The Great Convergence: How Fintech and Ecommerce Are Changing The Game

Some of the world’s biggest ecommerce enablers are starting to look a lot like fintech companies.

Millions of Amazon’s Indian customers, for instance, are now taking advantage of instant zero-interest and low-interest credit to pay for products weeks or even months after receiving them. Shopify saw its revenues jump 57% year-on-year after unveiling a new Shop Pay checkout tool. And in Indonesia, ecommerce giant Tokopedia merged with fintech innovator Gojek to create GoTo, a tech giant that contributes 2% to Indonesia’s GDP.

This “great convergence” between fintech and ecommerce is partly driven by the global pandemic, which compressed a decade’s worth of ecommerce growth into a few short months. Customer trust in fintech, perhaps out of necessity, skyrocketed as we worked and shopped from home, and consumers remain eager to use innovations like contactless payments in the post-pandemic era. That’s left fintech players looking to ride the ecommerce wave, and ecommerce companies seeking to tap new fintech revenue streams such as payments.

As investors, we’re never going to turn our noses up at this kind of unprecedented opportunity. But we believe this “great convergence” isn’t just about companies scrambling to grab market share and drive revenue. The reality is that this is one of those rare instances where 1 plus 1 really does add up to 3 — because when you bring the right ecommerce and fintech companies together, you wind up with something that’s much more than just the sum of its parts. And that can only be a good thing for both merchants and consumers.

For example, two members of the Oak HC/FT family — financing pioneer Clearco and ecommerce innovator — recently joined forces to provide merchants with access to capital and an end-to-end suite of ecommerce tools to scale their businesses. users can now access up to $10 million in instant financing via Clearco — and Clearco customers can use’s unified console to quickly and effectively deploy the capital they’ve raised towards marketing, fulfillment operations or software capabilities.

That’s good for both companies, which benefit from reaching a shared customer pool representing over 8,000 top ecommerce brands. But it’s even more exciting because it isn’t just about the synergies that come from bringing together powerful fintech and ecommerce solutions. It’s also about the shared vision for what intelligent fintech integration can help founders and merchants to achieve.

More on this partnership below:

Both Clearco CEO Andrew D’Souza and CEO Omair Tariq have witnessed the challenges that developed as ecommerce grew increasingly fragmented and over-complicated, leaving founders scrambling to manage a patchwork of third-party services and vendors. Both companies were founded on the belief that there is a better way, and that by creating streamlined financing and operational support systems it is possible to help more startups achieve success.

Seen through that lens, the partnership is more than just a smart business move. It’s the logical next step toward something bigger: a world in which ecommerce brands and fintech solutions operate seamlessly to give founders the tools they need to grow. By taking the friction out of entrepreneurship, and Clearco are making it easier for ecommerce founders to execute their visions, scale their businesses, and achieve their dreams.

That kind of value-add is why the “great convergence” between ecommerce and fintech is such a big deal. But it also reminds us that the goal shouldn’t just be to add a fintech layer to an existing ecommerce product or platform. What’s needed, to make this convergence multiplicative rather than merely additive, is a real mission to empower the next wave of ecommerce merchants. The best players in this space aren’t just trying to bring ecommerce and fintech together. They’re using ecommerce and fintech purposefully — to create a more level playing field for every founder.

Airbnb and the Problem with Later Stage Investing in Today’s Environment

A couple of months ago several news sources reported that Airbnb was raising $1B at a $20B (pre-money) valuation. This article on TechCrunch sums up the story pretty well.

I have a lot of respect for Airbnb as a business and the tremendous growth of the company in just 7 years. Airbnb currently boasts 1M+ listings across 34,000 cities and 190 countries. Though still a private company, revenue estimates for 2014 were said to be over $400M w/ yoy growth of 65%. Not bad for a company many famously passed on (including Fred Wilson) or wrote off as completely absurd. I’m confident the founders and early investors will be handsomely rewarded when the company eventually goes public.

