Beyond the Hype: AI in Emerging Markets

AI may be driving frothy headlines in developed markets, but in emerging markets, the reality looks different. Here, the conversation is not about moonshots. It is about productivity. When costs compress and throughput improves, access and affordability expand. And when that happens, EBITDA follows.

This is the thesis behind Next Billion Capital Partners’ new series on AI in emerging markets. Over the coming weeks, we’ll highlight how portfolio companies are deploying AI in ways that change unit economics, expand customer reach, and unlock new categories of growth.

The rails are already built.

Mobile technology laid the foundation. In Latin America, mobile services contributed ~$550bn to GDP in 2024—8.2% of the total economy—and are forecast to reach ~$680bn by 2030 . That’s not just infrastructure. It’s the distribution rail on which AI-powered services can scale rapidly across financial services, healthcare, and business services.

This mobile-first architecture gives emerging markets an advantage: new technologies like AI can plug directly into digital payment systems, telemedicine platforms, and business software without legacy drag. That leapfrogging effect allows adoption to scale faster and at lower cost than in developed markets.

Productivity, not hype, is the lever.

McKinsey research points to 5–25% task-level productivity gains from AI across functions like support, claims, coding, and consulting, with long-run potential to lift labor productivity by 0.1–0.6 pp annually. The implication in emerging markets is immediate: productivity is the bridge to scale.

In healthcare, where Brazil has ~2.8 doctors per 1,000 people compared to the OECD average of ~3.7, every administrative minute automated by AI frees scarce clinical capacity. In insurance, where Indonesia’s penetration rate remains under 2% of GDP, AI-powered claims automation and fraud detection make micro-policies viable. In financial services, automating reconciliations, customer support, and compliance isn’t a luxury—it’s essential to making unit economics work at scale.

Emerging-market operators are also leveraging localized proprietary data and languages—from Portuguese and Bahasa Indonesia to Arabic—to train models attuned to regional context, regulation, and consumer behavior. That localized data layer, often inaccessible to global incumbents, is becoming a defensible edge

But bottlenecks remain

This isn’t frictionless. Many markets still face gaps in reliable data, uneven AI-ready talent, and evolving regulation. Connectivity quality remains an issue in rural or low-income regions. These constraints are real—but they create space for operators who build localized, resilient solutions that work within (and around) today’s realities..

Valuations: The EM Advantage

The story is not just operational—it is also financial. In emerging markets, entry valuations remain more disciplined than in the United States, both in public and private markets. As of March 31, 2025, the MSCI Emerging Markets Index traded at roughly 12× forward P/E, compared with about 20× for MSCI USA—a 40% discount that continues to inform private-market pricing.

In private markets, that same discipline is visible in growth-stage transactions. Brazil’s legal-AI startup Enter raised $35 million at a $350 million valuation, while in the U.S., counterpart Harvey priced a Series E at $5 billion the same year. The spread highlights the valuation advantage for emerging-market entries—even in fast-growing categories—offering investors disciplined pricing today and productivity-driven EBITDA expansion tomorrow.

Emerging markets thus offer a rare combination: valuation discipline and scalable productivity, leaving meaningful room for value creation and multiple uplift at exit.

Next Up

At Next Billion, we see this dynamic firsthand. Alice in Brazil is using AI to reduce administrative load in healthcare delivery. Qoala in Indonesia is automating claims and underwriting to unlock affordable insurance. Minu in Mexico is applying AI to personalize and deliver workplace-based financial tools at scale.

These are not moonshots. They are businesses scaling rapidly, with a real bottom-line impact. This series will take you inside those models. Our goal is to show how AI in emerging markets is creating access, affordability, and returns.