This article was originally published on the World Economic Forum on January 13, 2025.
You can access the original publication here.

 

By: Raj Ganguly, Co-Founder and Co-CEO, B Capital

 

As we begin 2025, globalism is under interrogation. Protectionism, trade restrictions and geopolitical tensions are rising. These forces have prompted many – from business leaders to policymakers to citizens – to question the viability of a truly global economy. In venture capital, this manifests as a shift toward localized investment strategies, signalling a retreat from the global model that has long benefited investors and entrepreneurs.

The need for localized approaches is clear in tightly regulated industries like defence, pharmaceuticals, or state-dominated sectors such as utilities and infrastructure, but most sectors that venture capital firms invest in benefit from a global approach.

There is evidence that the deglobalization narrative is just that, a narrative. In fact, research from McKinsey found that global integration is growing, as trade, capital, data and knowledge move across borders at higher volumes. BCG forecasts global trade to grow at 2.8% per year through 2032, despite trade blocs playing a greater role.

Venture capital remains wedded to old metrics, such as market size, revenue and profitability, that are no longer sufficient to evaluate a startup’s true potential. These frameworks miss one of global venture capital’s greatest advantages: pattern recognition – identifying disruptive trends and scalable solutions across geographies and industries that would otherwise go unnoticed.

To solve today’s most pressing challenges and begin the next wave of innovation, venture capital must adapt and embrace a broader set of metrics that reflect the complexities and opportunities of an interconnected world. When this happens, globalization will prove to be more than economic integration – it will be a catalyst for innovation and progress.

 

New Metrics for a New World

To move beyond traditional risk-reward models toward metrics that capture the broader value of the innovation, we propose three criteria for consideration:

 

1. Global Problem-solving

The challenges of our time – climate change, healthcare inequities, and the digital divide – transcend borders and demand innovative, globally scalable solutions. Addressing these issues requires companies that can operate across diverse geographies, integrate international insights and leverage cross-border resources.

Sustainability initiatives illustrate the complexity of this challenge. Technological breakthroughs are essential, but their impact often depends on successful global scaling. Promising innovations frequently encounter obstacles such as resource disparities, regulatory complexities and varying market acceptance criteria.

Accacia, a B Capital portfolio company, exemplifies how startups can tackle these barriers. Its AI-enabled platform transforms carbon management for the real estate sector, helping organizations measure, analyze, and reduce emissions. Operating across Asia, the Middle East, the United States, and Canada, Accacia combines advanced technology with localized insights to deliver scalable climate solutions tailored to diverse regulatory environments.

The real estate sector accounts for approximately 40% of global greenhouse gas emissions, making standardized carbon measurement and reduction strategies critical. Accacia’s global approach enables it to harmonize strategies across regions while adapting to local regulatory frameworks, such as new emissions reporting requirements from the Securities Exchange Commission (SEC) and Singapore Exchange (SGX). By aggregating data and best practices across its markets, Accacia provides comprehensive solutions for decarbonization.

Global investors play a vital role in helping startups like Accacia overcome barriers to international scaling. By embedding commercial considerations early in a company’s development, they not only position startups for expansive growth but also enable the rapid deployment of critical solutions to address shared global challenges.

 

2. Cross-border Adaptability

A company’s ability to adapt its solutions across diverse geographies and economic contexts is a significant driver of growth in today’s global economy.

The benefits of cross-border adaptability are:

• Expanded Market Opportunities: Entering new regions unlocks untapped customer bases.
• Diversed Revenue Streams: Multiple markets help balance revenue fluctuations.
• Enhanced Innovation: Exposure to varied challenges fosters creative problem-solving.
• Increased Resilience: Flexibility across regions mitigates the impact of localized economic disruptions.

Global investors accelerate adaptability by leveraging extensive cross-border networks to identify high-potential companies worldwide, facilitate international expansion and provide critical insights into market-entry strategies and regulatory environments. Prioritizing adaptability enables startups to unlock unparalleled growth opportunities, scale their solutions on a global stage, and secure their place in the international marketplace.

 

3. Ecosystem Development

Global venture capital is vital in nurturing startup ecosystems, particularly in emerging markets. Beyond funding individual companies, this approach contributes to the overall economic transformation of regions. The World Economic Forum has identified entrepreneurship as a “missing piece” in many emerging economies, and global venture capital can help fill this gap.

The benefits of this ecosystem-focused approach include:

• Building communities of entrepreneurs in underserved markets.
• Laying the groundwork for future waves of innovation and growth.
• Facilitating knowledge transfer between emerging and developed markets.

An interconnected network also enables a more diverse innovator ecosystem. By fostering tech ecosystems globally, we increase the number of entrepreneurs working on a wider range of problems. This diversity of thought and perspective can lead to novel solutions for challenges we may not have even considered yet.

 

The Need for a Global Vision

Adopting a decentralized structure is essential for rethinking traditional approaches to growth. Embedding investors in local markets while maintaining a global outlook gives a well-rounded perspective with the strongest support for portfolio companies. Distributed teams offer invaluable insights into market-entry strategies, regulatory landscapes and cultural nuances, as well as global pattern-matching capabilities that allow for replication of previous successes.

Companies and investors that embrace this global approach won’t just unlock superior financial returns – they will shape the future of innovation and equity on a global scale. The current climate may question the merits of globalism, but it’s key to solving humanity’s greatest challenges. For instance, in addressing climate change, this global approach enables the rapid scaling of innovative green technologies across diverse markets, accelerating the transition to sustainable practices worldwide. From climate change to economic inequality, global venture capital – with its unique ability to identify patterns, nurture innovative ecosystems, and scale transformative solutions across borders – is well-suited to take the lead in driving progress.

 

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All information is as of 01.14.2025 and subject to change. The investment discussed herein is a portfolio company of B Capital; however, such investment does not represent all B Capital investments. Certain statements reflected herein reflect the subjective opinions and views of B Capital personnel. Such statements cannot be independently verified and are subject to change. Reference to third-party firms or businesses does not imply affiliation with or endorsement by such firms or businesses. It should not be assumed that any investments or companies identified and discussed herein were or will be profitable. Past performance is not indicative of future results. The information herein does not constitute or form part of an offer to issue or sell, or a solicitation of an offer to subscribe or buy, any securities or other financial instruments, nor does it constitute a financial promotion, investment advice or an inducement or incitement to participate in any product, offering or investment. Much of the relevant information is derived directly from various sources which B Capital believes to be reliable, but without independent verification. This information is provided for reference only and the companies described herein may not be representative of all relevant companies or B Capital investments. You should not rely upon this information to form the definitive basis for any decision, contract, commitment or action.