Fluent Ventures Invests in Replicated Startups in Emerging Markets

Challenging Silicon Valley's Dominance in Startup Success

A newly established venture capital firm is dedicated to demonstrating that groundbreaking startup concepts are not exclusively reliant on origination or expansion within Silicon Valley’s ecosystem.

Fluent Ventures' Geographic Alpha Strategy

Fluent Ventures, a global fund concentrating on early-stage investments, is providing capital to founders who are replicating successful business models from established Western markets within the rapidly growing economies of emerging markets. This strategy, focused on fintech, digital health, and commerce, has been termed “geographic alpha” by founder and managing partner Alexandre Lazarow, despite some characterizing it as a replication model.

The core principle driving Fluent’s approach is the understanding that many of the world’s most highly valued startups aren’t entirely novel inventions, but rather localized adaptations of concepts that have already proven successful in other regions.

Fund Structure and Investment Focus

Founded in 2023 and based in San Francisco, Fluent is currently managing $40 million through a combination of a fund, an incubator program, and a structured co-investment arrangement with its limited partners.

Initial investments range from $250,000 to $2 million, spanning the pre-seed to Series A stages. The firm intends to complete 22-25 initial investments, with provisions for subsequent follow-on funding rounds.

“We fundamentally operate as contrarians,” explains Lazarow, who previously held investment roles at Omidyar Network and Cathay Innovation. “We maintain that the most impactful innovations are not solely generated within Silicon Valley.”

A Decentralizing Tech Landscape

Fluent’s strategy aligns with a broader trend of decentralization within the technology sector. In 2013, only four cities were responsible for the creation of unicorn companies. Currently, that number has surpassed 150.

This expansion has largely been fueled by a “rinse and repeat” pattern, with numerous leading technology companies in emerging markets mirroring the success of established startups elsewhere – for example, Amazon-inspired e-commerce platforms, Stripe-like payment solutions, and innovative neo-banking applications in the fintech space. Russia’s Tinkoff served as an early example of a successful neo-bank, influencing Lazarow’s subsequent investments in Chime (U.S.) and Banco Neon (Brazil).

Beyond Simple Replication: The Importance of Localization

Lazarow emphasizes that Fluent’s approach extends beyond mere replication.

“A straightforward copy-paste strategy rarely yields positive results, in our experience. Successful implementation requires critical local adaptation,” he asserts.

The firm cites the ride-hailing industry as a prime illustration. While Uber pioneered the category, Go-Jek in Indonesia successfully localized the model by integrating motorcycle taxis and incorporating super app features reminiscent of China’s WeChat. Lazarow contends that Uber Eats is now actively pursuing this evolutionary path.

Evaluating Product-Market Fit and Founder Alignment

In addition to identifying adaptable models, Fluent Ventures rigorously assesses local product-market fit and the alignment between the founder’s vision and the target market.

Despite passing on numerous construction marketplaces globally, the firm invested in BRKZ in Saudi Arabia, a localized adaptation of India’s Infra.Market. The founder’s prior experience as an executive at Careem, coupled with the region’s substantial infrastructure needs, were key factors in the decision, as noted by Lazarow.

Geographic Focus and Portfolio Companies

Although identifying as a global fund, Fluent doesn’t pursue uniform allocation across all geographies. Instead, it concentrates its resources in regions demonstrating the highest potential, currently including Latin America, the Middle East and North Africa (MENA), Africa, Southeast Asia, and select U.S. markets.

The firm’s current portfolio includes:

• Minu: A Mexican employee wellness platform.
• Sabi: A Nigerian B2B commerce startup.
• Prima: A Brazil-based industrial marketplace.
• Baton: A U.S. M&A platform for small and medium-sized businesses (SMBs).

These portfolio companies have successfully secured multiple follow-on funding rounds since Fluent’s initial investments. Collectively, startups from Lazarow’s previous and current portfolios have generated over $30 billion in enterprise value, with seven achieving unicorn status.

Addressing Exit Landscape Concerns

Some observers express skepticism regarding the exit opportunities available in emerging markets, particularly given the recent increase in valuations and the growing number of unicorn companies. However, Fluent remains optimistic, pointing to the successful IPOs of companies like Nubank, UiPath, Swiggy, and Talabat as evidence that significant global outcomes can be achieved outside of the U.S. and Europe.

Furthermore, companies like Nubank and UiPath have demonstrated the possibility of ultimately conducting IPOs in the U.S. even after initial success in other regions.

“Exit markets are also maturing within these regions,” Lazarow observes. “New secondary firms are emerging, and stock markets are developing local listing capabilities. While the U.S. maintains more established IPO and M&A markets, a substantial portion of the largest and most profitable exits are now occurring elsewhere.”

A Robust Network of Support

Fluent has cultivated a unique network to support the founders it invests in. Over 75 unicorn founders and venture capitalists actively support the fund, including David Vélez (Nubank), Nick Nash (Sea Group), Akshay Garg (Kredivo), and Sean Harper (Kin), alongside institutional limited partners and family offices worldwide.

Many of these individuals actively contribute to portfolio companies, providing assistance with talent acquisition, fundraising, and expansion strategies.

The firm also benefits from the expertise of a small team of venture partners from ZenBusiness, Terminal, Kin, and Dell, offering both sector-specific knowledge and geographic insights.

Diversification for Limited Partners

In a climate where venture capital firms may be reassessing their exposure to the U.S. and China, Fluent believes its strategy provides limited partners with a valuable opportunity for diversification.

“We are convinced that the most promising ideas originate from any location and have the potential to scale globally,” states Lazarow, whose firm is recognized on Kauffman Fellows’ top-returner index due to his prior investments in Chime, ZenBusiness, and Sidecar Health.

Other global venture capital firms with a focus on emerging markets include Accion Venture Lab, Alter Global, Endeavor Catalyst, Flourish Ventures, Global Ventures, Quona Capital, and Speedinvest.