In recent years the world has witnessed a growing wave of entrepreneurial ventures in developing economies. CB Insights reports as of March 2020, developing economies have produced 160 unicorns, equivalent to 35 percent of all unicorns in the world. Much of the success of these unicorns can be attributed to entrepreneurs having increasing access to financing. Our study, however, found that access to financing varied significantly across developing economies and remained as a key challenge for entrepreneurs in most of those economies. Differences in legal structures, operating conditions, talent pools, and available capital sources created myriad conditions for entrepreneurs to navigate when seeking funding to build and scale their ventures.

At the end of 2011, Fernando Lelo de Larrea (MBA 2004) and Federico Antoni (MBA 2004) decided to resign from their CEO positions in their respective mid-sized companies and start fundraising for their first early stage investment fund: Seed Innovation Trust 1. Given their lack of track record in venture capital, they decided to create a micro fund, the smallest, yet most institutional, venture capital fund possible consistent with their investment thesis. Founded in 2012, ALLVP raised the first institutional seed capital fund in Mexico to invest in innovative service-oriented, new companies. The investment thesis focused on service industries such as healthcare, financial services, and consumer internet that were experiencing high growth due to demographic and macro-economic trends, favorable non-market forces, the growing middle class and the availability of new technologies. Given the underdeveloped entrepreneurial ecosystem in Mexico, the founders established, along with the fund management vehicles, a Seed Accelerator Program, called Venture Institute that would feed the fund with high quality startups. This dual model proved key to creating a high value first portfolio and positioning ALLVP in the Mexican entrepreneurial ecosystem. Two years and twelve portfolio companies later, ALLVP raised a second, $40 million dollar (USD) fund focused on Series A and B rounds in Latin America. Given ALLVP's success, a new proactive public policy from Mexico's new government was launched and helped the seed capital industry grow from ALLVP as the first and only institutional fund in 2012 to more than a dozen funds in 2014.

Dopfner had directed Axel Springer to approach this task with a two-stage digital transformation strategy process. Beginning in 2006, the company focused on organic growth and late-stage digital acquisitions. This stage of the strategy process had centered around profitability and the infusion of digitization into the corporate culture. In 2013, the second stage of the strategy process was driven by Dopfner's formulation of the firm's corporate mission to become "The Leading Digital Publisher" and his defining the company's business as its branded content and not its distribution channels. With this new strategy, Axel Springer intended to espouse early-stage investments and entrepreneurship and grow revenue through three business models: paid content, marketing, and classified advertising. As of 2013, Dopfner's two-stage digital transformation strategy had been a stunning success. Axel Springer had more than 12,800 employees, total revenues of $3.9 billion, and EBITDA of $625 million. The company had exceeded the goals it had set for digital media contributions to revenue and EBITDA, achieved reach in 44 countries, and serviced 98 million unique digital visitors worldwide. Looking forward in April 2014, however, it was clear that the future still held many challenges. Dopfner knew that Axel Springer would need to continue to successfully balance digital and traditional media business strategies, further reestablish the firm's identity, and continue to pioneer the cultural transition within the organization.

"Raise money when times are good." Kevin Hartz mulled over this expression as he examined the term sheet before him. The CEO had become somewhat of a masterful fundraiser. Since founding the online event and ticketing service Eventbrite in 2006, Kevin, his wife Julia, and co-founder Renaud Visage had raised $80 million over six rounds of financing. Now, the Hartzes and Visage had before them an offer from Tiger Global Management and T. Rowe Price to invest $60 million in Eventbrite at a $650 million valuation. Before accepting this financing, however, the founders needed to assess whether such a large raise was necessary and, if it was, how it would affect Eventbrite's development and influence the firm's future exit strategy. Unfortunately, the team knew that Eventbrite's market dynamics would make this analysis difficult.

It was June 2011, and Alain Chuard and Victoria Ransom reflected on their history as founders of Wildfire Interactive Inc. (Wildfire). Originally called Promotion Builder, Wildfire had evolved from an in-house marketing solution used by the duo's adventure travel company to a multi-platform software program used by thousands of businesses globally. The Wildfire product enabled these customers to develop customized social-media marketing campaigns composed of video and essay competitions, user-generated contests, quizzes, and coupons. Users could then push these promotions to their websites or social networks, such as Facebook, hi5, and LinkedIn. Through this evolution, the team contended with a myriad of difficulties, including attracting talent, navigating international markets, and building and scaling operations. In particular, obstacles associated with cultural differences and geographical distance made it challenging for the company to maintain effective operations overseas. Moreover, relative to its competitors, Wildfire was substantially under-funded and under-marketed. This made it difficult for the founders to decide when the company should either accept or turn away lucrative-yet demanding-high-profile customers. Chuard and Ransom were now at another critical decision point in the organization's lifecycle. Wildfire had traditionally been a campaign-based product. Under this model, Wildfire was offered to customers for an initial fee plus a per-day charge, the size of which was dependent upon the feature set chosen by the customer. Recent pressures from investors and consumers, however, had pushed the founders to consider a transition to a subscription-based platform that would provide timeline and stream management, analytics, and page-management functionality. Whereas the founders knew that transforming business models could have various positive effects for Wildfire, implementing the change would also inherently alter the company and its product

