My first blog post was about immigrant entrepreneurs and the geo-arbitrage opportunities for international investors.

then examined how these entrepreneurs give back to their home country while bringing their know-how and global network to re-build their local ecosystems.

Ever noticed the disproportionate success of small countries like Sweden, Estonia or Israel in creating global businesses?

Out of 194 private unicorns alive today, only 34 of them are from countries with less than 100M population.

For the sake of this post, I’ll define countries with 10–100M populations as mid-scale and countries with less than 10M population as small-scale. Diving deeper into the data, there are 20M people for every unicorn in mid-scale countries like France or Germany.

This capita per unicorn figure goes down to 5M for small-scale countries like Estonia or Switzerland.

It is also important to note that 77% of the unicorns are from US or China, together constituting 24% of world’s population. In other words, larger populations and market sizes mean greater opportunities — but only after a minimum threshold.

Below that cap, there lies a bigger potential as a country’s population and economic size decreases — called population paradox.

David and Goliath

The 8 small-scale countries with private unicorns, have an average population of 8M and a GDP of $400B which is much lower than the mid-scale average of 56M people and $1,600B GDP.

The limited market size pushes companies in smaller countries to explore international opportunities from the start. As the local market lacks scale, these startups are pushing boundaries for cross-border sales even faster.

While other brilliant entrepreneurs from mid-scale countries fully focus on dominating and owning the local market, their competitors — with once a tiny market — are even more aggressive on regional expansion.

This explains how Spotify (Sweden, 2006) is able to compete with Deezer (France, 2006) and Simfy (Germany, 2006).

As Malcolm Gladwell demonstrates in David and Goliath “the same qualities that appear to give them strength are often the sources of great weakness”

Higher overall GDP per capita in smaller nations creates better living standards and higher quality in education. This provides the underlying infrastructure that nurtures the best talent and encourages entrepreneurial activity.


Starting in a narrow market isn’t enough, great engineering talent needs to come together with multicultural skills necessary for global expansion. In average 70% of the population in small scale countries is able to speak in English, compared to 45% for mid-scale countries and it even goes down to 30% once you exclude English native Canada and the UK.

Furthermore, these mini-nations often have multiple official languages, covering the regions around them. The English capabilities and multi-language skills turn into a major competitive edge while expanding globally and dealing with international clients or investors.

This explains how Outfit7, famously known for Talking Tom and Friends, emerged out of Slovenia (2.2M population) and became the first $1B+ exit in Central Europe since Skype. Similarly, Global Fashion Group is an e-commerce unicorn out of Luxembourg operating in 24 countries worldwide.

Access to downstream capital is also vital to compete globally; however, I believe funding is more of an outcome rather than an input. Capital flows in naturally when the right vision meets exceptional talent.

Pseudo Population Paradox

500 Istanbul leverages population paradox while investing in smaller Central Eastern European and Turkic countries. These ecosystems show similar characteristics to Estonia or Sweden in terms of engineering talent and overall entrepreneurial ideals — we aim to capitalize on that potential.

In a mid-scale country like Turkey, we cherry pick the visionary entrepreneurs and provide access to our broader network. The region needs global success stories to encourage more startups not to get trapped in the local market and innovate with a global mindset.

This pseudo population paradox effect initiates a positive mind shift throughout the ecosystem and unlocks an even bigger potential.