Artificial intelligence is expected to democratize access to technology, making it a boon for would-be founders in emerging markets — but some investors disagree. “AI will change everything for emerging markets,” said Anton Osika, CEO and co-founder of Swedish startup Lovable, which allows others to create apps and websites via prompting, removing the need for technical knowledge. “Most of the world’s best ideas are stuck in the heads of people who can’t code. That’s especially true in emerging markets where many people deeply understand local problems in areas such as healthcare, logistics and education, but don’t necessarily have the tools to build software solutions to address them,” Osika said. “AI changes that and breaks down this barrier. Lovable expects to see a wave of new founders building companies in these markets,” he added. Lovable said it became the fastest-growing startup in the world when it hit $100 million in annual recurring revenue in July, in just eight months. The digital economy “has been limited to less than 1% of the world population, now the rest of the 99% will be able to be part of this,” Osika told CNBC’s ” Squawk Box Europe ” in an interview earlier this month. He added that AI companies are set to increase by a factor of 50 thanks to tools like Lovable. Last valued at $1.8 billion — though that figure could now be as high as $4 billion according to August reports from the Financial Times — Lovable has 2.3 million active users in over 200 countries, according to Osika. “Some of the fastest growing countries for Lovable users include Sri Lanka, the Netherlands, Taiwan, Tanzania and Ecuador,” he added. It is one many startups trying to win in the vibe-coding space as investors pile in. Anysphere, which created the popular generative coding tool Cursor, lured $900 million from investors in a Series C round priced at $9.9 billion. Meanwhile, OpenAI also announced vibe-coding capabilities in ChatGPT-5. More infrastructure needed in emerging markets Building a company in less-established markets can be tricky due to a lack of capital and infrastructure, the cost of distribution, and trust and compliance, investors told CNBC. As a result, appetite tends to be lower. That said, some VC firms do have funds dedicated to emerging markets, where they can theoretically secure deals at lower valuations and with less competition, due to the nature of younger tech ecosystems. In the public market, the MSCI Emerging Markets Index , which tracks large and mid-cap stocks in 24 emerging economies, is up around 28.8% year-to-date. “AI has lowered the entry cost of building and shipping software: what once took years and millions can now be prototyped in weeks. Iteration cycles are shorter, and the knowledge asymmetry that used to favor incumbents is disappearing,” said Emmet King, managing partner and co-founder of J12 Ventures. Indeed, Osika pointed to Brazilian edtech company, Q Group, where two developers built a premium version of the platform in one month. “The premium version generated $3 million in 48 hours after launch,” he said. However, AI doesn’t solve structural challenges faced by emerging markets, meaning plenty of points of friction still exist, including local funding availability and confidence that startups will secure revenue, according to King. “That is not unique to emerging markets — but definitely more visible,” he said. King added that he is “yet to see a greater flow of capital to emerging markets, nor is there chatter or signs that it’s imminent.” “It may yet come, but that’s not what we’re seeing or hearing right now,” he said. Startup success can sometimes depend on infrastructure, whether that’s poles in the ground, servers in the cloud, or strong local network of investors and fellow founders who can help capitalize and guide startups. This is why many of the core aspects of scaling a company rely on being in a recognized tech hub, per King. “Given investor appetite to find the AI winners right away, they will naturally optimize their search and look to established hubs,” he said. Nothing replaces good talent For June Angelides, an investor who backs African founders via the angel syndicate she founded, Levare Ventures, the quality of opportunities has actually dropped. That could be down to “really good talent” opting for “safer options” like working in big tech, she said, as “there just hasn’t been that flow of early-stage capital” to startups. While rumors of a bubble swirl in the broader tech ecosystem, Angelides, who also works as a venture partner for Samos Investments, doesn’t envision a future where investors flock to emerging markets for AI deals and create a boom and bust. Companies are using AI to produce apps and tech more affordably and quicky, “but at the end of the day, we’re all still wanting to bet on really strong teams,” she said. And “to have a leading company you need to have in-house technical talent,” added Thomas Olszewski, partner at 6 Degrees Capital, a Seed to Series B-focused firm with 250 million euros ($291.5 million) under management that has dedicated up to 20% of its current fund to emerging markets. The company has cut checks to companies operating in Africa, Latin America, and Southeast Asia. For Olszewski, the sticking point is less about backing an emerging market and more about the technology: “The philosophy of VC investing more broadly is that a company develops something that is unique and defensible, and that competitive advantage allows companies to scale faster and with good economics. If it can be built easily using AI then that doesn’t hold true,” he said. For the African continent to capitalize on AI, Angelides said it needs additional capital to back companies and infrastructure to ensure that they can build and scale, echoing King’s point. That infrastructure can equate to something as simple as continuous internet access and more data centers, she added. Microsoft and Nvidia are investing in Africa, but “it’s still very small amount compared to what is being invested elsewhere in the world,” Angelides said. Microsoft has long been present in Africa, while Nvidia has partnered with pan-African firm Cassava Technologies to build AI factories on the continent . Data is also an important aspect of AI success, the investor added. Models are typically trained on data from countries in the northern hemisphere, meaning companies building in the southern hemisphere may not get relevant results when prompting chatbots. “We need to think about more localized data collection, the labeling, all of that takes time, but I expect that sort of within the next two, three years, it will become very normal for all startups to be leveraging AI in some way,” Angelides said. Indeed, King added: “In other words, AI democratises the capacity to build but not the capacity to scale. Value will accrue to teams that tie models to local data and navigate compliance and governance with discipline.”
