Endeavor Catalyst’s 21 Predictions for 2021
Tags: Venture Capital, Emerging Markets, Scaleup, Entrepreneurship, Predictions

Endeavor Catalyst’s 21 Predictions for 2021

2021 is off to the races, and while the macro-economic backdrop continues to be challenging for many, there has never been a better time to back great entrepreneurs who are leveraging technology to create the jobs of the future. As our friends at Lux Capital put it recently: “The directional arrow of technology progress continues to point to the world getting better — in spite of our human chaos.”

At Endeavor Catalyst, we invest in the visionary entrepreneurs supported by Endeavor in more than 35+ emerging and underserved markets around the globe. This gives us a unique vantage point on how these different markets are developing, including which business models are seeing increased traction, where other smart investors are focusing, and why certain companies — and certain entrepreneurial ecosystems — are able to achieve outsized success.

Seen through the “Endeavor lens” of high-growth entrepreneurship and venture capital in emerging and underserved markets, we see the world moving boldly ahead in 2021, in what we believe economic historians may someday look back on as the “real beginning” of the 21st century.

With this in mind, here are 21 predictions for what we believe will happen with emerging ecosystems, business models and sector trends in 2021.

For full disclosure, with over 160+ investments, we are investors in many (but not all) of the companies mentioned below. Endeavor-supported companies are noted in BOLD.

2021 Predictions: Emerging Ecosystems

On the heels of its first significant exit, Cornershop, and its first Unicorn, Kavak (above), Mexico’s entrepreneurial ecosystem is primed to attract significantly more capital than ever before in 2021 (see prediction #7!).

1. The “decoupling” of capital and geography will continue.

The flow of capital into markets once ignored by leading venture capital and growth equity investors has been greatly accelerated by COVID-19, and will continue to grow in 2021. For a more in-depth look at how and why this is happening, check out our post earlier this month on “Redrawing the Map” here.

2. US investors will look between the coasts.

In 2013, after 15+ years supporting entrepreneurs in emerging markets around the globe, Endeavor made the bold (and controversial!) decision to open an office in Miami, as showcased in the Harvard Business School Case Study: “Endeavor: Miami Heats Up”. In 2021, with burgeoning tech scenes in cities like Miami getting more attention than ever, we expect to see more companies scaling up — and getting funded — in cities like Miami, Denver, Atlanta, and Detroit, but also further afield in places like Louisville, Kentucky; Birmingham, Alabama; Western New York, and Northwest Arkansas.

3. In the US tech community, underrepresented groups will be (slightly) better represented.

Thanks to groups like AllRaise, BLCK VC, Lightship Capital, Collab Capital, Base10 Partners, and Backstage Capital, as well as new initiatives from industry leaders ranging from a16z to Flybridge to Softbank, the movement to back more BIPOC and female founders and investors will continue to build momentum. “Better, but not enough!” is the review we expect to hear 12 months from now. This will take sustained work by all of us over the coming years. For our part, Endeavor will seek to continue to back great founding teams like Dave Salvant and Songe LaRon from Squire, George Azih from LeaseQuery, Mark Wilson from Chime Solutions, Rodney Williams and Travis Holoway from SoLo Funds, Nicky Goulimis from Nova Credit, Trina Spear and Heather Hasson from FIGS, Robin McIntosh and Lisa McLaughlin from Workit Health, and Melissa Butler from The Lip Bar.

Endeavor Entrepreneur Brian Brackeen launched Lightship Capital in 2020 with wife Candice Brackeen to fund technology driven startups founded or led by underrepresented professionals throughout the Midwest.

4. Latin America will produce its first $100B+ company.

Buoyed by extraordinary growth in ecommerce penetration (see #12 below), Nasdaq-listed MercadoLibre (MELI) will become the first company in Latin America to reach a market cap of $100B+, inspiring others across the region to dream even bigger!

5. US investors will “discover” Indonesia.

Whether or not the rumors of an $18B Gojek + Tokopedia merger become reality, we believe 2021 is the year that more US investors “discover” what is happening in Southeast Asia’s digital economy — and particularly in Indonesia. Following in the footsteps of SEA Group (NYSE:SE) — currently the only Southeast Asian tech company listed on a US exchange — we predict at least 2–3 Indonesian tech companies will seek to go public in the US within the next 12 months, including the first dual-listing IPOs between the US and Indonesia. For more on Southeast Asia’s digital economy, check out this great report from Google, Temasek, and Bain & Company, appropriately titled “At full velocity: Resilient and racing ahead.”

6. Brazilian Tech will see more growth — and more liquidity.

As the digitization of Latin America’s largest economy continues apace, we expect to see more growth in Brazil’s tech sectors — especially Fintech, Healthtech and Edtech — and more liquidity in the form of acquisitions and public offerings. We predict at least 5 venture-backed exits in Brazil this year — and perhaps even 10 or more! For a much deeper dive on Brazil, check out this excellent piece of research from our friends at Atlantico.

Brazil’s Meliuz, a cash-back marketplace led by Endeavor Entrepreneurs Israel Salmen and Ofli Campos, celebrated an IPO of more than US$100M in November 2020.

