Posted: 3 months ago

Pioneering Startups in Frontier Markets: An Interview with Dennis Kibirev

In this interview, we talk with Dennis Kibirev, a recognized venture builder, startup coach, and speaker, who is currently a mentor in the 500 Global Accelerator's Fourth Stream in Georgia, Dennis shares insights on the unique challenges startups in emerging markets face, ways to overcome them, and his approach to mentoring based on his vast experience working with startups and global corporations.

Dennis, with your extensive experience in international venture building and entrepreneurship, what are some unique challenges that startups in emerging markets face? How can they overcome these challenges?

As a mentor or Entrepreneur-in-Residence, I’ve been a direct participant in many emerging startup ecosystems across the MENA and APAC regions with both venture & government-backed programs. So I’ve seen various permutations of national startup communities and, as much as each frontier ecosystem is unique, they also face many common challenges. Such common issues encompass access to talent and capital—including government backing and incentives—to help accelerate growth, as well as being able to tap into guidance from experienced and already successful founders or executives, including support from the wider local startup community. 

Depending on the stage of development of each of these three elements (capital, community and coaching), an emerging ecosystem will usually see a corresponding level of maturity with respect to the startups it ‘graduates’. While there is no cookie-cutter formula for how to create a thriving startup community, having a ‘catalyst’ in the form of a cornerstone private or government-backed program with investment capability, is definitely a main ingredient.

Public-private partnerships in emerging markets are a great variation on this theme as they allow for founders to simultaneously tap into the global know-how and capital of international investors in addition to the on-the-ground connections and support that a government innovation agency can facilitate. Finally, universities also have an important role to play as enablers of first-time founders and science-led ventures.

You've spent 17 years working at and consulting for fast-growing startups, scale-ups, and global corporations. How have these experiences shaped your approach to mentoring startups in emerging marketing such as Georgia?

Because my career started in New Zealand, which is a country that is very similar to Georgia population-wise, I fully understand the importance of having a ‘global from day one’ mindset. The double whammy of being a startup from a less-mature ecosystem that also has a smaller population usually requires that its founders set their sights overseas almost from the start in order to gain the resources and customer base required to scale their businesses. When I’m coaching founders from emerging markets, I try to help them understand that they can aim high from the get-go but this does require for the team to adopt a more international outlook on venture building. For some teams, this requires a significant conceptual shift which then becomes part of their learning curve as entrepreneurs.

For Georgian founders, this means looking to immediate neighbours such as Turkey, Azerbaijan, Uzbekistan or Kazakhstan for a larger and more scaleable customer base and to investors in MENA or APAC, as well as further afield, for funding support. The advantage that founders here have over their emerging market peers is that Georgia is ranked as one of the easiest countries in the world to do business in. While this doesn’t remove the challenges around fundraising and hiring, it does provide a better starting point relative to other ecosystems.

As a mentor who’s advised startups from all 7 continents, what are some key lessons or advice you typically impart to startups to help them scale and attract global investors?

It seems the international funding environment has reached a point where investors are now more open towards supporting nascent startups. Many VC firms globally are now putting in money at a much earlier stage of the company lifecycle and are willing to make bets on less experienced founders. Post-COVID realities have also slightly ‘flattened’ the venture world from a  geographic standpoint so you now have founders from the EECCA region successfully pitching investors out of the US, Europe or Asia.  

While what I just said comes with many caveats, including a potential looming global financial crisis, these two elements seem to have considerably levelled the fundraising playing field for emerging market startups. Regional founders are now able to access global capital in a way that historically hasn’t been possible. 

The advice I usually give to founders from emerging markets is to thoroughly research investment options that are open to them in their particular niche on an international level and align themselves with funders who will have a high ‘care factor’. This usually involves searching for investors who are more strategic in nature—whether this be angels, syndicates, funds or family offices—who understand the startup’s industry and can appreciate the founding team’s ability to introduce a novel solution into that vertical. 

The upside of such an approach is that the geographic origin of the startup can often become a secondary concern for the investor if they can gain the confidence that the particular team has the capability to execute globally. So the challenge then becomes to credibly present the product and the team to such investors in a way that wins their trust. 

Having previously been a jury member for Startup World Cup and many other startup pitching competitions globally, what are some qualities or factors that you look for in a startup that indicate it has the potential for success on a global scale?

