations such as USAid and the World Bank. These efforts have certainly facilitated private investment, but they are not generally credited with kick-starting the start-up ecosystems now thriving across the developing world.

The emergence of investable new-economy markets across disparate regions represents a less political kind of economic uplift and one that is more amenable to cross-border collaboration. China is illustrating this point off the BRI path with a massive push into Africa’s consumer internet sector. Here, there is a counterintuitive sense that independent, early-stage forays are more sophisticated than larger, sometimes threatening government-driven plans.

Southeast Asia appears to be watching this unfold and taking notes. Its latest region-to-region connections have been adventurous and largely characterized by the kind of seed-level ecosystem building that favors communities of trust over national agendas. Standout examples include Malaysian incubator StartupJohor attempting to bridge Southeast Asia with Central Asia by merging with Mongolian counterpart Start. The combined entity aims to export business models as far as Russia and the “Stan” countries.

The Singapore government seems keen to keep its cross-regional moves close to the ground as well. Last month it teamed up with Latin Leap, a Colombian VC and start-up services provider that aims to help Southeast Asian companies expand into Latin America. Progress to date includes launch of a boutique $20 million fund, deal referral relationships with a number of regional VCs, and a debut investment in DiMuto, a Singaporean agtech start-up with an existing presence in Mexico.

The wildcard in these types of plays is always culture. Even when aggressive government-level interventions are taken out of the equation, sensitivities around exploitation often remain if one of the partnering regions is significantly more developed than the other. This has proven the case for China-Africa. In other scenarios, there can be such a lack of historical overlap that meaningful cultural and economic connections appear unrealistic, as is the case with Southeast Asia-Latin America.

These hurdles are perhaps best solved by beginning the process in B2B segments that are less obliged to cater to local customs and preferences. “Everyone speaks the language of business,” says Stefan Krautwald, founder of Latin Leap. “Latin American decision-makers are proficient in English and can interact with Singapore-based CEOs. With us in the middle, culture is not that much of an issue.”

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• Topics
• Southeast Asia
• Technology
• Early-stage
• Singapore
• Latin America
• Latin Leap
• Venture
• seed