Sri Lanka’s economic promise lies not in size but in specificity. Its most competitive startups are emerging in narrow, underexplored sectors where local knowledge and operational efficiency matter more than scale. In areas such as agricultural technology, the country offers fertile ground for experimentation and early traction, and while these sectors are often overlooked by investors seeking quick returns, they are capable of providing a more sustainable path to growth. During a discussion with Echelon, Israel Pons, Chief Executive and co-founding partner of Angels Nest LATAM, expresses personal interest in startups that target these specialised domains. He sees them as the driving force that could propel Sri Lanka onto the global entrepreneurial map. However, to realise this vision requires these startups to receive support, including capital from investors willing to take a risk.
The $1 Million Angel Investment Equation
Israel Pons illustrates an early-stage investment strategy by spreading $1 million across 10 startups, at $100,000 each.
In this scenario, six startups fail entirely, RESULTING IN A $600,000 LOSS
Returns from the Remaining Four
The remaining four startups deliver the following returns:
► One generates a 2x return: $200,000
► Another delivers 5x: $500,000
► A third yields 7x: $700,000
► The final one achieves 10x: $1 MILLION
The total return adds up to $2.4 million from the original $1 million investment.
Small Markets, Sharp Solutions
One reason Pons believes that niche-focused startups have the most potential is that Sri Lanka is a small market to foreign investors. As such, a startup that can become the best in its niche, whether in tea production, agrotech, and so on, stands a greater chance of succeeding abroad. Further, while the domestic market is modest, it provides a platform to refine operations and prove value. Once validated, these models can be exported to larger economies.
The Agritech Opportunity
Agriculture offers a particularly compelling case. Countries in the Gulf region, including Saudi Arabia and the United Arab Emirates, are actively seeking reliable food sources. Their domestic agricultural capacity is constrained by geography, despite investments in vertical farming and import infrastructure. Sri Lanka, by contrast, has the natural conditions to produce a range of foodstuffs and the potential to supply high-quality exports. Technology can improve yields, reduce waste and extend shelf life.
“Sri Lanka is poised on agritech, and I’m sure on fintech and health tech as well,” Pons says, “to find these niches.” He adds that Sri Lanka doesn’t need the population size of India or other larger countries to be competitive. “It’s not about numbers,” he says. “It’s about quality.”
Pons points to Revolut, now a global fintech firm based in Britain, which began life in Poland. Despite operating in a market of five million people, its early investors saw enough merit to fund its growth. The example suggests that start- ups need not originate in large economies to achieve international success. What matters is focus, execution and the ability to expand when the time is right.
Returns Beyond Borders
For investors in smaller countries, this approach offers a way to reconcile limited domestic demand with the ambition of achieving substantial returns. Regional partnerships among angel networks can facilitate cross-border co-investment and allow startups to enter new markets more effectively. Instead of competing in crowded global sectors, they can quietly build leadership in neglected spaces.
Sri Lanka may never rival the scale of India or Indonesia, but it has no need to. Its opportunity lies in solving real problems well and in exporting that expertise to markets that are larger but less nimble. Pons quotes the popular maxim, “the riches are in the niches,” underscoring his belief that startups in small markets can find success by focusing on highly specific, underserved problems.
Starting Small at Home
For his part, Pons advocates for a model where startups use their home market as a pilot base, prove traction, and then expand regionally or globally. Here, angel networks can play a pivotal role by connecting startups with partner angel networks in neighbouring or larger economies. For example, a Sri Lankan startup might test locally, then expand to a market like Indonesia, India, or a Middle Eastern country with greater purchasing power and demand. Investors in those regions can then co-invest, helping the startup soft-land and grow faster in the new territory.
This would enable angel investors in small countries to reconcile a limited local market size with the need for large returns. Strategic scalability matters more than size, Pons argues, which in practice means it can be easier to expand into a new market than it is to keep growing locally.
A Global Angel Investor
Israel Pons is the CEO and Co-founding partner of Angels Nest LATAM, one of the most active angel investment networks in Latin America. With a portfolio spanning 17 startups and millions in dollars invested globally, he has helped shape the region’s early-stage investment landscape.
► Founder of PITCH to the WORLD, creator of global pitch events like Pitch At The Beach and Pitch In The City, with 1,500+ members.
► Board President at E-Uno, a $100M VC fund focused on agri-tech.
