Millions of families in East Africa and India lack access to basic financial services. Despite popular perceptions of a mobile money revolution, very few FinTech startups in emerging markets are reaching meaningful scale. Breaking the Pattern examines why the vast majority of these startups in East Africa and India are not receiving the investment they need. The report’s key insights include:

The report’s key insights include:

  • Investment is highly concentrated in just a few companies: Despite a few well-known DFS companies operating at scale, like Safaricom’s M-Pesa in Kenya and India’s PayTM, most are not receiving the investment they need to scale. For instance, in East Africa, startup investment is at an all-time high, but 72% of venture capital went to only three startups in 2015 and 2016.
  • Human Capital Trap and Business Model Challenges: Investors in East Africa and India consider DFS companies to be risky because of human capital challenges and structural barriers in the marketplace; but these challenges are hard to overcome without investment.
  • The “pattern recognition problem”: Because of the high cost of early stage due diligence in India and East Africa, investors often fall back on patterns to find companies and make investment decisions – relying on networks and indicators like prestigious universities or accelerator programs.

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