Most narratives about emerging markets start with a problem statement about “the underbanked” or “digital adoption.” Those are real problems, but they are downstream. The upstream problem in wholesale trade across Eastern Europe, Central Asia, and large parts of Africa is much more mundane: there is no software, in the boring, load-bearing sense. There is software for hailing taxis, ordering groceries, even sending money. There is almost nothing for the 90–110-person regional distributor who moves four million dollars of beet sugar a quarter and reconciles every order in a spreadsheet emailed back and forth on Friday afternoons.
The shape of the gap
I’ve walked the warehouses of distributors in Lviv, Tashkent, and Lagos. The shape of the work is identical. A sales rep takes orders on WhatsApp. A different person re-enters them into Excel. A third person checks stock by walking to the back of the warehouse. A fourth runs invoices through 1C or QuickBooks or a custom Access database from 2008. The buyer has no real view of inventory. The supplier has no real view of orders. The accounting team reconciles the gap on the weekend. The credit decision is made by whoever picks up the phone.
This is not a technology problem. The technology to do all of this exists and has existed for a decade. It is a packaging and distribution problem — nobody has bundled the eight things a regional wholesaler actually needs into one product they can adopt in a week.
The reason nobody has, until recently, is structural. Enterprise B2B software historically sold top-down through global system integrators to companies large enough to have a procurement department. The regional wholesaler is too small for that motion and too big for consumer SaaS. They’re also in jurisdictions where the integrator economics break (translation, local tax regimes, local banking integrations, frequently changing regulation).
What I think the operating layer is
When I say “operating layer,” I mean a specific eight things, in this order:
One: a catalog that is the source of truth for what you sell, at what price, to which customer cohort. Synced from your ERP if you have one, native if you don’t. Two: orders that buyers create themselves, that suppliers confirm themselves, with no manual re-entry. Three: stock that updates in real time, with at least 95% accuracy, every day. Four: invoices generated automatically from confirmed orders, with the right tax code for the right jurisdiction. Five: embedded trade credit — not a separate product, not an upsell, but a payment-terms toggle on the order form. Six: logistics that plug into your fleet or into a regional carrier network. Seven: returns and proof-of-delivery, with photos and signatures. Eight: analytics that show you which SKUs are working, which customers are slipping, and where margin is leaking — without requiring a BI engineer to assemble them.
That’s it. Eight things. Every single distributor I’ve seen in five years has built some subset of these eight in spreadsheets, on top of email, with one engineer they hired off Upwork. The software exists in every distributor. It just isn’t coherent.
Why software, not marketplace
A common mistake is to assume the answer in B2B emerging markets is marketplace. It isn’t. Marketplace economics in wholesale trade are punishing — the take rates are 1–3%, the customer acquisition costs are competitive with consumer marketplaces, and you spend years building the supply side before any buyer cares. Worse: once you do reach scale, the suppliers and buyers transact off-platform the moment they find each other, because the platform doesn’t add daily value to the relationship.
Software adds daily value. If a distributor is using your platform to process every order and every invoice every day, they don’t leave. Marketplace is the discovery layer; software is the operating layer; finance is the unlock. Most companies pick one. The thesis is that you can’t separate them in emerging markets, because the customer doesn’t want three vendors.
The order of operations
We started Faktorist as a catalog. Just a catalog. Three buyers, eleven suppliers, one Telegram group, a lot of translation. The reason we started there and not at orders or at credit is that the catalog is the only thing every party in a trade transaction needs to look at, and the part most likely to be wrong in the existing system. Catalog is the wedge.
Orders came second. Not because they’re easier — they are harder — but because once buyers were already using the catalog to discover SKUs, they wanted to place orders without leaving the screen. The product pulled the next feature out of the user, instead of us pushing it.
Credit came third, and only after we had two years of order data on which to underwrite. Trying to build credit before you have order data is how trade-finance startups fail. Trying to skip credit entirely is how they get stuck at $5M ARR forever. The order matters.
Logistics is fourth. Logistics is the part that everyone gets stars in their eyes about (“Uber for trucks!”) and then loses their company on. Logistics in our markets is locally optimized, which means it is almost always cheaper to plug into the carrier relationships the distributor already has than to build your own fleet. We build the layer; carriers do the moving.
The customer profile that works
We have spent enough cycles on the wrong-size customer to share what the right-size one looks like. The customer Faktorist serves best is a distributor doing $5M–$50M in annual GMV, with 6–40 people, with at least one sales rep who is technical enough to write VLOOKUPs but not technical enough to write SQL. Below $5M, we can’t pay back our deployment cost. Above $50M, the customer starts wanting SAP-integration features we don’t build.
Within that band, the predictor of success is not industry. It’s whether the owner has done one specific thing: tried to hire a software engineer and failed. Owners who have failed at that hire are ready to buy a platform. Owners who haven’t tried are still in the “we’ll just build it” phase.
What the thesis says about the next decade
The Faktorist thesis is, in a sentence: the next decade of B2B emerging-markets software will look like the last decade of B2B US/EU SaaS, except faster, because the customers are smaller, the regulators are friendlier, and there is no incumbent on-prem software to displace.
I think we will see exactly three winners per major regional bloc — one for catalog/orders, one for finance, one for logistics — consolidating into one platform each. The companies that win will be the ones that resist the temptation to expand horizontally before they have all eight of the things above shipped and battle-tested. We have all eight. We are not done.
One thing I think we got wrong
For the first two years we under-invested in the credit underwriting team. We thought of credit as a feature; it’s actually a separate business inside the company, with its own risk model, capital base, and people. Once we treated it that way, it grew quickly. The lesson is that the eight things aren’t equal — credit and logistics are full businesses that happen to live inside your product. Staff them like full businesses.
I write more about that in the book. The short version: don’t confuse a feature flag for an org chart.