These tech companies run by migrants from emerging markets beat the Nasdaq
Probably no one in the United States has ever heard of Georgia-born Mikheil Lomtadze. But in October 2020, it surprised the world with one of the world’s hottest tech IPOs. Lomtadze is not from our Georgia. He is from Georgia, the Black Sea nation. He emigrated to Kazakhstan, among others, founded the successful fintech company Kaspi.kz and made it public in London last year. Since then, Kaspi has outperformed Nasdaq, Tesla, MSCI Emerging Markets and even Bitcoin, up around 80% since its inception.
Newcomers to new nations must bring with them a kind of motivation that the natives don’t quite match. Lomtadze isn’t the only one who is a foreigner in a strange land who, with years of sleepless nights and a typical entrepreneurial obsession, is launching a new tech company and become a rock star in their respective corner of the market.
Foreign founders. Fortunes found.
At one point in 2016, in instinctive response to the early Trump years, the financial press became obsessed with immigrants. Tech companies complained about H1-B visas. Reporters were busy writing feature articles on the next foreign-born new founder as if to tell Trump how amazing our immigrants were, though the former president never said they didn’t. were not. An immigrant success story was on the cover of every magazine.
Yet it is an old story. Sergei Brin was born in Moscow. He founded Google with Larry Page and became a billionaire. Andy Gove was born in Hungary and was one of the founders of the global semiconductor giant, Intel.
Yet a truism remains. The latest generation of new technology IPOs has behind them founders born abroad from a large emerging market, usually a Russian or a Chinese. What’s up with this?
A report released last week by the New American Economy Research Fund shows that 44% of Fortune 500 companies have at least one immigrant founder or immigrant child. Kauffman Foundation Research found that these new Americans are twice as likely to start businesses as their native-born American peers. The Kauffman Foundation Jason Wein Notes, “There is something inherently entrepreneurial about leaving home to start a new life in another country. Perhaps this is the reason why immigrants tend to start businesses at a disproportionately higher rate than native Americans.
Immigrants from emerging markets, such as Russia, China, Brazil and India, in particular, often grow up in difficulties that cause them to be more open to taking risks in order to achieve upward mobility. On top of that, these same emerging countries regularly produce some of the world’s best tech talent, according to Coursera’s Global Skills Report.
If they are so hungry and so successful, maybe their businesses are worth investing in as well.
Here are a few of those I have found that are newcomers to the past two years, or soon to be newcomers, to the US stock market. I should have bought Zoom. Instead, I’m stuck with KraneShares China Healthcare (KURE).
Look at these guys …
Oleg Shchegolev and Dmitri Melnikov of Semrush (NYSE: SEMR)
Semrush manufactures online visibility management and content marketing software. They went public in March. They are up almost 100%.
One of the underlying drivers of Semrush’s growth has been the tectonic shift towards online interactions between businesses and customers – a trend that has intensified due to the pandemic.
Its founders, Oleg Shchegolev and Dmitri Melnikov, have been friends for over 30 years and are both from Russia. They immigrated to the United States and now work in the Semrush office in Boston. Friends started to develop the platform as a hobby, but quickly found that it had the potential to help marketers around the world. From there, Semrush was born in 2008 and has since grown into a public company with a market capitalization of $ 2.5 billion.
The company is said to have more than 72,000 paying customers in more than 142 countries and more than 1,000 employees.
Goldman Sachs analyst Vyacheslav Degtyarev wrote in a recent research report that “Russian entrepreneurs and individual technology developers are increasingly looking to penetrate international markets. given materially larger addressable markets, benefited by an abundant and relatively inexpensive domestic technological talent pool. “
Translation: Russian technicians will do the job. Their founders will travel to where the money is. Bam. Success.
Dropbox’s Arash Ferdowsi (NASDAQ: DBX)
Dropbox is now a household name and virtually eponymous with cloud storage. The company went public on the Nasdaq in 2018 with a valuation of $ 8.2 billion, but its market capitalization has since reached $ 11.9 billion. Their stock price has risen more than 35% year-to-date and beats the Nasdaq by a national mile.
