The Evolving FinTech Landscape Through the Eyes of Those Investing In It with Andrew Steele of Activant Capital | Soar Payments LLC

The Evolving FinTech Landscape Through the Eyes of Those Investing In It with Andrew Steele of Activant Capital

Join us in this intriguing video as we delve into the vast world of commerce, B2B investments, and growth opportunities. In this episode of PayPod, host Jacob Hollabaugh sits down with Andrew Steele of Activant Capital to discuss how these large and serviceable markets present sustainable growth avenues for companies. Activant is a global investment firm that partners with high-growth companies that are transforming commerce. Don’t miss out on this insightful episode featuring valuable learnings for investors and founders. 

Payments & Fintech Insights In This Episode

  • Activant typically invests from series B through to IPO in high-growth technology startups.
  • They focus on startups that are transforming commerce, particularly in payments and financial services.
  • The B2B category in commerce is still in its early stages and has a lot of growth potential.
  • Activant is a research-led growth firm and they identify gaps in the tech stack to build large, valuable companies.
  • Having the ability to be acquired can validate a company’s goals and open up other partnership opportunities.
  • And SO much more!

Today’s Guest

Andrew Steele : Activant Capital

Activant is a global investment firm that partners with high-growth companies that seek to transform commerce. They typically invest when two things come together. First, the company has the potential to achieve escape velocity and transform an entire industry. Second, they believe the founders can lead the company through hyper growth, and their support can significantly increase the probability of this success.

Featured on the Show

About PayPod

PayPod is the leading voice in the payments and fintech industry, covering payments, risk management and new technology. Host Jacob Hollabaugh interviews leaders who are shaping the payments and fintech world, as they discuss the latest developments in the payments and fintech industry.

Episode Transcript

Jacob: Welcome to PayPod, the Payments Industry podcast. Each week, we’ll bring you in-depth conversations with leaders who are shaping the payments and fintech world from payment processing to risk management and from new technology to entirely new payment types. If you want to know what’s happening in the world of fintech and payments, you’re in the right place. Hello, everyone. Welcome to PayPod. I’m your host, Jacob Hollabaugh. And today on the show, we’re looking at the fintech world as usual. But this time through the lens of an investor with every company and product we talk about on this show, someone has had to put the money up to get that company off the ground. But what kinds of companies, what types of people, what ideas are worth investing in or worth believing in within this world? Those are the questions we will be tackling today. And joining me to do so is an exceptionally qualified guest in just those departments. We’ve got Andrew Steele with us, partner at Activant Capital, the investing firm supporting relentless entrepreneurs who are transforming commerce. Andrew, welcome to the show. Thank you so much for being here.

Andrew: Thank you for having me. Pleasure to be here.

Jacob: Pleasure is all ours. I’m very excited. This is a little bit of a different approach than we usually get on the show, so I’m very excited to kind of look at things through the lens. You look at that from an investing and who you believe in and why and everything. So let’s just start, if we can, with an overview of Activant Capital. Who are you? What’s the goals? Who are you investing in?

Andrew: Amazing. Thank you again for having me. So I’m Andrew Partner here at Activant. We’re a growth equity firm, so we typically invest from series B through to IPO. We’re investing in high growth technology startups that are transforming commerce, as you mentioned, commerce to us. It spans a lot of areas, obviously, but payments and financial services are one of the greatest enablers of all commerce. But on the B2C side, on the B2B side, so we spent a lot of time investing there. I’d lead a lot of our fintech work. We’ve been investing in a number of Series B, stage and beyond companies in that space, a lot of payments, fraud, identity data, solutions that sit underneath and then even sort of core financial products. So from the data to the lending to everything else. So I spend a lot of time in fintech.

Jacob: Wonderful. Yeah. And I was looking through the full list of all the different investments and actually a few names stuck out as like they’ve been on the show before or someone from those companies has been on the show before. So definitely a lot of overlap. Why, why, why those specific the industries you mentioned and the points in the company, the series B all the way to the IPO, Why those specific targets? Is it simply where you see the most potential for growth and profits? Is there something about founders in those spaces that you trust and believe in something else? What is it that makes you have those specific targets?