I do, however, have concerns with the current massive round that Airbnb is raising. And it’s a concern I believe should be shared by many of today’s unicorns and, in particular, their later stage investors. If I were a prospective later stage investor in Airbnb’s $1B round, I would not invest at this stage and at that valuation. My thoughts can be summed up in three points:

  • A $20B valuation overinflates the true value of the business, which by my analysis is closer to ~$10.2B. This high private valuation will hinder returns for later stage investors—it’s a problem I think many of today’s later stage investors in unicorns are going to face. The infographic in this Forbes article shows a similar story with one of the more recent unicorns to go public: Box.
  • Airbnb has important competitive advantages in terms of network effects and customer captivity—they may even have a bit of a regulatory advantage thanks to their scale. The problem is that Airbnb has nothing that will allow it to be a complete “winner-takes-all” business. At the very least, it will have to share TAM with its most direct competitor, HomeAway, not to mention all the major hotel chains that have been around for decades.
  • There are a number of unknowns that make Airbnb a risky business to invest in including: macro-economic tourism and vacation trends, the decentralized nature of regulation and an uncertain cost structure that is likely to erode margins. Some of these unknowns could be very detrimental to Airbnb’s growth and continued success as a business.

For a more in-depth analysis of the investment opportunity, I’ve put together an investment recommendation deck below:

Increasing Conversion along the mCommerce Customer Journey

Increasing sales on a mobile commerce (mCommerce) platform is often seen as synonymous with driving more traffic through mobile channels—whether through the mobile app, tablet or mobile site. Yet there are other ways for mCommerce startups to increase sales besides increasing app downloads. Chief among these methods is increasing conversion in the customer journey to levels that are on par or better than desktop conversion rates or any other benchmark a company is using.

Typically mCommerce platforms have customer journeys roughly similar to the desktop customer journey. Give or take a few steps depending on the product, industry, stored preferences, member vs. guest, etc. These customer journeys almost always (roughly) look something like this:


When scaled up to thousands if not millions of customers all going through this process, the customer journey in aggregate looks like a funnel. In early stages of the journey, the funnel is broad—there are many customers. Yet by the time the journey is at the “Confirmation” stage the funnel has narrowed, and there are very few customers remaining who actually convert into buyers. An example using Airbnb will help illustrate the concept of the funnel. All numbers are completely made up and used simply for illustrative purposes.

Let’s say there are 100 potentials customers who login to Airbnb’s iPhone app on Friday at noon. Of those 100, let’s say 80 proceed from the Login page to actually browsing the listings of sublets in the destination of their choice. Of those 80 who browse the listings, only 30 actually select a sublet that they are interested in. Of those 30 who select a sublet of interest, only 10 make it to the “Review” page where they review their listings and perhaps add any extra features they want. Of those 10, only 5 actually enter in their payment information. And of the 5 who enter their payment information, only 2 click submit and reach the “Confirmation” page. Thus of the original 100 who logged into the app, only 2 actually purchased, resulting in a final conversion rate of 2%.

There is clearly a big opportunity to increase conversion—particularly if Airbnb’s desktop conversion is higher than 2% or if their competition has superior conversion rates. Startups looking to increase conversion in the customer journey can target 2 different methods:

(1) The first method is to simply make it easier for customers by eliminating steps in the customer journey. A great example of this is how Uber has dealt with payments. By taking a photo of your credit card the first time a customer opens the app and then storing that information, they have effectively eliminated the payment step in the customer journey. Fewer steps in the journey, mean less opportunities to fall out and, ultimately, higher conversion rates.

(2) The second method is to simplify painpoints in the customer journey. In other words, increase the conversion rate of steps in the customer journey where customer fallout is particularly high. So if the conversion rate from “Browse Listings” to “Select Product” at Airbnb is currently 37.5% (30%/80%), focus on increasing that step’s conversion rate to 50% or 60%. This particular step in the journey has been mastered by many of the airlines and hotel companies (SPG and United in particular) with their unique mapping features, simplified browsing/sorting capabilities and sharp focus on UX. As can be imagined, increasing conversion early in the customer journey (when the funnel is still wide), should be prioritized as it has the potential to have the biggest impact on final conversion.