Co-founder Arash Ferdowsi is an American, but his parents came from Iran and moved to Overland Park, Kansas. In an editorial in his local Kansas City Star last year, Ferdowsi said, “Kansas welcomed my family and gave me the confidence to be successful in a way my parents could never have dreamed of. I want future generations of immigrant families to have the same opportunity – so they can build a bright future here and uplift us along the way. “
He came out of Kansas. He went to MIT and founded Dropbox with his roommate, Drew Houston. Arash’s net worth is now estimated by Forbes at over $ 1.1 billion, and Dropbox has over 15 million paying customers.
Tony Xu of DoorDash (NYSE: DASH)
The DoorDash food delivery platform could not have been made public at a better time, in the midst of the worst pandemic since the Spanish flu, only with lockdown orders that did not accompany this killer virus. The company’s revenue in the first quarter of 2021 almost tripled compared to the first quarter of 2020. They also signed new partnerships with chains like Albertsons, Rite-Aid and PetSmart.
Dash is up 23% year-to-date, beating the Nasdaq.
Chinese immigrant Tony Xu created DoorDash. No, his parents weren’t physics teachers. They were blue collar workers like most of us, and had to hold multiple jobs, Xu told the South China Morning Post at the time of the IPO in December 2020. Xu was a humble dishwasher and pizza delivery man, so he came up with the concept of DoorDash.
In a letter accompanying DoorDash’s IPO prospectus, Xu wrote, “I was five years old when I immigrated from China with my parents. Like many immigrants, my family came to this country to pursue the American dream… DoorDash exists today to enable those like my mother who came here with a dream to do it on their own.
DoorDash now has over 18 million customers and over 2 million “Dashers”.
Eric Yuan, Zoom Video Communications (ZM)
Like DoorDash and Xu, Yuan’s Zoom IPOD at the right time, a year before the pandemic, when the world equated video conferencing with “Zoom calls.” Zoom is now to videoconferencing what Coca-Cola is to soda. If you think of video conferencing, you think of Zoom, not Skype, not Cisco’s Webex. Zoom’s share price has risen more than 500% since its IPO in April 2019.
Yuan was born in Shandong Province in China. In an interview with Forbes in April of this IPO year, Yuan said that as a child he collected scrap metal to sell it.
With annual revenue of $ 331 million, up 118%, Zoom was the ultra-rare tech unicorn to debut on the stock exchange with a profit, with 50,000 corporate customers, including Samsung, Uber, Walmart and Capital One. Yuan avoids the spotlight. Under the buzz, Yuan’s is a story of perseverance, perfect timing, a product that makes Zoom a priority over former players already in the market.
Vlad Tenev of Robinhood (soon to go public)
If you’ve been following the Gamestop and AMC stock meme stories of 2021, then you’re no stranger to Robinhood, the financial trading app that aims to “democratize finance for all”.
Co-founders Vlad Tenev and Baiju Bhatt both come from immigrant families. Tenev was born in Bulgaria, but moved to the Washington DC area with his family when he was five. Bhatt is a first generation American and the son of Indian immigrants.
They aren’t public yet, but unless Wall Street really wants to punish the Reddit Wall Street Bets mob, Robinhood should do well, especially if it becomes one of the only traditional online brokerage houses that also allows l purchase of crypto. You cannot do this on E-Trade.
Finally, Wall Street is considering a number of tech-related IPOs from the developing world. A few of the two in the spotlight right now: Vietnamese Start of VE Vinfast will try to be like China’s NIO and collect a huge American IPO salary.
Another is that of Malaysia Aztech Global. Although this one is for the big boys who have brokerage accounts in Singapore. They signed up in March. How sexy is Aztech Global? Their IPO was 18 times oversubscribed.