Andrew: It’s honestly a great question that I haven’t thought about in a long time. So for context, I’ve been with Activant for about seven years, so I joined in our first fund. My partner Steve is the founder of Activant, and we when I joined, we we were focusing on this commerce space and I think reflecting on why, there’s a few reasons why I think building a growth equity firm is a unique journey. We also had to build Activant into the firm it is today not exactly the same way that the founders we invest behind build their companies. But in a similar vein. And when you’re investing at the growth stage, a few things matter. Number one, in your first few funds, you don’t have that much room for error, right? You’ve got a couple of large checks and you’re running highly concentrated. And the idea of running around and sort of investing in health care one day and payments the next and VR and gaming fell, I think just a little difficult to, like really feel like you would ever have that depth of knowledge to understand the spaces you’re working in. That matters from a few reasons. Number one, you have to actually make good decisions, understand the spaces, know the nuances, really know what’s going on, who all is playing in that sector. But then also you have to prove to the entrepreneur that you are the person they should work with. And look, we are in a we’re a much, much bigger firm today than we were back then. But I think that DNA of going deep in our sectors and really understanding them inside out and then turning up and making the first meeting feel like a second or third meeting has been kind of one of the key reasons why we’ve had success at Activant.

Andrew: And I think in building a growth firm relative to maybe more like a seed stage firm where you can have a lot of checks and sort of fill smaller positions and build your brand that way. We were reliant on our investments being very successful because otherwise we wouldn’t be in business. So that’s a little bit of why I think commerce though, is just if we reflect on the whole category, we describe it as any way you make move and sell things, it ultimately touches a lot of parts of the world, right? Supply chain, e-commerce, omnichannel, commerce, retail, financial services, insurance. These are big markets. It turns out it’s a good place to play because they’re very large, serviceable markets that you can grow companies well into the billions of dollars in in a sustainable way and not just in a sort of on paper way. And for me, and we’ll probably touch on this plenty of times today, but the whole B2B category still is very early innings. We got started off on a successful couple of investments there, but fast forward almost a decade and most of the success has been on the consumer side. Even if it was infrastructure serving commerce, it was mostly consumer. So this category has many, many more decades of growth in it, and I think we’re just very excited about that. Yeah, that.

Jacob: All make sense. And we definitely will be coming back to the B2B side of things because that’s been a common reoccurring theme of late on the show and I think is a big area. There’s a good reason why you guys have such focus on it. The one thing I do want to reflect on in that answer, the kind of relationship aspect of it, makes a lot of sense to me. That one from the knowledge point of, like you said, like if we didn’t focus on some sort of focus, then like how do you ever get the knowledge but also the trust side of like you’re not walking into anyone and saying, We want to invest in you. And they’re looking back. We’re like, You’ve never invested in anyone like us or done anything. So are you just looking to get a check at the end of this or when it’s what you’re doing? Like, no, we’ve worked really well with these other people who are doing similar things in the same industry. That trust is kind of immediately thereof. No, they really see value in us or the company because they’ve done this before, they’ve been in this space and there’s a lot of people they could have come to and offered money to. So I think that just helps you build that relationship real early on. Let’s talk about fintech specifically. What are you kind of alluded to some, I’m sure similar to what you’ve just said, but are there any key characteristics you’re looking for in either a founder or a company in the fintech space specifically to feel confident in their probability of success?

