Jon: All right. So in the last week, there have been some very exciting deals announced. And I figure let's break them down as Peter, from a venture capital standpoint, myself as an entrepreneur and like what we like and what we don't like about the deal and just like what's happening in the market right now in the land of easy.
Peter: Let's do the thing.
Jon: All right. So I don't actually know how to say this bu goo cos they just raised 50 million so far. They've raised a total of about 63.5 million. Their last fund was only a few months ago was 10 million. The one before that was $3.5 million.
Peter: It sounds like they're growing really quick, gaining a lot of attention.
Jon: My understanding is what they do is they're more of like they're helping companies become more digitized, go more online, specifically around the the lines of financial accounting.
Peter: So they're based in Indonesia and they're helping small and medium sized businesses in Indonesia get online and be more digitized. I would imagine the market is kind of similar to India. What do you think of that opportunity and having having lived there?
Jon: So I can't speak specifically for India because I don't use that many local ISE applications in India for finance. I used QuickBooks and they have a version specifically for that market. I think one of the things I like here is when I first got into like tech startup, the things that I looked at specifically for was what are models that worked well in the U.S. and where ones can go overseas.
Jon: And I don't know if that that playbook exists anymore. I see similarities, but here I think the plan that they have is I think it's much easier to have a marketing platform go global. But I think with finance applications, with specifically individual tax laws, payment gateways, I think there's probably a fairly defensible moat, at least for the next ten years around models like this picking countries that are large enough and building financial applications specifically for them.
Jon: And especially in this country, they're seeing that 60% of all businesses are SMB and most of them are digitized. And so, I mean, like right now, if you said, John, here's a country that has a similar blueprint, here's $310 million, it would be tempting to go try it out.
Peter: Yeah, no, I agree. I think, look, you've got I would imagine that in Indonesia that smartphone adoption is pretty deep. And so you have a lot of consumers that are, you know, digital savvy and have access to sufficient technology. So it makes a ton of sense that you would offer a lot of services that really bring even the smallest business in into the 21st century from a digital perspective.
Peter: Right. I think I look at this as a lot like a square, right? Probably when square wouldn't have been successful in this market, you know, when it launched in the U.S. because the digital adoption wasn't there. But I think the digital adoption is probably there at this point. Right. And so and.
Jon: Probably for most these markets and for me, the question would be more of timing.
Peter: Sure. But it feels like now is the right timing, right, This type of business.
Jon: I think there is still if I was building it, it'd be a very light application. I probably would go mobile first. Most of these companies don't even have regular web browsers. Actually, I don't know if I would even go. I would go mobile first and I don't know if I would even have an app, primarily because a lot of these people have very limited space on their phones.
Peter: And limited bandwidth to, I'm.
Jon: Sure, and limited bandwidth, at least in India, bandwidth is fairly cheap, is cheap compared to the U.S., but it might be cheap in my mind, just as a foreigner. So that may not be a fair comparison. But because in India specifically, like when you go to make an online payment, I'm not typically plugging it through like the U.S. merchants or like stripes.
Jon: They use Razorpay and others, and that gives them a fair amount of defense ability. I think specific to their market or similar markets. If you were looking at it. I think one of the things that was interesting is that Sequoia funded this deal, but it doesn't look like they were in the latest round of 50 million, which makes me wonder.
Jon: I've heard a lot of VCs get upset where they'll give something like 10 million and they're like, This should last you for the next two years. And then the next thing you know, a startup goes and raises 50 million and some funds like Sequoia in the past have expressed a little that they're a little bit upset. But I think some startups are like, Hey, if we can raise the money now and is it a good rate?
Jon: Like, why not do it now?
Peter: Yeah, that's a good question. It doesn't really indicate whether or not they participated. I would guess that Sequoia would have participated.
Jon: Well, they've done two rounds back to back. So if we go to this article right here, we know that.
Peter: One they might have. The other one.
Peter: I mean, the other two investors noted, are a DoorDash executive and the CEO of TransferWise, which like transfer guys is a great, very successful business, as is DoorDash. But I mean, I would be surprised if those two individuals combined wrote a $50 million check into the business.
Jon: What do you think about the concept? Like if you look at the what their core is, they're a small business or they help small businesses go online. How much longer do you think that is going to be a trend like I would have expected that trend to have been over?
Peter: Well, I think in most developed markets it is over. I think in developing markets like Indonesia, it clearly hasn't played out yet. Okay.
Jon: All right. Let's go to Merge. They just raised $4.5 million to help specifically with integrations. And as I've read through this, they look like they're kind of like Zapier specifically for the h.r. Space. So they have much more of like a plaid like component where they're connecting deep financial apis, lots of security, lots of compliance, but trying to make a lot of these apps fairly connected.