7. Mexico will have its moment.

Long overshadowed by Brazil when it comes to VC investment in Latin America, Mexico’s entrepreneurial ecosystem is primed to attract significantly more capital than ever before in 2021. On the heels of its first significant exit, Cornershop, and its first Unicorn, Kavak, Mexico is no longer a secret. We saw more activity in 2020 from respected local funds such as Mountain Nazca, ALLVP, and Jaguar, regional leaders like Kaszek, and even Silicon Valley funds like a16z and Index. We expect more in 2021 — watch this space!

8. UIPath’s IPO will drive increased VC interest in Europe.

Originally founded in Romania, UIPath’s expected IPO at a valuation well north of $10B+ will be the latest reminder that global category-leading companies can come from unexpected places in Europe. With multiple $10B+ role models (e.g. Spotify, Ayden, UIPath), we expect to see more European entrepreneurs dreaming big — and more VCs downloading this report to figure out where to look next. For our part, we’re betting on the South (particularly Greece, Spain and Italy), the East (especially Bulgaria, Romania and Poland) and the geographic “edges” of Europe (think Ireland on one side and Istanbul on the other).

9. Saudi Arabia will make global VC headlines.

Several years in the making, Saudi Arabia’s venture capital ecosystem grew over 50% in 2020 and will come into its own in 2021, boosted by support from the Saudi Venture Capital Company and led by STV, Sanabil, Beco Capital, Raed Ventures and others. Expect large funding rounds for well-known companies like Unifonic, Foodics, Mrsool, Noon Academy, TruKKer and Classera, as well as a number of new early-stage financings. The rise of a “Paypal Mafia”-type network out of Careem — following it’s $3.1B acquisition by Uber — will play a meaningful role in Saudi (as well as the UAE, Egypt and Pakistan). Congrats to Philippe Bahoshy and the team at MAGNiTT for their continued great work covering this emerging region! You can check out insights from their latest report on MENA (plus Turkey and Pakistan) here.

Careem founders Mudassir Sheikha, Abdulla Elyas, and Magnus Olsson. Careem’s $3.1B acquisition by Uber in 2019 has had a ripple effect throughout the MENA region, spurring a proliferation of new startups founded by former employees.

10. The number of global startup ecosystems that have created a $1B+ startup will surpass 100 for the first time

In their fantastic annual report on the Global Startup Ecosystem, the folks at Startup Genome have been tracking the number of $1B+ companies ever since Aileen Lee coined the term “Unicorn” back in 2013. Over the past seven years, this number has grown from fewer than 10 cities around the world to more than 80+. This year, we predict it will exceed 100+ cities for the first time ever! As Fred Wilson wrote in his recent piece “The Rise of Everywhere”: “[…] let’s start celebrating the rise of tech entrepreneurship everywhere. That is a profound thing for the world and something to be incredibly happy about.”

2021 Predictions: Business Models and Sector Trends

11. Everything will be delivered.

Fast growing delivery services like Latin America’s Rappi and Spain’s Glovo (which now serves >7M customers across 22 countries) will become a bigger and bigger part of daily life for millions of people. And they won’t be alone! Rising consumer demand for the delivery of food, groceries and more will drive increased growth in dozens of businesses globally, including Everli (Poland and Italy), HappyFresh (Indonesia, Malaysia and Thailand) and Toters (Lebanon and Iraq).

12. Consumer e-commerce will become increasingly mainstream.

The accelerated adoption of online buying by consumers in 2020 will stick around, particularly in Latin America and Southeast Asia, driving massive growth for horizontal e-commerce platforms like MercadoLibre, Tokopedia, Bukalapak and Shopee as well as e-commerce enablers like Shopify and VTEX. Vertical ecommerce leaders will also thrive in distinct categories ranging from babies & kids (e.g. Mumzworld in MENA) to furniture & home goods (e.g. Madeira Madeira, Brazil’s latest unicorn; Fabelio in Indonesia).

13. B2B e-commerce will become a new “buzzword.”

Inspired by the rise of Udaan as India’s fastest Unicorn, the business model of B2B e-commerce will quickly spread to other emerging markets, disrupting and digitizing supply chains on every continent. We expect smart investors to flock to this space, backing companies like Ula (Indonesia), Telio (Vietnam), Twiga Foods (Kenya), MaxAB (Egypt), Bazaar (Pakistan), Chaldal (Bangladesh), Chiper (Colombia) and more. Credit to Jesse Sullivan and Yash Kanoi at Alter Global as well as the team at Next Billion Ventures (NBV) for spotting this trend early. More on this new phenomenon from NBV’s Chris Schroeder here.

Waresix is digitizing logistics in Indonesia, Southeast Asia’s largest economy, by connecting businesses and shippers with available trucks and warehouses.

14. Supply chains will become more efficient.

A wave of startups are rapidly digitizing the freight industry, ultimately bringing down the cost of transporting goods across emerging markets. By connecting cargo owners and truckers over digital platforms, we are seeing tech companies revolutionize an industry that has been largely manual and fragmented to date. We are watching companies like TruKKer in the MENA region, Waresix in Indonesia, Kobo360 and Lori Systems in Africa, and CargoX in Brazil drive productivity and efficiency in logistics around the world.