Andrew: Yeah, I think on the founder front, folks with a very clear direction and view of what they’re trying to build that they can articulate that vision very clearly. Sometimes timing is always important in investing as it is as a founder. And there are companies that are often built after a category becomes, quote unquote hot or everybody’s excited about it. But usually the companies that we like are building in spaces where people aren’t. Not everyone is paying attention. They’re sometimes more difficult to tackle. They’re a little slower moving. They’re just not as sexy, frankly. So I think we look for founders that have experience building, have a proven track record of doing that, build teams around them who complement them and really enable them to unlock this vision. But building, building infrastructure software is hard, right? Like you have to build a lot of features before you can win some big enterprise contract because there’s always the one more feature. And I would buy this problem. So you have to find entry points where you can make revenue early, prove your value proposition, provide real value to the end customer, but always have your eye on the bigger picture about what this platform will be. Fintech is a category that obviously has gotten a lot of excitement and heat in the last few years for good reason. Right? It’s an incredible place to play, but at the end of the day, companies need to win on technology. And the idea that we will beat J.P. Morgan on cost of capital or we will what whatever we want to whatever example we want to use is foolish. So we have to win on having the best technology. And I think founders who combine that understanding of smart wedge products get into the market, provide immediate value, but build real sustainable value in their technology stack over time is where I think the biggest winners come from. And that’s kind of what we look for.

Jacob: Yeah, and I had kind of a funny maybe not to them if you do have any examples of this, but as you said, like trying to find someone who’s doing something new versus is has been done or just that timing aspect, I’d imagine you’ve potentially come across moments where you’ve maybe met with someone or heard about a company and like, Hey, that sounds really awesome and that will work. But little do you know, we’ve already talked to someone else that like is three steps ahead of you and like you’re probably your timing is going to be off and having to be the one that like knows that knowledge because of the view you have. I could see that being potentially an uncomfortable meeting from time to time of like.

Andrew: Yeah, I actually.

Jacob: Think the hard right track, it just turns out you don’t realize that someone else is a little bit further down that same track.

Andrew: Right? I think that’s a good point. And I actually had a I had a startup before Activant and it didn’t end up succeeding in any shape or form in the way that I would have hoped. But there’s something about being a founder is difficult because you got to really be aware of your surroundings completely, but also run fearlessly at like the task at hand. You can’t get bogged down with having competitors in your category because if you did, you wouldn’t even try to build it. And you’ve got to you got to be convinced of that. But it is, to your point, interesting because we see these markets completely end to end, right? We’re meeting companies from the earliest innings of their growth from the seed stage the whole way through to the public companies, the people who end up potentially buying some of our portfolio companies or acquiring other businesses and seeing all those pockets of opportunity and growth. I think the harder flip point, though, of what you’re saying is not so much when a founder has is building in a space and there’s a competitor a little further along, it’s actually more difficult when it’s a space that you’ve seen maybe a year or two before and someone else tried it, but it failed for some specific reason that was related to timing or market conditions, because it doesn’t mean that this company will not succeed. I think you have to always keep an open mind as an investor, especially one that spends a lot of time in a category because it evolves and they change. But there are often learnings from history. I think history is one of the greatest things that we can read and learn from in this industry, but we sometimes forget that that’s a good way to predict the future.

Jacob: Yeah, certainly. And you can be too late, but you can also be too early and something can be like that will work, just not yet. And now the new company coming along, you just got to figure out was it simply timing? Was there one thing that needs change? What have you? Kind of in a similar vein, a lot of our guests on the show end up filling one of three roles. We talk to lots of founders, lots of CEOs, CTOs, C-level people across lots of different fintech and payment companies. And they end up their companies kind of filling one of three roles that I’ve laid out as there’s the disruptors who are solving the same need in a radically new way, a gap filler who’s kind of providing a service that is the missing piece of an existing ecosystem, or the third type, a bridge builder, someone who’s connecting different existing players within an ecosystem who could just help each other if they could be combined or could a bridge could be built between them. If I give you those three kind of archetypes of like a disruptor, a gap filler or a bridge builder, do you have a preference on who you want to work with or which approach you see as the most successful in today’s age?

Andrew: That’s a great question. We as a firm were very research led the way we would describe our firm. Another way to describe. It is a research led growth firm and think the benefit of doing research as we talked about from the seed stage all the way to like the public companies and knowing them inside out is that you can see the let’s call it the gaps in the tech stack like you’re describing. And there are markets where. Those gaps are so big and specific that you can build very large companies in attacking those. What’s nice about those from an investor’s perspective, and I’ll be very candid here, is that it creates a really strong foundation for value because these businesses are highly acquirable and sometimes those acquisitions can be in the billions of dollars. This isn’t like a, Oh, we sold it and we didn’t go for the big icon. You can have a big icon as a growth investor. That’s a nice thing to have as an option, as a card on the table. And then on the other hand, like the disruptor category is also becoming even more hard to understand because of the introduction of LMS and the way that AI is impacting the industry. Right? Like does the value accrue to the incumbent who has maybe data moats or distribution advantages that can use these sort of LMS off the shelf? Or do the new players come in and can they disrupt them faster than these guys can potentially turn the ship? So I think it varies is the long and short of it is it varies by the research or theme or thesis that we’re tackling in that given moment.