Alain Chuard and Victoria Ransom reflected on their history as founders of Wildfire Interactive Inc. (Wildfire). Originally called Promotion Builder, Wildfire had evolved from an in-house marketing solution used by the duo's adventure travel company to a multi-platform software program used by thousands of businesses globally. The Wildfire product enabled these customers to develop customized social-media marketing campaigns composed of video and essay competitions, user-generated contests, quizzes, and coupons. Users could then push these promotions to their websites or social networks, such as Facebook, hi5, and LinkedIn. By summer 2011, Wildfire had achieved significant success and the founders believed that the company had reached a turning point. The team had analyzed the histories of similar industries (e.g., e-mail marketing) and determined that Wildfire's space likely would not support several independent companies and would ultimately experience an industry-wide consolidation. This meant that Wildfire would probably not be able to maintain the status quo and that Chuard and Ransom may need to consider the possibility of going public, getting acquired, or raising additional capital to bolster the firm's presence in the market. In May 2012, two large acquisitions occurred in the space and triggered a flurry of M&A activity. Among these events was an offer by Google to purchase Wildfire for $350 million with the contingency that Ransom and Chuard provide Google with a decision within 24 hours. The team set forth evaluating their options.

As of the date of this note, financing environments varied significantly across developing economies. Differences in legal structures, operating conditions, and available capital sources created a myriad of conditions for entrepreneurs to navigate when seeking funds to develop their ventures. One systemic trend, however, did exist: entrepreneurs consistently cited access to financing as one of the top three obstacles to achieving growth. This note does not seek to provide a "one size fits all" model to addressing this challenge. Rather, this note is intended to provide entrepreneurs with a starting point to better understand the types of financing available in developing economies, the sources of this capital, and the means to locate these investors. Entrepreneurs can use the examples in this note as a springboard to craft solutions for the challenges posed by their specific financing environments.

Waze successfully developed a free smartphone mapping application that gave consumers turn-by-turn directions and real-time traffic data. This digital map compiled driver-generated data from Waze's community of users to relay constantly updated information on conditions such as traffic accidents, speeding-camera locations, and construction zones. By October 2012, Waze had captured 10 percent of the U.S. iOS mapping market and had grown to serve over 28 million users, with an expectation of reaching 100 million "Wazers" by 2015. Noam Bardin, Waze's CEO, recognized the company's emergence as a leader in its space and understood that a fresh capital injection would be needed to lead it through the next stage of development. Waze's previous fundraising attempts had been fraught with challenges. In October 2009, just one day before Bardin anticipated accepting a Series B term sheet, Google released Google Maps Navigation. Investors felt Waze would eventually be pushed out of the market by what would now be considered the industry's 800-pound gorilla and rescinded their offers for funding. But now, in 2012, Waze's strong market position enabled Bardin to negotiate with potential investors from a position of strength. In December 2012, Bardin secured a $100 million Series D round of financing at a $700 million pre-money valuation. Prior to finalizing the terms of the agreement, however, the CEO hesitated. With the draft term sheet before him, Bardin thought, "Have I exhaustively evaluated all of the changes that might ensue by taking this money?"

International healthcare and reimbursement systems underwent a radical transformation in the 2000s, resulting from growing financial pressures incited by economic depression and a steady rise in healthcare spending. This phenomenon was most pronounced in the United States, where the health-spending share of GDP rose from five percent in 1960 to 17.9 percent in 2011. In Organization for Economic Co-operation and Development (OECD) countries on average, healthcare spending as a percentage of GDP grew from four percent to 9.6 percent over the same period. Although specifics varied by country, the systemic evolution of international healthcare and reimbursement standards was characterized by two main trends-a shift toward value-based pricing; and more stringent reimbursement standards for new drug evaluations. With this in mind, each country developed its own methods and decision-making processes for reimbursing companies looking to penetrate its market with new innovations. The United Kingdom, Germany, and Japan exemplified this dynamic.

It was February 2009, when Eric Edelson wondered to himself how he had gotten into this situation. Less than two years earlier, Edelson had been an MBA student at the Stanford Graduate School of Business ready to market a footwear product to the elderly. Since then, he had been unemployed, fired from his first job, and had acted as an underpaid consultant for a series of small and struggling companies. At present, Edelson was an operator at Fireclay Tile, an insolvent tile manufacturer with revenues of less than $3 million. Much had changed for Edelson since his pre-GSB days at Lehman Brothers. As Edelson sat in Fireclay founder Paul Burns' car driving what would become a daily commute from his home in San Francisco, California, to Fireclay's headquarters in San Jose, California, he evaluated the challenges that lay before him. Edelson had initially been brought in by Burns and his partner to evaluate BottleStone, one of Fireclay's product lines. Over time, Edelson had become more involved in Fireclay's strategy development and operations, eventually helping Burns highlight Fireclay's inefficiencies and providing him with actionable recommendations on how to address them. Little did Edelson know then that his work would result in his potentially joining and operating the company. Edelson had provided Burns with his turnaround plan just a few weeks before with the expectation that Burns would execute the recommendations himself. Now, Edelson was in a position to take charge and assume the responsibility of turning around the flailing organization. Pulling up to Fireclay's headquarters in San Jose, and with his game plan in hand, Edelson knew he had his work cut out for him.