The Geography Problem in Venture Capital

Venture capital describes itself as a search for outliers, yet for three decades it has searched the same handful of postcodes. The United States accounted for roughly 57% of global venture funding in 2024, according to Dealroom, and that concentration has since deepened rather than eased: Crunchbase data puts the US share of global venture capital at around 83% by the first quarter of 2026. Add China and the United Kingdom, and the large majority of global venture capital has, for a generation, gone to a strikingly small number of national markets.

This is not a story about the quality of ideas emerging elsewhere. It is a story about where capital chooses to look, and the evidence is accumulating that it is looking in too few places.

The map investors use is out of date

Capital allocation tends to follow prior capital allocation. Funds cluster where other funds have already validated a market, where legal frameworks are familiar, where exit precedent exists, and where limited partners can explain the geography of a portfolio in a single sentence. That clustering made sense when venture-scale technology ecosystems genuinely sat in a handful of hubs. It is harder to defend today, when the fastest growth in early-stage funding is showing up in cities most allocators could not place on a map without help.

The cost of this lag is not abstract. Every year that capital takes to notice a genuinely inflecting market is a year in which the earliest, cheapest, highest-conviction cheques go to whoever happened to already be paying attention. Later capital pays a higher price for the same thesis, once the growth is obvious to everyone rather than a select few.

Tashkent is the clearest illustration of the lag. Uzbekistan's early-stage funding rose from around 0.3 million dollars in 2020 to 69.5 million dollars in 2024, a 230-fold increase in four years. In March 2024, Uzum became the country's first unicorn, valued at 1.16 billion dollars. Four years earlier, an investor building a thesis around Central Asian technology would have found almost nothing to underwrite. The underwriting case now exists in full, and most of the capital that could act on it is still elsewhere, still waiting for a more familiar signal.

Kigali tells a similar story from a different starting point. Rwanda's capital raised roughly 45 million dollars in 2023, up tenfold from around 4 million dollars, in a year when African equity funding overall fell by approximately 57%. Kigali grew against the regional trend, not with it. A market moving in the opposite direction to its neighbours during a broad downturn is precisely the kind of signal a disciplined allocator should investigate rather than discount as noise.

Growth is not evenly distributed, and neither is attention

Manila offers a scale story rather than a growth-rate story. GCash, the mobile wallet, reached a 5 billion dollar valuation after MUFG bought an 8% stake for 393 million dollars in August 2024. It now serves around 94 million users, and the Philippines' broader fintech and digital ecosystem roughly doubled in value to 6.4 billion dollars over the course of 2024. That is not an early-stage curiosity. That is a market that has already produced a proof point of the scale allocators say they want, in a country that rarely features in the standard venture narrative.

Istanbul shows how quickly the picture can move. Turkish venture investment grew from about 497 million dollars in 2023 to roughly 2.6 billion dollars in 2024, a 423% increase in a single year. Casablanca moved on a smaller base but at a similarly sharp gradient: Moroccan startup funding reached approximately 94.96 million dollars in 2024, up from around 17 million dollars the year before. None of these moves required a new technology or a new business model. They required capital to notice a market that was already changing, and in most cases capital arrived only after the change was already visible in the data.

The pattern across all four cities is the same. Growth arrived before capital did, and in most cases it arrived well before capital did.

Mispricing has a mechanism, not just a symptom

None of this is accidental, and none of it is likely to correct itself without deliberate allocation. Concentration in venture capital is self-reinforcing: capital creates infrastructure, infrastructure attracts founders, founders attract more capital, and the cycle compounds in the same few locations while comparable activity elsewhere goes unpriced. The result is a market where risk and reward have become disconnected from underlying fundamentals in the strict economic sense. Assets are mispriced when the price does not reflect available information. Here, the information exists in the funding data, the unicorn creation and the exits, but the pricing mechanism, meaning where global venture dollars actually flow, has not caught up with it.

The fintech sector alone provides a run of exits and valuations that should already have moved allocator attention. Stripe acquired Paystack for over 200 million dollars in 2020. Flutterwave has been valued at around 3 billion dollars. Moniepoint reached unicorn status on the back of a 110 million dollar Series C in October 2024. Kaspi.kz listed on the Nasdaq in January 2024, the first Central Asian technology company to do so on a US exchange. Uber acquired Careem for 3.1 billion dollars. ByteDance took roughly a 75% stake in Indonesia's Tokopedia at a valuation of 1.5 billion dollars or more. Each of these events happened in a market outside the conventional venture map, and each was a market-clearing price set by a large, sophisticated acquirer rather than a speculative round among insiders. Sophisticated capital has already voted with real money. Venture capital, as an asset class, has been slower to follow.

What disciplined allocation looks like from here

The opportunity is not to abandon the well-covered markets. It is to build a systematic method for identifying the next Tashkent, Kigali, Manila or Istanbul before the rest of the market catches up, and to do so with a framework rigorous enough to separate genuine structural growth from short-lived momentum. That means scoring ecosystems on both current strength and forward trajectory, rather than defaulting to whichever market already holds the most prior capital. It means treating a 230-fold increase in early-stage funding, or a tenfold rise against a falling regional trend, as a data point worth investigating rather than an anomaly worth ignoring.

The venture industry has spent thirty years perfecting how to evaluate a company. It has spent far less time interrogating how it selects the geography in which that evaluation even happens. Correcting a mispricing requires discipline about where the growth signal is real, and a willingness to act in markets before the consensus narrative has caught up with the data. The mispricing in venture capital is not a temporary anomaly. It is the standing condition of an industry that has outsourced its geography to habit.

The fund willing to price that gap correctly, market by market, captures the outliers everyone else is still searching for in the same old places.

Photo by Road Ahead on Unsplash