Andrew: I generally like companies that are built in a modular enough way where they can potentially be a gap filler or a bridge builder, but always have that like genuine embedded like upside in the in them where they can disrupt the market, right? Like if they’re able to have this foundation they can work from, they have a sustainable business, then they can go and hit markets very hard. And the disruptor business models in fintech have varied a lot over the last few years, right? Because it used to be that only technology, true software companies with 90% gross margins were funded by venture capital and then it became possible to actually not do that and run at a market with a lower gross margin and grow it over time as you build the software and go head on against the incumbent. And that market’s harder because capital is tighter, but there still are. That is still where you can build big value. So I’m not giving you a good answer. I think it’s a really good framework and I’m actually thinking about it a lot as it relates to some of our research areas, but it’s usually a combination of a few of those things is how we think about it, certainly.

Jacob: And I don’t think there is one answer. It’s not like, Oh no, for the next three years, like only a company who’s truly a disruptor is going to be successful and then it switches or anything like that. But I do think there is a little bit of a cyclical nature with we had kind of in the 20 tens, a lot of big disruptors coming in and changing things because we were at maybe a point of a lot of static ness across commerce and across all different industries. And now, especially in the fintech and payments world, we’re in not a static environment at all. We’re in a highly changing, rapidly changing environment where there’s going to be a little bit less disruption because some of those disruptors already came in and a little bit more. All right. Things got totally thrown out of whack or thrown up in the air now where the new gaps to go in and fill so they can all be successful, I think just at different times. And especially I bring it up just because we’ve had a lot of recent guests who have been kind of very against like we’re not trying to disrupt anything. We are simply trying to do this one little thing really, really well, which takes me to and you had mentioned the acquiring piece of it.

Jacob: So I’m going to kind of jump ahead to a question I was hoping to ask near the end, but I’ll just ask it now because we’re kind of alluding to both parts of it. There has been a rise in recent years of kind of the as a service model, specialization integration, been the name of the game and gone at least for right now, or kind of the days of big companies doing everything themselves, everything internally. And I wonder when you’re looking at investing, are you looking at your goal of companies that can grow and scale and be standalone, be that specialized specialization at all times? Are you a little more focused on companies that could possibly be acquired and therefore, maybe in the back of your mind you’re thinking there could be a period in the near future of more consolidation, kind of this trend of as a service, everything slowing a little bit or at least some consolidation, some acquiring going on. What’s your kind of mindset when investing in these companies and looking at the maybe, let’s say, next half decade of that trend of everything specialized everything as a service? You think that continues? How’s it kind of color your investment strategy?

Andrew: I think it’s a another great question. I mean, the I think it was kind of goes back a little bit to what I was saying in a minute ago. So. We are typically investing in B2B businesses. They are typically valuable sort of infrastructure in and of themselves. Now, of course, there are more and more competitors, right? This this speed of innovation in software has increased dramatically. It used to be. I don’t know, 7 or 8 years ago that if you started a software company building some specific payment solution, it would be three years before someone could catch up to you and you had that window. But then the proliferation of APIs, the infrastructure stack around you, made it easier and faster to do so. You’ve got more and more competitors. But I think that fundamentally we like companies that have some strategic, strategically valuable components to them because it does provide option value for the business at multiple points in time. I don’t think at the end of the day, the company control where minority investors in our businesses. The company controls their own destiny as to what they decide to do with those setups, but it never hurts to have the ability or option for a large potential acquisition. If anything, it just validates what you’re really striving towards and I think can open up other partnership opportunities with people who sometimes may want to compete with the person who wants to buy you, right? Because they’re like, whoa, Like now we can actually think about like leveraging these guys as an alternative for us to use our distribution to compete with another incumbent.

