Over the next decade, the world’s most pressing needs will be increasingly addressed by leveraging advanced technologies. Already, digital technologies are proliferating across developed and emerging markets to provide essential services and address social challenges. Today there are 4.7 billion internet users worldwide, with an average daily use of 6 hours and 37 minutes per person. Companies that harness these technologies to fill gaps from healthcare to education to economic resilience will be crucial for the billions of people that reside in global emerging markets. Achieving sustainable development in the next decade will therefore depend on the identification and scaling of proven digital technologies and business models – and the companies that develop them – particularly in the regions of the world that see growing demand for essential goods and services.
Next Billion Capital Partners, a global fund manager committed to unlocking growth in global emerging markets, has proven its ability to accelerate technology-enabled companies doing just that. The group, who spun out of the World Bank’s International Finance Corporation, invests in industry leading technology-enabled companies that provide life-changing services to local mass markets, providing both the capital and the expertise to grow, expand their capabilities, and serve more people, faster.
Their Next Billion Digital Growth Fund successfully secured commitments from leading institutional impact investors in 2024 to support growth stage companies. Next Billion’s latest private equity fund is designed to further its reach by positively impacting 100 million low to mid-income households, over 50 million women, and at least 1 million micro, small, and medium sized enterprises (MSMEs).
We had the opportunity to speak with Ruzgar Barisik, Managing Partner of Next Billion Capital Partners, who shared valuable insights into the urgency, challenges, and what is needed to unlock technology at the necessary scale to accelerate social impact.
The Challenge of Accessing Essential Services
Currently, a stark divide exists between developed and developing countries regarding access to essential goods and services and access to finance. According to the WHO, 4.5 billion people lacked access to essential health services as of 2021. The World Bank estimates 1.4 billion people globally do not have access to financial accounts. Morocco, Vietnam, Egypt, the Philippines, and Mexico each had over 63% of their populations living unbanked as of 2021 data. Women are 6% less likely than men to have bank accounts in these regions. Meanwhile inefficient supply chains and distribution of essential goods and services weaken household consumption and economic growth. For example, in India, nearly 90% of retail trade is conducted by small, off-line vendors with limited integration with larger supply chains and sources of capital. Manual processes and large gaps in credit access dampen wider productivity in these markets. As Ruzgar explained, “two-and-a-half to three billion people live in emerging markets and are in desperate need of these essential tools and services. One of our first filters is to identify if the need being addressed is essential. And the second is to determine if the need is widespread and can be addressed at scale.”
Digital Technology in Emerging Markets
Digital inclusion sits at the heart of this issue. Although 63% of the world’s population is digitally connected, only 27% of people in the least developed countries are Internet users. But this number is continuing to grow, which will provide an enormous opportunity for digital technologies to solve some of the unmet goods and services in emerging markets. According to the World Bank, when fast internet becomes available, people are 13% more likely to have a job, and businesses can increase their exports by four times. For example, in Senegal and Nigeria, increased 3G coverage has been linked to declines in extreme poverty of 10% and 4.3%, respectively.
Ruzgar told us, “technology has the power to reach a lot of people very quickly. That’s the promise. It doesn’t mean that every technology is good, but if it is well designed, then you can really impact lives. That’s ultimately the opportunity across the world and across our geographies, and we think it is a generational opportunity.” With increased connectivity, software and digital technologies will continue to grow in both advanced and emerging economies. As Ruzgar explained, “This has been going on for the past decade around the world and no one doubts it’ll continue for the next decade. The next 10 to 20 years will see the proliferation of these services.” Further spreading of digital technologies can be critical to boosting growth. Firms in developing countries that adopt such technologies are 2.5 times more productive than those that do not according to the World Bank.
The Opportunity
Developing countries are host to immense opportunities, particularly given the underserved populations of women, low and middle-income households, and micro, small, and medium enterprises (MSMEs) whose inclusion can boost local and global economies. In particular developing markets represent billions of people that can reshape the global digital economy by becoming users of tech products and services that affect their daily lives and close structural service divides. This includes a shift from households making daily purchases using cash in offline retail, to inclusion in the form of digital payments and saving that increase financial health, transparency, and convenience. Technology companies are increasingly offering innovations to bridge these gaps and serve more markets with goods and services.
However, some technology-enabled business models are more likely to succeed than others. Ruzgar believes Next Billion’s unique focus and approach to technology investing sets the firm up for success. “Our specialization is that we are digital technology investors in emerging markets. We are able to bring pattern recognition to the problem and identify the very select business models and innovations that are proven to work across these markets. These can be fintech innovations, digital health business models, or digital education business models, but by and large our global approach allows us to identify the most promising business models and invest in the leading growth stage PE opportunities in them.”
Already, the company has invested in leading technology companies including the largest insurance technology company in Southeast Asia, and the largest digital health company in Brazil. Given the early stages of the digital economy in these regions, each new company has the potential to improve the lives of its users at larger scales than in developed markets.
The Outlook
While the opportunity to reach billions of users and meet market needs exists, information and knowledge barriers can slow investment for these companies that have the potential for growth. As Ruzgar explained, “Investors tend to invest in their back yards, so part of what we try to do is reduce the information and knowledge gaps about investing in emerging markets. Broadpeak has been a key partner for us in educating the market about what’s happening and helping to get more people into the space, and connecting us with the wider market of potential investors.”
The investments made by the Next Billion team and their first fund marked a milestone in driving technology enabled services across developing nations with the intent of closing the gap in digital services. The current fund plans to build on this success. Continued investment in solutions that are both digital and scalable in markets lacking financial access can spur further innovation, growth, and investment which meet essential needs and improve livelihoods. As technology and software continue to spread, the demographic trends in Asia, Latin America, and Africa targeted by Next Billion reveal immense opportunities for successful technology businesses that combine social and financial features. As Ruzgar told us, “What we’re trying to do is marry impact at scale, but with outsize financial returns. We back businesses in these geographies that impact the next billion technology users and have the potential to become the next billion dollar companies.”
