NBA star's second act in Africa
When 6-foot-9, 270-pound Nigerian Obinna Ekezie was pounding the boards for the NBA's Vancouver Grizzlies and Atlanta Hawks in the early 2000s, he learned about cohesion, communication and teamwork on the hard court. By 2008 he was out of professional basketball, but Ekezie applied those lessons to the Web when he started Wakanow.com, Africa's one-stop shop for cheap flights, hotel reservations and airport pickups.
Wakanow's customer-service program harnesses social media to get up close and personal. Alongside promotions, Wakanow's Twitter feed features customer service, with one customer—whose Twitter handle is @baronpatsy—getting a link for travel packages to Dubai, while @hardeytayor finds help with a visa problem.
The formula is working. Wakanow predicts 2013 revenue of about $100 million, double the $50 million of 2012 when the company booked about 150,000 trips. Ekezie said the company recently turned profitable as margins climbed from 4 percent to 7 percent.
Netting profits in Africa
"There isn't an … ecosystem that connects entrepreneurs to financing and workforce. Sourcing and social networking is how they are doing it."
The Lagos, Nigeria–based company is only one of scores of start-ups in the developing world that grabbed $1.4 billion in 233 venture funding deals through the first three quarters of 2013, according to the Emerging Markets Private Equity Association. Most have fast-tracked their success by tapping people power through social networks, crowd sourcing and crowdfunding.
It's not hard to see why. About 6 billion people, or 8 of every 10 people on Earth, live in emerging and frontier markets, according to the UN's report "World Population Prospects: The 2012 Revision." Moreover, by 2100 Africa's population is expected to climb 400 percent, reaching 4.2 billion, while wealthy countries, including Japan, South Korea and Germany, face sharp declines, the report reveals.
Deirdre Coyle, co–chief executive of All World Network, which connects and promotes growth companies in Africa, Asia and the Middle East, said social networking is baked into start-ups, in part because Third World companies face Third World conditions.
"The infrastructure in many of these emerging markets is tough—from political instability to power outages to conditions of roads—so smartphones become a huge tool for them," she said.
Another factor, Coyle said, is that developing-market entrepreneurs, as a matter of survival, have to tap social networks just to get their businesses off the ground. "They can't go to Staples to get what they want," she said. "There isn't an … ecosystem that connects entrepreneurs to financing and workforce. Sourcing and social networking is how they are doing it."
(Read more: Crowdfunding 2.0: A new era for start-up finance)
Joanna Kubba of Eureeca Capital, a crowdfunding start-up in the Persian Gulf, said social networking is a natural for developing markets where mobile phones are the default technology and national borders and identities are becoming less relevant.
"The U.S. transitioned from [personal computers]," the former Googler said. "In this part of the world, it just skipped ahead because people are much more mobile. You have people who no longer live in one community. Someone might be born in one place, educated in another and work in another."
Going social's all the rage
"Social media has really taken off in this part of the world."
Lowered barriers can spell opportunity for start-ups. For instance, Kubba said, capital is flowing freely across national borders to three Jordanian companies on the Eureeca platform. Since launch, 250 small- and medium-sized businesses have applied to list on the platform, with eight passing the vetting process that Eureeca chief executive Christopher Thomas says is as tough as an investment bank's.
So far, four of those companies have reached their funding goals, Kubba said. "Social media has really taken off in this part of the world."
That also applies to entrepreneurs themselves, said Adam Stelle, founding partner and vice president of growth at Up Global, a Seattle-based not-for-profit that runs Startup Weekends around the world. Stelle said that founders' cross-border networks are giving them access to mentors, markets and capital in developed countries."We always see something like a company in Bogotá, Colombia, ending up joining an accelerator program in a place like Denmark," he said. "It's possible for someone in Nigeria to know the people in Seattle."
The reason for the cross-pollination is a start-up scene that is increasingly transnational, with venture capitalists scouring the globe for promising companies and founders moving to the greenest pastures.
(Read more: Start me up: The global entrepreneurial revolution)
Mobile, mobile everywhere
Ekezie, in a telephone interview from Lagos, said that Wakanow has designs on markets beyond Nigeria, including Ghana, Kenya, Tanzania, Senegal, Liberia, Zambia, Mozambique and Rwanda. The former center, who played for five NBA teams as well as Moscow Dynamo, said that users of Wakanow—no. 5 on All World Network's ranking of fast-growing Nigerian companies—are untethered.
"Obviously, mobile is the key," he said. "We've launched mobile apps, but they had some issues. We're looking to launch much lighter mobile apps on Android and iOS platforms."
Innovators crop up
In Southeast Asia, apps created by Triip, a nine-month-old start-up based in Ho Chi Minh City, Vietnam, also target the travel market. The apps use crowdsourcing to recommend tours, like a food-themed jaunt through Hanoi or a motorbike trek along the Mekong Delta.
Co-founder Hai Ho said that the bootstrapped seven-person company, launched in February, has approved 280 of the 2,200 tour-guide applicants in Vietnam, Cambodia, Myanmar, Indonesia, Malaysia, Thailand and the Philippines.
Triip, which opened its doors to customers in July, has booked more than 150 travelers and forecasts November's revenue to near $500,000. The firm's business model calls for travelers to pay Triip in advance. Once the tour is completed, Triip funnels 90 percent of the money to the tour guides.
In Bangladesh a start-up called Panacea is building an app that helps customers verify that their medicine is not counterfeit and uses feedback from those patients to help authorities crack down on bogus pharmaceuticals.The founders of Panacea and other start-ups in developing countries often are drawn to create apps. The reasons: low barriers to entry, low start-up costs and little capital investment required.
Soumik Aswad, a 19-year-old co-founder of Panacea, named one of the 50 most innovative companies for November's Global Entrepreneurship Week, said that the market for counterfeit drugs in Bangladesh is about $150 million per year, but that manufacturers can't pinpoint the fakes."We're going to help them with that," he said in a telephone interview from Dhaka.