15. The global Fintech Unicorn herd will grow.

Led by companies like Checkout.com (valued at $15B in their most recent funding round), India’s PayTM ($16B+) and Brazil’s Nubank ($10B+), the stampede of VC-backed Fintech companies reaching $1B+ “unicorn” status will continue on every continent. Keep an eye on Latin America, where Creditas recently joined Nubank, BREX, d.Local and Ebanx in the $1B+ club; as well as Indonesia, Vietnam, and Nigeria, where the recent acquisition of Paystack (for $200M by Stripe) is likely to drive increased investor interest. In no particular order, here are some of our top contenders to appear in a future edition of CB Insights’ Fintech Unicorn map: ADDI, Bitso, Clip, Ualá, Neon, and Nelogica in Latin America; Funding Societies, Investree, Kredivo, NextPay and Trusting Social in Southeast Asia; and Flutterwave, Paga, Migo and Carbon in Nigeria.

16. EdTech and HealthTech will grow the fastest.

Fueled by meaningful changes in consumer attitudes and behaviors towards existing technologies (e.g. online learning, telehealth), we expect EdTech and HealthTech will be the fastest-growing segments in many venture firms’ portfolios this year — including our own! In EdTech, where VC investment has grown an astonishing 32x over the past decade, we expect to see the continued rise of “workforce development” and adjacent sub-sectors — an area that already accounted for nearly half of all VC deals in EdTech in 2020.

WorkIt Health, a health tech company led by Endeavor Entrepreneurs Robin McIntosh and Lisa McLaughlin (above), announced a $12M Series B funding round in 2020. Its pioneering digital recovery program has seen accelerated demand during the COVID-19 pandemic as more people seek out telehealth services.

17. Mental Health will be in focus.

The mental health and wellness space is flush with cash and mainstream attention. In the US, marquee names such as Calm ($2B) and Lyra Health ($1.1B) raised large rounds in 2020, reinforcing or establishing their status as the sector’s first class of unicorns. However, much like we saw in the broader digital health landscape in years past — as recently as five years ago — major exits are scarce. Talkspace’s planned $1.4B SPAC debut is the first major shoe to drop. However, we expect that this will not yet open the floodgates, as peers eye even higher valuations, more capital from private markets, and growth among user bases — particularly in the corporate customer segment. As we enter “Year 2” of the pandemic, companies like Sondermind (Colorado) and WorkIt Health (Michigan) will help address the day-to-day mental health challenges that people face. Outside of the US, where the topic is still largely taboo in many places, we hope to see more conversations — and more start-ups! This recent report by Endeavor Mexico is a step in the right direction.

18. The “digitization of the SME economy” in emerging markets will provide some of the most interesting opportunities for global engineering and product talent.

In a list peppered with “trends,” it is worth pointing out that sometimes the most interesting work is often with teams and companies that are not yet part of a major trend or theme. Endeavor mentor David Frankel has a great piece on this from a few years ago describing how companies like Uber and Airbnb were started several years before the concept of the “sharing economy” took off. Such is the case today with enterprise, cloud and B2B businesses in most emerging markets. We predict that this space — which will be a massive growth area in the next decade for markets like India, Brazil and Indonesia — will continue to attract great talent (but little media attention) as companies build real solutions for millions of Small and Medium Enterprises (SMEs) in unsexy spaces like tax, accounting, CRM, marketing automation, CPaaS and more. Hot tip: If you are an engineer or product manager looking to expand your horizons in 2021, check out BukuKas and OnlinePajak in Indonesia, Omie, Conta Azul, RD Station and Contabilizei in Brazil, Runa in Mexico, Unifonic in MENA, and Clickatell out of South Africa. They’re hiring!

19. Family Offices globally will double-down on venture capital and innovation.

With the maturing of start-up ecosystems around the world, the long-running trend of Family Offices’ investment in venture capital — which has increased 10x since 2007 — will continue. Check out this great report from our friends at SVB for more in this trend.

20. SPACs will be spectacularly good (at least a few of them).

Chamath may have been first, but he won’t be the only one to have SPAC success. By the end of 2021, we expect to see at least half-a-dozen business combinations with SPACs led by experienced entrepreneurs and operators like Reid Hoffman, Kevin Hartz, Peter Thiel, Marc Stad (Dragoneer), Micky Malka (Ribbit) and others. We believe these operator-led SPACs will far outperform the “middle-of-the-pack” SPAC, to such a degree that it will be much more widely understood 12 months from now that the SPAC category is really just the new incarnation of late-stage venture capital.

21. Cryptocurrencies will continue to come of age as an asset class.

What would a 2021 Predictions list be without at least some mention of Bitcoin?! The global growth of cryptocurrencies has powerful implications for emerging and underserved markets, reducing friction in financial services like cross-border payments, storage, and lending. We expect to see rapid growth in this space with companies like Bitso in Latin America, OmiseGO in Southeast Asia, BitPay and Xapo. Xapo’s founder Wences Casares’ June 2017 piece on “Why Own Bitcoin” feels as timely as ever!