TLDR
Key Points:
- Emerging markets face currency depreciation, posing a challenge for investors.
- Venture capital (VC) can offer a solution to beat currency depreciation in these markets.
How VCs can beat currency depreciation
The article discusses the struggle that emerging markets face with currency depreciation, which can impact investors’ returns negatively. Despite promising macro tailwinds, available investment options in these markets often deliver mediocre returns once adjusted for currency depreciation. The solution proposed is venture capital (VC), highlighting how top quartile VCs have delivered outstanding returns compared to traditional investment options.
VC as a way to beat depreciation
The article delves into how VC rooted in the idea of betting on high-growth tech companies can offer a way to beat currency depreciation in emerging markets. By funding tech startups in primed markets focusing on digitally virgin industries, VCs can capitalize on macro tailwinds and potentially outperform traditional investment options while also navigating currency depreciation challenges.
Operationally speaking, for startups and VCs
The article provides insights on how startups and VCs in emerging markets can navigate currency depreciation challenges operationally. Startups can grow faster than depreciation by focusing on dominating digitally virgin industries, while VCs need to factor in depreciation and average exit sizes when investing. The importance of choosing the right founders and convincing LPs to buy the VC thesis is also highlighted.
