Financial governance issues on the rise

• Multiple startups in APAC and beyond have been embroiled in scandals and even shut down due to accounting hygiene, governance lapses, excessive burn and poor capital allocation and budgeting. 
• This has lead to painful consequences for thousands of employees that take big career and financial risks and suffer through below-market compensation, layoffs and worthless equity

Too much data, too few people

• Data within a company grows at a far greater rate than the number of employees within a company that know how to translate that data into actionable insights
• An example of one kind of data that is critical for companies is the general ledger (“GL”).  The GL is a repository of every transaction that occurs in the company, and on a monthly basis, gets mapped and summarised into financial statements.  GLs can range from thousands to millions of rows, but financial statements are rarely more than a 100 rows.  Due to a combination of human limitations and antiquated process stemming from human limitations, FP&A cycles are shallow in nature
• To extract and manipulate GL data requires highly-technical skills that neither finance nor accounting professionals possess.  However, data engineers that could assist with processing GLs, don’t have accounting nor finance knowledge, meaning these engineers wouldn’t know how to structure the data.  To have both skillsets collaborate would require a product manager skill-set, one that possesses technical, financial and accounting expertise – which is incredibly rare

Too much data, too little time

• Most companies FP&A cycles take three to four weeks, minimum.  These FP&A cycles are shallow, and entail significant back and forth communication between leaders in the company and the finance team that spend time auditing and double clicking into the numbers instead of expeditiously generating forward-looking, strategic actions

The nascency of software in APAC

• Software as a Service (SaaS) has grossly underpenetrated APAC relative to consumer technology.
• This has left most businesses apart from multinationals handicapped with respect to taking advantage of the efficiencies that have long supported and accelerated macroeconomic growth in western markets – most notably highlighted by Marc Andreesen in his timeless 2011 piece, “Why software is eating the world”
• The main drivers of this under penetration are:
  • Products built in the west are not empathic enough of local users and use cases. Aspiring local startups evangelise silicon valley and consequently tend to overbuild for the local market as well. Moreover, the infrastructure that software usually sits on top of has not scaled enough to APAC
  • A perception that the market for software is small due to the smaller number of total potential customers relative to sectors such as fintech.  However, as the tech industry shift towards profitability increases the focus on unit economics, entrepreneurs and investors alike are realising the gross margin opportunity of saas which compensate for the relatively lower scale.  For example, a consumer business may win $5 of gross profit per customer per annum across 100k customers for a total gross profit of $500k.  An enterprise business may win $500 of gross profit per customer per annum across 1k customers for the same gross profit of $500k.  Additionally, software businesses typically offer stronger retention and pricing inflation potential relative to consumer businesses