► Investor & Advisor at Brickhouse Ventures (Canada), investing in eSports, sports, and entertainment tech.
► GP at BillioNeurons (USA), an AI-focused fund, and Mexico ambassador to Deal Gateway, a global family office network in 35+ countries.
► Board Member of GBAN, XCALA, and Mexico Chair of GBA, representing Latin America in global angel investing and blockchain networks.
The Capital Gap
A significant issue in emerging ecosystems is the lack of investors at the stage that follows angel investing. Once a startup has used its initial funds and needs further capital to grow, there is often a gap because it cannot find a clear source for follow-on investment. Mature ecosystems are capable of producing numerous players across the investment lifecycle, but this continuity often breaks down in developing countries.
The problem is often made worse by the fact that this stage tends to be the most capital intensive, so the absence of a new funding layer risks killing otherwise viable businesses. Without fuel to scale, the startup ecosystem stagnates. This ‘capital gap’ is one of the biggest structural challenges facing early-stage ecosystems in emerging markets.
Pons shares experiences from Costa Rica and Chile, where early angel net- works were formed, but then struggled to find the next round of funding. Initial angels may pool great sums, but once that money is deployed, there is no guarantee of follow-on capital. Despite their confidence, angels are unlikely to reinvest large amounts in the same startup given they will not have a limitless pool to draw from, especially when they may have families, other investments, and wider financial boundaries to consider.
The answer to this problem is institutional capital: venture funds or growth-stage investors willing to back promising startups with larger sums.
Funding Longevity
In Chile and Costa Rica, where angel investors initially funded fellow entrepreneurs out of a sense of national pride and responsibility, Pons says early networks began engaging with local banks and mature financial institutions to push for the creation of venture capital funds or fund-of-funds that could continue backing startups beyond the angel stage.
This process used to be slow, taking decades in the US and Europe, but today’s emerging markets have the significant advantage of following a swifter timeline. Technology and digital platforms have made it easier for international capital to be brought into a region without the investors physically visiting it themselves, and Pons looks forward to the rise of cross-border co-investment platforms where foreign venture capitalists (VCs) can invest in Sri Lankan startups alongside local angels, bypassing the need to wait for domestic VC infrastructure to mature.
“Mature ecosystems are capable of producing numerous players across the investment lifecycle, but this continuity often breaks down in developing countries.”
“I can put investors on a platform to co-invest with angel investors,” he says, “and I can have VCs looking at investing on the next round of Sri Lankan startups. That’s the great advantage that we have now.”
What Pons Sees in Sri Lanka
“When I go to a new country,” says Pons, “go out there and visit the streets. See how the economy moves. See the markets. See how money gets exchanged between people. See if there’s infrastructure being built. There’s a bridge next to a hotel that’s being built. Those are key elements. You think: something is happening here. People are investing. There’s ‘economy’ happening.”
It’s this ground-level view that informs how Pons assesses the potential of emerging markets. Even the rapid activity of tuk-tuks, he says, highlight how eager people are to make the most of their time and pursue their goals, in turn giving investors a sign that real opportunity is present.
Drawing on comparisons to his native Mexico, Pons emphasises that the fundamental challenges in emerging markets often mirror one another. Whether in rural Sri Lanka or southern Mexico, the core issues are the same, such as access to healthcare, personal finance tools, food security through agritech, and even access to technology via mobile phones. These are the pillars around which scalable startup solutions can be built.
“What is it that everybody has in Sri Lanka, as in most emerging economies? A mobile phone,” he says, noting that such devices unlock pathways to education, health, and financial inclusion. Further, once local demand for goods has been saturated, a mobile phone can enable sellers to become exporters.
Realism and Optimism
Throughout the conversation, Pons advocates both pragmatism and hope. For instance, he believes that with the right support, entrepreneurs in emerging markets like Sri Lanka can rise to meet the challenges they face. However, that support often requires a mindset shift from investors, who need to understand that returns in these regions may take longer to materialise. This is particularly true for angel investors.
Where a mature market may produce more predictable, periodic returns, an emerging market requires a more patient approach, with exits appearing in the range of 6–8 years instead of 3–5. Still, Pons argues that the value lies in helping to build an ecosystem of entrepreneurs who are solving real problems.
For Sri Lanka, that means embracing both the challenges and the vast potential of its base-of-the-pyramid economy. It also means creating space for capital that is not just transactional, but transformational, with investors basing their goals on a long-term vision.