In underdeveloped ecosystems, the Imported startup playbook doesn’t apply !
Forget everything you’ve read about quick exits and scaling at breakneck speed. That narrative works in markets where IPOs and acquisitions are common currency. But in most of MENA, South Asia, Sub-Saharan Africa, and other emerging markets, exits are the exception—not the rule. For example, in 2022, the entire MENA region saw only 57 startup exits through mergers and acquisitions.
This number is stark when you consider the thousands of startups operating across the region. So what do you do when the “build fast and exit” strategy doesn’t work?
You adapt.
You question why your goal is to exit in the first place.
And you start building with staying power, not just a sale price.
Fundraising in Underdeveloped Ecosystems – It’s Not Just a Sprint. It’s a Marathon with Surprise Obstacles
Raising capital in underdeveloped ecosystems is not for the faint-hearted.
But here’s the catch: a significant percentage of startups that raise pre-seed or seed funding in these regions never make it to a Series A. Why? Because the capital dries up. There’s little follow-on support. And the infrastructure to scale—whether regulatory, financial, or operational—is often missing.
Pakistan is a case in point. The ecosystem attracted over $300 million in 2022, yet by Q4, funding dropped to just $15.15 million—a 79.24% year-over-year decline.
These aren’t just numbers. They’re a wake-up call.
Raising money is only half the game. Surviving after the raise is the real challenge in these markets.
The JOMO Era -Why Founders in Underdeveloped Ecosystems Should Learn to Enjoy Missing Out
In fast-moving markets, FOMO (Fear of Missing Out) drives most fundraising activity. Founders scramble to secure capital—any capital—as quickly as possible.
But in underdeveloped ecosystems, this FOMO can be fatal.
Not all capital is equal. And in a region where follow-on funding is rare and exits are rarer, taking the wrong money can lock you into unrealistic expectations, equity dilution, or worse—misalignment that breaks your company.
In 2022, African startups raised $6.5 billion, but here’s the nuance: $1.55 billion of that was through debt financing. That shift suggests founders are exploring capital that doesn’t come with immediate equity pressure.
JOMO—Joy of Missing Out—means taking a beat. Saying no. Being intentional. It’s realizing that skipping a round or walking away from a flashy term sheet might just be the best decision for your startup’s long-term health.
So let’s flip the script: what if it’s cool not to raise?
When to Say No to Money (Yes, Even in an Underdeveloped Ecosystem)
Saying no to money sounds like a luxury. But it’s a discipline.
Let’s be real—capital is scarce in underdeveloped ecosystems. In 2022, Pakistani startups raised $315 million, compared to Nigeria’s $838 million or Turkey’s $1.63 billion.
So when a check comes along, it’s tempting to grab it.
But desperate fundraising leads to disaster. You might get investors who don’t understand your market, impose unscalable growth targets, or push for exits when your business isn’t built to exit.
Instead, founders should ask:
- Does this investor have local or adjacent market experience?
- Do they understand macro instability and how to navigate it?
- Will they support me through slow periods?
Funding is like marriage. Easy to get into. Hard to get out of. Choose wisely.
Founder Due Diligence on Investors in Underdeveloped Ecosystems – The Underrated Power Move
Most of the startup world focuses on investor due diligence on founders. But what if we flipped the lens?
In underdeveloped ecosystems, where funding relationships are high-stakes and long-term, founders must become the evaluators.
Here’s how:
- Ask for references from founders the investor backed—and exited.
- Probe into how they handled COVID, economic downturns, or political uncertainty.
- Dig into whether they bring strategic value or are simply “capital tourists.”
Q4 2022 saw Pakistan’s startup funding hit $15.15 million. That’s not a market where you want to be stuck with passive investors waiting for the next unicorn.
Founder due diligence isn’t just smart—it’s survival. And in truth, the best investors welcome it. If an investor gets offended when you ask tough questions, run.
Underdeveloped Ecosystems Need Fundraising Models That Fit Their Reality
Why are we trying to replicate models that were built for Silicon Valley, New York, or London?
Underdeveloped ecosystems have different economic structures, consumer behaviors, and time horizons. So why chase capital designed for a completely different reality?
Let’s get creative.
- Revenue-based financing gives you capital without equity loss or exit pressure.
- Community-driven funding (angel syndicates, crowdfunding) can reduce dependency on international VCs.
- Grants, government accelerators, and university spin-offs may offer more aligned incentives.
In 2022, debt funding made up 24% of African tech capital—a sign that the region is adapting. It’s not just about getting funded—it’s about choosing the right model for your ecosystem.
We don’t need copy-paste models. We need new blueprints.
The Myth of the Exit – Why Building to Last Matters More in Underdeveloped Ecosystems
Let’s talk about the sacred cow—exits.
If exits are rare, then why is every founder building toward one? Is the only measure of startup success a sale or IPO?
The MENA region saw only 57 startup exits in 2022. That’s across dozens of countries, hundreds of cities, and thousands of founders.
Maybe we need to redefine success.
What if startups could:
- Employ 500 people in underserved areas?
- Digitize entire industries that never had access?
- Create social or environmental impact that spans generations?
This isn’t idealism. It’s realism.
Underdeveloped Ecosystems Face a Reality Check – Plunging Investments, Rising Debt, and Shifting Startup Strategies
In 2023, African tech startups experienced a significant downturn in funding, raising a total of $2.4 billion—a 27.8% decrease from the previous year. This decline reflects the broader global capital shortage impacting emerging markets. Notably, Nigeria, Egypt, South Africa, and Kenya remained the top four countries in terms of funding, with Nigeria witnessing a substantial 59% drop to just under $400 million.
Pakistan’s startup ecosystem faced a dramatic funding decline in 2023, securing only $75.6 million—a 77.2% drop compared to 2022. This downturn is attributed to global economic challenges and a shift in investor sentiment. The number of deals also decreased by 47.9%, with the average ticket size falling by 60% to $2.4 million. Despite these challenges, female-founded startups made notable progress, attracting $10.5 million and accounting for 13.9% of the total investment.
Amid the funding decline, African startups increasingly turned to debt financing in 2023. Of the $2.9 billion raised, $1.1 billion—approximately 38%—was through debt, marking a 47% year-over-year increase. This trend indicates a strategic shift as startups seek alternative financing methods to sustain operations during economic downturns.
These figures underscore the evolving dynamics of startup funding in underdeveloped ecosystems, highlighting the need for adaptable strategies and diversified financing approaches.
Can We Create a New Culture of Fundraising in Underdeveloped Ecosystems?
Here’s the open question:
What if the greatest startup ecosystems of tomorrow aren’t defined by unicorns, but by endurance?
Can we stop mimicking models that were never designed for our markets? Can we stop glorifying exits and start glorifying impact, and value creation locally and regionally?
To do that, founders in underdeveloped ecosystems need to:
- Practice intentional fundraising—knowing when to say no.
- Conduct due diligence like a boss.
- Seek long-term alignment over short-term hype.
- Explore alternative capital structures.
- Redefine success on their own terms.
Because maybe, just maybe, the next big thing isn’t something you sell.
It’s something you keep building.