Over the years, I’ve been a jury in many competitions across a variety of countries and I have seen some of the craziest—and most innovative—ideas pitched on both the physical and virtual stages. Such constant exposure to innovation helps to develop and strengthen the ability to recognize patterns, which is arguably one of the main skills in any investor or pitch judge’s toolkit. When you’ve seen a different variation on the same theme many times over, the strengths and weaknesses of a given team or product tend to surface pretty quickly. Such pattern recognition allows you to get ‘hunches’ around whether a particular group of individuals could be the right one to build a ‘global from day one’ business. However, competition pitches are typically very short and information-poor so it’s often hard to say definitively whether a team is ready to compete globally.

In terms of a specific ‘tell’ that normally jumps out at me is the way a CEO talks about their product’s merits not just in the regional context but relative to the larger markets they’re pursuing. Often teams from emerging ecosystems will underestimate the difficulty of gaining a foothold or competing in more mature geographies such as North America or Europe and don’t do enough market research. This is often due to a lack of founder experience but sometimes it is also a sign of excess hubris as a result of having a strong ‘local’ product combined with not enough customer-driven insights into the new target market. So having a leadership team that is prepared to be intellectually honest and admit that they “don’t know what they don’t know” while clearly showing that their ambitions are backed by thorough in-market analyses is one solid indicator of international potential.

From your perspective, how important is it for a startup to understand and adapt to the culture and business environment of the region it operates in? Can you share any experiences or examples of startups that have done this well?

There are fundamentally a few types of ventures that a founder can build and, depending on which type their product idea aligns to, global expansion may become easier or harder. The first one is a B2C business model or, less often, a small-business focused B2B startup where advertising and other more easily accessible marketing channels act as the main engine of growth. With the exception of products that are in highly regulated industries, such as FinTech for instance, scaling such a startup internationally will be easier because they will target English speakers in various countries while using marketing tactics appropriate to their industry that can be replicated with minimal variation in the different geographies. Gaming startups fit the bill well here as they have high global scaling potential built into the business model and their founding teams can quickly test different markets using the aforementioned approach. A good example of such a Georgian startup is Arena Games who have been targeting gamers and gaming studios from all over the world.

The second kind of startup usually has a B2C product that has a niche appeal for a particular type of regional consumer or a B2B product that involves longer and more complex sales cycles or, for instance, winning government contracts. Such founders will need to think long and hard when choosing their next market as consumer tastes may be very different and media or marketing channels for accessing such customers could be less accessible. In terms of B2B business models, regional differences in terms of the local culture and specifics of the business environment will need to be seriously taken into account when planning expansion. A great Georgian example here is Kernel, who have tested various countries for their FinTech product and ended up targeting the small-business sector in India as their chosen customer base. Deeply understanding the Indian business and cultural context is a major factor in terms of accelerating their growth.

How do you see the startup ecosystem in Georgia and the larger EECCA region evolving over the next few years? What trends or opportunities should startups in this region be aware of?

There seems to be a growing awareness within international investment circles that this is a yet-untapped startup region, which has so far flown under the radar. While competing markets to ‘the left and right’ such as Africa and South East Asia have become the focus of emerging market investing, EECCA is still a relatively novel option as far as venture capital is concerned. This also means that it is in many ways less mature as a funding destination and the founders coming out of its various member states have to work harder to put themselves on the global investment map over the next few years. Yet the total size of the region population-wise and some of the common cultural elements shared by its members present a very attractive commercial opportunity.

There is definitely scope to develop the capacities of each individual ecosystem but even more potential in terms of building ‘bridges’ between EECCA markets in order to accelerate innovation regionally. This is similar to what I saw in the Balkans countries while working as a mentor there, where the various ecosystem leaders actively collaborate to foster cross-border innovation, thereby helping to create a ‘bigger regional pie’ for their local founders. Georgia is a great example of a government that has recognized what innovation can do for the country and is now actively implementing private and public initiatives to accelerate ecosystem-building. This approach could be further enhanced and accelerated through collaborating with other EECCA members, vis-a-vis the Balkans model.

You’re currently a resident mentor for 500 Georgia, in your opinion, how does participating in such a global accelerator equip startups for rapid growth and scaling up? 

As I mentioned earlier, one potential way to grow an active frontier startup community is having a cornerstone player in the market who can help with ecosystem capacity-building. This can come in several forms and in Georgia specifically, 500 Global is a good example of such a prominent international brand that has helped to lift the skills of both Georgian founders and those from the wider region. 

