Building a startup ecosystem in developing nations

The breakout session at the 2019 BYU Management Society Asia Pacific Conference in Mongolia tackled one of the most pressing questions for emerging economies: how do you cultivate a thriving startup culture from the ground up? For Australians attending the gathering, the conversation carried immediate relevance. Back home, Sydney's Surry Hills has transformed into a hotbed of founders pitching everything from fintech to climate tech, while Melbourne's Cremorne precinct has earned a reputation as a "Silicon Alley" of its own. Yet the same challenges of access to capital, mentorship gaps, and fragmented regulation that entrepreneurs face in Mongolia echo across the Asia-Pacific.

Speakers drew on case studies from Ho Chi Minh City, Nairobi, and Manila to map the ingredients that turn an idea into a movement. They argued that ecosystems are not built by governments alone but by the slow, deliberate work of founders sharing office space in hubs like Brisbane's River City Labs or Sydney's Stone & Chalk. The Australian experience, with its mix of taxpayer incentives and private accelerators, offers a fair dinkum comparison point for any nation seeking to nurture homegrown innovation. The phrase "no worries" might define the local mindset, but building a startup is never quite that relaxed.

The building blocks of a thriving ecosystem

Every ecosystem needs three foundational pillars: capital, talent, and a culture that tolerates failure. In developing markets, these elements rarely exist in equal measure. Vietnam, for instance, has produced a wave of competitive engineers thanks to heavy investment in STEM education, yet access to early-stage capital remains patchy outside Hanoi and Ho Chi Minh City. Australian founders recognise the same squeeze, often describing the Series A crunch in terms like "the valley of death" between seed rounds and growth funding.

A second ingredient is regulatory clarity. Founders in markets where business registration takes months, or where foreign ownership rules shift unpredictably, struggle to plan beyond the next quarter. Sessions at the conference emphasised that policy reform does not have to be sweeping to be effective. Small changes, like streamlined visa pathways for skilled migrants or simplified tax filings, can unblock entire sectors overnight. For Australians watching from abroad, the message landed close to home, since the federal government's R&D Tax Incentive has long been a lifeline for local startups, and any tightening of those rules tends to send shockwaves through the inner-city co-working spaces.

Funding the first mile

Capital is often the loudest complaint from founders in developing nations, but the quiet truth is that money is rarely the bottleneck. The harder problem is finding patient investors who understand local consumer behaviour. Angel networks across Sydney and Melbourne have spent years building this muscle, backing everything from agtech in regional Queensland to ocean-sensor startups spun out of CSIRO. Speakers at the Mongolia gathering urged attendees to look at models like the Techstars and Startupbootcamp accelerators, but adapted to local realities rather than copy-pasted from San Francisco.

Microfinance and revenue-based financing were also highlighted as underused tools. In markets where venture capital is scarce, founders can grow through customer-funded models, reinvesting profits instead of chasing institutional rounds. Australian entrepreneurs have started to embrace this approach through platforms that connect small businesses with non-dilutive funding, a trend that mirrors what is happening in Manila and Lagos. The shift proves that a viable exit pathway does not always require a billion-dollar acquisition.

Mentorship and the power of diaspora networks

Mentorship often emerges as the underrated catalyst in any emerging ecosystem. Speakers shared stories of founders in Ulaanbaatar who credited their breakthroughs to late-night Skype calls with relatives working in the United States, Canada, or Australia. The Mongolian diaspora, like the Indian and Chinese networks before it, has become a soft-power force, channelling expertise, introductions, and sometimes capital across borders.

For Australians, the diaspora angle is familiar. Roughly one in three residents was born overseas, and many of the country's most successful founders, including the teams behind Canva and Atlassian, have drawn on transnational networks to scale. Conference participants explored how diaspora-led accelerators, like those run by alumni groups in Singapore and Sydney, can fast-track credibility for early-stage companies. The takeaway was that ecosystems grow faster when knowledge moves with the people who carry it.

Sectors that lead the way

Not every sector lends itself to startup formation in developing markets. Agriculture, healthcare, and financial inclusion tend to lead because they address immediate needs and benefit from mobile-first distribution. Speakers pointed to telehealth platforms in rural Indonesia and agri-fintech in Kenya as prime examples. In Australia, similar patterns are visible, with founders in Perth building drought-monitoring tools and Brisbane teams developing remote-diagnostics software for the bush.

Financial services, in particular, emerged as a recurring theme. Attendees interested in how capital flows through young ventures were pointed toward the conference's finance and accounting resources, which outline the accounting standards and funding mechanisms relevant to Asia-Pacific founders. The session also touched on how mobile wallets, peer-to-peer lending, and embedded finance are reshaping expectations in markets where traditional banking has under-served entire populations.

Practical steps for founders and policymakers

Conference organisers closed with a set of recommendations for anyone looking to accelerate ecosystem growth in their own backyard.

• Map existing assets before importing outside models, including local universities, industry clusters, and informal investor groups.
• Build bridges with diaspora communities early, since they often hold the contacts, credibility, and capital newcomers lack.
• Pilot small policy changes, such as one-window business registration or founder-friendly visa programs, rather than waiting for comprehensive reform.
• Fund patient capital vehicles, including revenue-based financing and angel syndicates, that suit local market rhythms.
• Invest in mentorship infrastructure, because experienced operators can compress the learning curve for first-time founders by years.

The session left attendees with a clear sense that ecosystems are grown, not installed. Whether in Ulaanbaatar, Suva, or a Surry Hills office above a brunch café, the same stubborn mix of capital, talent, and trust determines whether a startup survives its first decade.