Andrew: So I think it’s hard to get an exact perfect sort of fine tuning of this. Every company is an organism that evolves over time right at our stage. These are not static entities, but ideally it’s companies that have some strategic value in their technology and their data and their distribution, but have it legitimate and straightforward goal to like actually run headfirst and really changing the industry that they’re in. I think deliver might be a good example of that. For example, it was a company that we sold last year. It was sort of $2 billion plus icon at the bottom of the market, right? Like when things were going crazy. And the reason for it was because it was strategically valuable as a business and helping big commerce players compete with Amazon. Right. And like that is an existential question for some of the folks who were on the table. But that business had a real chance to continue to run and grow stand alone. So that ability to have that option on the table in a legitimate way is also what can drive a great outcome in an acquisition. And I think those are some of the things that we look for. I would say it’s like combining those two in as best and as best way you can.

Jacob: If both are an option, that means you’re doing something right and probably is the best place to be in. Let’s then you’ve referenced B2B and that’s kind of a lot of your focus a few times here. So let’s talk B2B Commerce and Payments specifically. Activant did a big two part report on the B2B commerce landscape. They had a large focus on the payments side of things, and I really enjoyed diving into that. And from what it looks like, you’ve had some big investments, you’ve referenced a few of them already in the B2B commerce space. And as I understand it and from everyone I’ve talked to recently who’s doing things in this B2B world, most of the opportunity in the space is born out of the fact that B2B commerce has just lagged way behind B2C commerce and things haven’t transformed. Things haven’t gone as digital nearly as quickly. The question I have for you is why do you think that lag exists? I’ve asked a few different people this recently that are working in this space, but I’d love to get your take on it if am I correct in just saying it is the big opportunity is just it’s lagged so far behind where B2C has been. And so that creates all this opportunity to get it caught up. And what has been creating that lag in the B2B world?

Andrew: Yeah, the lag, at least from my opinion, is a result of many different components all coming together. I think, number one, this is simple, but there are just multiple stakeholders. So when you’re a kid and you’re trying to convince your mom to borrow the credit card to buy something on eBay like you had one person to go through procurement with. Right. But in but in a large organization and you’re doing RFPs and procurement and a whole host of different sort of workflows exist to ensure that whatever gets purchased fits within the bounds of the organization and the broader goals. That just adds complexity. It just adds a lot of workflow steps. And the bigger issue with that workflow is it’s still often analog to digital. It’s like flowing between those two constantly and maintaining any kind of consistency in that data is very, very difficult and challenging. So I think that’s number one is it’s just tricky because the multiple stakeholders. Number two is the product purchases are just large in general. So when we’re buying that X box on eBay, worst case, we might mess up and lose a couple hundred bucks. Right. But bid. But in a B2B world, if you’re buying like $2 million worth of steel or lumber or whatever component that goes into your product, that’s much, much more of an issue if you can mess that up. And I think this is just fundamentally one of the components of B2B, is that credit and payments are not always so separate, right? Like we have credit cards in the US, which makes us think and largely on the consumer side, which makes you feel like, oh, credit and payments are connected in the US, but not in the same way.

Andrew: We’re talking about businesses functioning on terms with everyone having different days payable and there just being mismatches in all those things across across the sort of different players in any purchase. And that is complicated. That requires a lot of underwriting across a lot of data. It requires a lot of like vetting of purchases of history. So I think the credit and the payment. Components combined with the more complex sort of workflow associated with getting through any organization and sales process. And then lastly, just like marketplaces are going to be such a critical driver of growth for B2B e-commerce growth, no question in my mind that that will be something that happens over the next decade or two decades. But right now the marketplace environment is difficult because of some of those things. We talked about the analog to digital. The players involved and even if you look at companies like Slack, they started as a purely product led growth company. They distributed without a single salesperson, but then they got to make enough the number 15 million or 20 million of buying. They have half their team is sales people and like sales is still going to sit in the center of a lot of this. So I think it’s finding ways to embed the payment solution, the fintech solution, into the workflows that exist and gradually pull this forward in an omnichannel way.

