What Is the Multiplier Effect?

Entrepreneurs are often narrowly judged by simple indicators like growth, profit, and valuation. Stats like these ignore a much larger economic picture.

In 1999, Marcos Galperin and Hernan Kazah were enchanted by the growing abundance of ecommerce companies sprouting up all over Silicon Valley. Together, they founded Mercado Libre and were selected to join our Endeavor community.

By 2007, Mercado Libre became the first Latin American to have an initial public offering and list on the Nasdaq in the United States. Today, it’s worth more than $60 billion and recognized as a global commerce leader. They scaled up, grew into one of the largest tech companies in Latin America, revolutionized ecommerce in the region, and are now industry giants. But that’s only half their story.

As they ascended the ladder of success, Marcos and Hernan decided to help new generations of entrepreneurs climb it with them, compounding their success and creating innumerable entrepreneurial opportunities across Latin America. Marcos has mentored more than 20 budding founders, directly invested in 25 others, and become a leader at Endeavor. Hernan has founded his own venture capital firm, Kaszek Ventures, where he has funded no fewer than nine other unicorns and around 100 companies. And the leadership and culture they created at Mercado Libre has inspired 90 former employees to become entrepreneurs themselves.

At Endeavor, we’ve seen this story repeat itself across the globe over 25 years as we’ve developed and nurtured entrepreneurship in emerging markets. We’ve learned that when entrepreneurs help other entrepreneurs, their efforts compound exponentially. We call this the Multiplier Effect.

But What Is the Multiplier Effect?

The Multiplier Effect is the compound, exponential impact a founder has on the entire entrepreneurial economy of a region when they mentor, invest in, and inspire the next generation of entrepreneurs. It’s their bubble of influence.

Building and scaling a company to make millions (or billions) of dollars is crucial to the Multiplier Effect. It’s just not the whole story. The best entrepreneurs scale up and think on a grander scale.

Entrepreneurs can transform entire economies for the better when they foster more entrepreneurship. They can do this by recognizing the help they’ve gotten along the way and paying it forward, giving back to the startup community so the next generation of entrepreneurs can more easily overcome obstacles that could derail their dreams.

In the United States, you can see the power of the Multiplier Effect by looking at PayPal’s influence on Silicon Valley. PayPal alumni have gone on to found companies including Tesla, LinkedIn, Palantir, SpaceX, Affirm, and Yelp.

By harnessing the Multiplier Effect, Endeavor spreads this kind of success globally. It’s how we’ve helped 60+ companies become unicorns in cities and countries where that opportunity had never existed before.

We’ve seen evidence of the Multiplier Effect all over the world. Entrepreneurial communities are building the next Silicon Valleys—thriving entrepreneurial ecosystems that drive broad, sustained economic growth. In Latin America, Globant (see Multiplier Effect map) grew to employ more than 6,000 people, inspiring so many employees that its alumni have gone on to start more than 430 businesses. In the Middle East, ride-hailing giant Careem (see map) now serves 48 million customers. Its founders have paid it forward by investing in 91 startups. And in Africa, Go1 (see map) became the first unicorn from South Africa just a couple years ago. Its founders have already mentored 35 entrepreneurs.

In Endeavor’s research, the most successful companies were 2x as likely to have received mentorship, investment, or work experience from a successful founder.

To shed light on the Multiplier Effect, Endeavor has launched an exclusive worldwide Multiplier Effect map that visualizes the compound influence that 24 Endeavor Entrepreneurs from 13 countries have had in their underserved communities. Endeavor’s community helped many of these founders scale into $1+ billion unicorns, and gave them a platform to pay it forward.

Our new interactive map uses data provided by Endeavor Entrepreneurs and their companies, along with supplemental information from Pitchbook and LinkedIn. It shows every entrepreneur they have mentored, directly invested in, or previously employed. And it proves that a single founder can impact more than 500 other companies.

We’ve linked to the Multiplier maps for every company we’ve mentioned in this article, and there are many more to explore.