A crucial lesson that founders who go through the 500 Georgia program internalize is the importance of execution rather than just coming up with ‘great ideas’. I’ve spoken to several 500 Georgia alumni who say that the “execution is king” mantra is one they now recite religiously, which they also admit was not the case before they entered the program. Prior to the accelerator, they would cling tightly to their game-changing (in air-quotes, of course) ‘killer products’ and not be willing to publicly share much for fear of someone stealing their idea. This fear of openly sharing ideas is actually a feature of emerging startup economies that I’ve noticed across the world and that founders from the EECCA region are obviously not immune to. 

However, the 500 Georgia program helps founders understand early on that their ability to take their ideas to the global stage will depend on how quickly they can internalize this execution-first mindset. Ultimately, getting alumni to evangelize this approach and talk about their wins—and more importantly, their losses—within the local community creates a more pay-it-forward type environment that hugely benefits the entire ecosystem.

Given the diversity of startups that you coach, which includes differences in terms of business models, customer and geographic focus as well as founder mindset, how do you adapt your mentoring approach to meet the unique needs of each founding team?

While it is undoubtedly true that there will be many differences between founders from various parts of the world, there are also many common elements between them as business people as well as the products they build. Earlier I referred to ‘pattern recognition’ as a core investor and mentor skillset, which involves identifying commonalities with regards to products, operational and business models, markets and growth strategies. 

As a result, I focus on trying to figure out the ‘whole product’ that a founding team is trying to build and how this fits into the context of the markets they aim to serve. Once I do the gap analysis together with them to figure out where their main business constraints and growth accelerators are, we map out a plan to address critical areas. The most important element here is effective prioritization and working on ‘the right things at the right time’ as there will always be more ideas and opportunities than can be executed on.

A lot of what I work with founders on is trying to help them ‘upgrade’ the personal mental models they use for thinking about their businesses. This also involves teaching a systems thinking approach to venture building and learning to zoom in and out on problems. As Einstein famously said, “you can’t solve a problem by using the same level of thinking that created it”, so learning to take a ten-thousand foot view on startup challenges becomes a lifeline for founders when it comes to removing growth roadblocks.

As a mentor and advisor, how do you balance pushing startups towards rapid growth and ensuring they build solid, sustainable business models?

I’ve developed a strategy framework that I use to think about startup growth and I refer to this framework when getting founders to consider the end-goal of their vision and the milestones needed to get there. This involves considering the long-term market and societal value that they’re creating and mapping this back to the blockers preventing them from achieving certain tactical goals in the near-term. I believe that one of the things sorely lacking in ‘startupland’ is a coherent system for connecting longer-term strategy to a regular execution cycle that a new founder can use. 

By using the ‘Strategy Stacks’ framework, I try to get founders to see that there is a cadence that they can implement in order to ‘build for the future’ while executing on their yearly, quarterly and monthly objectives. Ultimately, startups are defined by having a finite runway in terms of financial resources that they have to keep extending via increasing their market value. The best way to grow that market value more predictably, in an environment where almost every element of your business is unpredictable, is to leverage a systems thinking approach and use actionable strategy frameworks paired with ready-made execution toolkits.

The problem with the majority of less experienced startup founders—not just from emerging ecosystems but pretty much anywhere—is that they lack the right mental models to run their businesses on, including a coherent ‘growth operating system’. I do my best to show how implementing such a system will help them not just in the short term but also as their entrepreneurial career evolves.

Finally, what motivated you to become a mentor and invest your time in nurturing startups? What is the most rewarding aspect of this role for you?

I believe that at this point I’ve coached about 400-500 founders through one-on-one mentoring, running group workshops and delivering public lectures. When I started out years ago in New Zealand, I had no idea that I’d end up doing this all over the world and that it would allow me to travel to so many countries and meet so many amazing individuals. 

However, it’s still not a career for me but rather something I’ve always done parallel to my main job, whether that be launching my own ventures or working in tech companies as a hired executive. The main driver has always been to share my experience with those who could directly benefit from that knowledge. While it started out with imparting digital marketing and sales advice, as my career evolved and I started to work in more leadership-focused roles, my coaching has become more strategy and systems thinking oriented. 

I get a buzz out of sharing the mental models and tools that I’ve developed over the years, especially when I see how this can rapidly help a fellow entrepreneur improve their thinking process or significantly accelerate their rate of learning around a topic. And the learning is always two-sided of course, so getting constant exposure to so many talented and inspired people from different countries is a fantastic reward for being a mentor!