Andrew: Right. And not just relying purely on e-commerce, because if we only do that, we’re going to struggle. I think I saw a stat recently, it was just I was reading a book on Alibaba, which I highly recommend. It’s what a incredible business. But I think even for me was like, oh, Alibaba, B2B, e-commerce, darling of the space, right? But we need to fact check this. But Google just quickly, percentage of B2B revenue and it was like 7 or 10% like we still have fairly low penetration from a sort of digital commerce perspective in B2B. So I think we’ve got a lot of good stuff to grow there, but it’s going to be things like credit meets payments, logistics and fulfillment. All the great stuff we’ve built in the last decade for the consumer side is not going to be ported over here. It’s going to be data that allows you to do real time pricing, understand where you’re bidding. All of that stuff is going to combine. And I think like we all, it’s always easy for us to say and I think we’ll all agree that for this, like if I’m a B2B purchaser, I go home and we use Amazon as a consumer, why wouldn’t I use it? In my business world, that is where we should go to. But it’s just going to take a little bit of time and a lot of nuance before we get to that end. State I think I’m.

Jacob: With you on all of that. That was really, really good and a great breakdown in synopsis. I know you’ve made recent investments in a bunch of companies in the B2B space, but specifically Vartana that works with B2B sales closing. I saw Sardine was one that stood out. Does fraud and payments infrastructure, can you speak to those investments at all, what opportunity you see with them? And then more broadly, even where you just see most of the opportunity right now within this B2B commerce transformation, You just alluded to a few areas of it. I heard Marketplace in there and immediately thought of a couple of recent guests working on that 100%.

Andrew: I saw some of your amazing guests, many of which are friends of mine, actually.

Jacob: So then that report, there was a couple that there on one of the charts that you had within the big report. I was like, Oh, Balance. Like we just talked with Bar.

Andrew: Like Bar is a wonderful. Exactly. Yeah. So maybe I’ll touch on Vartana and starting quickly and then give you some perspective. So Vartana actually fits very nicely with what we were just talking about. We spent a lot of time looking at this space at large and think what was really obvious to us when we we met. Vartana It’s actually interesting. Vartana was reading some of that research. That’s how we first met. It was really special to be able to meet through sort of a melding of minds and some of this stuff. But Vartana sits within the actual sales closing workflow, so inside of the CRM and provides everything from payment financing, document signing and closing all the core components of what a sales person might need to close a deal. And one other thing to just note about B2B commerce as well is there are a lot of robust markets that exist already. They’re just not digital in the traditional way, right? So if you’re buying a large contract for some piece of hardware or software or cybersecurity or whatever it might be, some of these companies already have financial providers, but they’re just really, really hard to work with. And it turns out that that actually stops sales from closing. And if you’re a sales person, you’re one of the folks in the organization who drives revenue for the company, who’s incredibly vocal. When you don’t get what you want or what’s holding you back because your commissions are lost. So the ability to provide financial services like actually at the point at which you are doing your job and taking some of this offline online digital interaction, like making that offline interaction digital and holding a log of it all was very appealing.

Andrew: So Vartana was a was a really amazing company that we were super excited to back and we led their series B recently and they’ve been able to serve large, large enterprise customers, that is even in their early innings, which just showed the need in the market and their speed of the growth and the way in which they’ve built a lot of sophisticated technology from workflow to capital markets was something that we felt was very unique on the sardine side, sardines, another very multifaceted business, one that we’re very close with, but we invested with them recently in their series B and they provide a lot of fraud and identity solutions and software. And those spaces have had a lot of noise. But having spent many years looking at them, when we met Sardine, it was just very obvious what was unique, right? They were combining fraud, which is typically let’s look. At individual transactions and usually for e-commerce, to be honest with you and identity, which is let’s actually onboard this customer and get their information at the beginning. But most of the time just forget what happens after that, right? Like check the box. We’ve done the KYC combining those two and applying it to financial services use cases and it’s very powerful to see in action. And what it does is it creates a risk layer that they are able to build a lot of stuff on top of.