Peter: Yeah, no, I think I think it's interesting. I think the thing that really stood out to me was when they talked about how Salesforce, you know, is this really big player. They've got a lot of market share. They clearly have like, you know, arguably a fairly robust API. And yet customers are saying they'd rather use merges product over Salesforce as API because it's just so much easier to use and work with.
Peter: I think at the end of the day, things are only going to continue to become more and more and more interconnected and customers are starting to, I mean, have been for a long time, but almost it's table stakes now, right? You have to be able to integrate across a wide range of data sources. You know, what I think is interesting about this as well is today they integrate with like 40 different h.r.
Peter: Platforms. You know, how many of these platforms are out there that are actually better but that don't integrate with all of the different product or software products that a company is using. And so they don't get the purchase even though they offer a much better product. And so companies like like merge create this really interesting potential partnership where these other h.r.
Peter: Companies that are maybe like getting overlooked from the api side can work with merge and drive additional customers back to their platform and it becomes a symbiotic relationship that can benefit both players.
Jon: I don't know if a market like indonesia or india would be big enough, but I bet there might be a very similar play of creating an API in a very large market like in India and connecting them.
Peter: Yeah, probably. Well, and I think what they would argue is why do you need to build something that on the API side, that specific to India, why don't you just add it on as one of the many, many, many, you know, different APIs that work on your system? All right.
Jon: Let's look at the last one. Okay. So anchor store, they just raised $102 million and they are basically just a wholesale marketplace they believe you can only buy things on if you are wholesaling.
Peter: Not if you're wholesaling, if you're a retailer, if.
Peter: So the idea here is you have either an online store or even, I believe, a physical location, and you can go and buy product through anchor store and sell it through your store, right? And so the nice thing, if you are a vendor, a wholesaler of of different products, right? Maybe it's a lot of the stuff they have is like decor or supplies, specialty items like maple sirup or bed, bath salts, etc., etc..
Peter: So if you're one of those companies and you're you're generating, you know, quite a bit of volume of product, it can be really painful to to work with, you know, a small gift shop in New Hampshire that wants to buy, you know, $100 worth of product right into service at one little tiny customer. And so that's what anchor star does.
Peter: That's really interesting, is like, okay, hey, you have this little gift shop. You can get access to all these like specialty items all over the place. And your minimum purchase can be like 100 bucks, which is totally doable for a small store. Instead of having to spend a minimum of a thousand or $10,000. Right.
Jon: Would that be enough of a deterrent for you not to invest in a company like this?
Peter: not necessarily. I just think it's, you know, a broader trend that's, you know, interesting to think about the flip side is there are a lot of companies that don't like selling through Amazon. They don't like giving up their data and they don't like giving up control. And so they're looking for alternative ways to sell product. Right. and, you know, look, this is this could be a really interesting thing.
Peter: You think about how many people started on Etsy, they designed some sort of product, they get some initial sales, but then it's like, okay, if I could take this, this product that maybe I 3D printed or, you know, whatever it might be and I take it to China and have it mass produced right then I could start selling and not just one Z Tues direct to consumers, but I could actually sell it to smaller boutique sellers that are doing a lot of the curation on behalf of their customers right?
Peter: And I could sell a lot more product hypothetically across, you know, a broader range of geographies and markets. And so that piece of it of like just having a natural evolution of a way to scale up your business without having to make that huge jump is a whole that I think fair. And of course our store self really well if.
Jon: You were to invest in one of these three yeah like what would be your preference.
Peter: So you know I think Angkor SA is probably my favorite of the three. just because I think it's a, it's a pretty large, well-established business. I think bukauskas is also really interesting. It just in terms of the amount of growth that they're seeing, it looks like it's, it's a rocket ship. But, you know, I think merge is also really interesting.
Peter: It's just the seed stage. It's really early and I don't know as much about that, that market and that industry.
Jon: I think for myself, I would put merge first. I think I like that they seem smaller. I like more of that intimate feel. So maybe that's a personal non venture.
Peter: But you're just swinging for the fences. That's all. You just want to get in early. Yeah.
Jon: Well, I also like from my standpoint, I'm a founder, so like, you know, I invest more time than money historically. Yeah. And so I can see more of an upside personally, if I were to join them versus the book, I guess.
Peter: Yeah. So you've also kind of felt this pain point here with Merge too, right?
Jon: Yeah, I felt the pain point. But I would also argue that India is not developed enough for these other companies to have APIs for you to connect into. And then at that point when they do a semi merge does come and gobble up the market. Then other people, it would be harder to like do a start up like that when when India is ready if it was ready, sure.
Jon: So, but yeah, that's how I break it down. Well as I work on this to be interesting to see to see like what your thoughts are.
Peter: Yeah, I'm excited. We should do a show just on like you starting this business. I don't think about it.
Jon: We could. That would be interesting.
Jon: All right. Sounds good, Peter.
Peter: All right. Thanks, Ron.
Jon: All right. Thanks, guys. Make sure you like it. Subscribe below.