Andrew: And if you’re familiar at all with Soups and the team there, they have a very diverse background everywhere from building the Zelle payment network to Coinbase’s instant ACH products to Revolut, to PayPal to all these companies. And I think the ability to build payments stuff on top is critical. And it’s actually maybe a good transition into some of the stuff we’re looking at, which is Sardine has this unique ability and they’re doing it today to help companies move money off of on both card but non card payment rails and I think non card payment rails has been the space that everyone in fintech who’s been deep in fintech and payments in the last few years has been thinking about because we’ve seen it take off in other countries right. India has this payment program called which I’m sure you’re familiar with and I should know this, that. But the usage is just mind blowing, right? It’s grown to hundreds of millions of people using it every day. The same thing is true in other countries around the Eurozone, in the Eurozone and Singapore and all these places. And that sort of non card payment method is very important for B2B. That stuff we’re talking about, right? Like being able to transact not on a credit card, but on but with real time payments on large transactions, with lower fees, with more control, more visibility, all that stuff is incredible, but it has a lot of risk associated with it. And if you look at the rollout of things like Zelle in the United States that had risk and that’s where starting sort of sits.

Andrew: So maybe transitioning quickly to just some of the areas we’re looking at. It’s funny, a lot of them are quite tied to what we’ve always been excited about. But I think one place is international payments and international trade more in a more broad level. There are some amazing companies there airwallex’s tunes, some really cool companies building things there. But international payments is just it’s still so nascent. And we’re talking about the global economy here, right? So we have in the early days of that, you had the Swift network doing a lot of stuff, very, very expensive. Everybody can imagine how painful it is to use Swift if you’ve ever used it. So the ability to build real time payments across the globe is an incredible feat. We had a lot of that. Remittances think TransferWise and other companies that started in consumer, but in B2B that is even more powerful because if you can have multiple bank accounts in different countries across the world for your different entities, you might even have to move currency in exchange foreign exchange, which couldn’t save you literally hundreds of thousands of dollars or millions of dollars every year. And that’s an entry point to do much more within fintech build and build lots of other solutions that sit on top of that. And that’s an area we’re excited about, I would say at large and even watching people. There was a recent report of Singapore and India connecting their payment systems.

Andrew: We’re talking about things that are now almost in the realm of building free trade agreements, right? Like the ability to move money internationally instantaneously from a merchant from one country to another. What can that do for the global economy? That’s the kind of thing that can drive serious lifts in GDP. So for us, that’s really exciting and I think there’s a lot there. We talked about embedded payments, embedded finance. I would say other areas are just more complicated. Billing and payments, use cases, usage based payments. There’s some really interesting companies you might have seen in that space that help with more sophisticated business models where instead of being SaaS because SaaS is just a business model and when the cost of capital and the time value of money changes, it turns out that you might actually want to get paid upfront or you might actually want to get paid in different ways, right? So being able to have billing that is sophisticated and easy for the CFO, for the finance team as they connect to the sales team. Some of the Vartana stuff we talked about that’s really interesting. And again, when interest rates go up, all of a sudden you’re thinking about Treasury management, you’re thinking about where do I put my money? How do I ensure it’s in the right place? How do I ensure it’s not all in one single bank as we saw happen this year? So just seeing a lot more cool stuff around core pieces of the nervous system of financial teams and actually building that into other products.

Jacob: Yeah, certainly. And the one part of that, the international part really piques my interest and has with a bunch of recent guests in makes a lot of sense in two ways for you from the investment approach of one. Yes, it doesn’t get bigger than the global economy. So when we’re talking opportunity and market size and everything else, it’s going to be pretty interesting to see that actually take shape. And how big of opportunities are out there to start doing these connections, But then also with doing all the different international work, the number you were trying to pull. I’m also a little embarrassed because we just spoke with a guest recently that gave me that exact number you were looking for like days ago. We recorded and I’m like, I should remember this number immediately. But yes, the adoption rate in India has been mind blowing and then becomes something where it’s not only can you find ways to work in that market and take advantage of the opportunities that are there, but also what can we now learn from different places that you could bring back to the States? So it works both ways and we’ll get you out of here.

Jacob: This one final question, which you just named a whole bunch of areas you’re excited about. And I promise this was a planned final question that I wanted to ask you. And now it’s going to be great because you’ve listed all these things you’re excited about, and I’m going to make you only pick one if what one area or idea or product type within fintech or commerce world has you most excited. And we’ll say the next 3 to 5 years in the short term, near future, let’s say for some reason all the partners at Activant got together, decided each of you only get to work on one single company type product type, which I’m sure is a horrible way to run an investment firm. We talked focus earlier, but not that type of focus. But for this hypothetical, if you all had to pick one specific idea, it’s like you only get to do B2B checkout. That’s all you’re doing. Now, some specific thing. What one area, what product type, what idea would you pick that gets you the most excited in the near term future?

Andrew: Wow, that is a hard question.

Jacob: I’ll allow you to give a couple to think

Andrew: Okay. I think the two areas that I would say jump to mind for me are some of the stuff we talk about in international as it relates to these larger B2B transactions. So everything from how do you manage funds in escrow, a single platform that combines a lot of this stuff, How do you manage funds? How do you manage tax? How do you manage compliance? How do you manage payment across multiple layers all within a single platform for these large B2B transactions as we start to see them become much more digital over time? We have a company called Trades in the Portfolio. It’s an amazing business from Korea, one of the unicorns you’ve never heard of, and we worked with them on some of these things and it. That market is still very nascent. So I would say that is one giant area. The other one I would just say purely because it’s an area that we are continuing as most firms and most people are at this point in building our expertise around is like, how do some of these advancements in LMS and other parts of, let’s call it I change the way in which we run a financial organization or system and I think have this like nascent thesis.

Andrew: It’s not quite fully baked yet, but this idea that like a lot of the workflow automation that we’ve seen, no code, low code will actually become a lot more useful. Very quickly because you can ingest unstructured data into them and get value much faster and you can point. Specific models and like maybe even like off the shelf open source models at specific pain points within the financial workflow that are that are accessible. Whereas before the idea of addressing this, how do I use AI thing, which is going to be the question for every company is still sort of nebulous, but if we can find ways to build a sort of no code, low code tooling, you might be able to insert them very precision oriented, like almost like precision surgery, that kind of idea. So those are two. I’ll give you two. But put it this way, if I had to go and like you’re like desert island, you got to go try to build some company from scratch, What would you build? Those would be two areas that would get me so excited that I would want to go and chase them.

Jacob: Yeah, Love it. Well, I appreciate you giving a real honest answer and actually answering that question because it is a bit of an unfair one to ask you to narrow it down at the end. Well, Andrew, this has been an absolute blast. For those listening who may want to follow you, learn more about Activant, keep up with what all you and the firm have going on. Where would be the best place for them to go to do so?

Andrew: Yeah, you find me and find us on LinkedIn or Twitter or anything. But most important with us is our research. We’re going to be publishing a lot more of this stuff in the coming months, and we know that those are works in progress. And if you think we’re wrong, please tell us because that’s where the most fun happens. So we love to brainstorm on our research and any ideas are always, always welcome.

Jacob: Love it and I will link to all those and more. And I do often in every guest of research, you know, most of these companies have blogs put out really good information and I often reference to people like go read the information they’re putting out. And I mean it when I say it. And sometimes it might just sound like host speak or whatever, like you do mean it when I say it. And I dove into the report with the context of like, I need to know what I want to talk about with Andrew. But then I was immediately like, No, I need to read this whole thing. Like I need this is really good and this is really amazing info. So I mean it every time when I say it, but certainly as much as I possibly can here, it’s well worth going and diving into all the info you guys are putting out. It’s really, really good stuff and will help educate anyone interested in these topics, so we’ll link to those more in the show notes below. Andrew, thank you so much for your time and knowledge today. I’ve greatly enjoyed it and hope to speak again sometime soon.

Andrew: Thank you very much.

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