Patrick Linden: Dealguru $34M Acquisition, Southeast Asia Roll-Up Strategy & Match.asia M&A Marketplace - ​​E459

Patrick Linden, Cofounder & Managing Partner of Match.Asia, and Jeremy Au discussed three main points:

1. Dealguru $34M Acquisition: Patrick shared his journey beginning from a small village in Germany to moving to Singapore and building iHipo, a platform to connect European students with opportunities in Southeast Asia. This early experience ignited his entrepreneurial passion, and he recounted the inception of Dealguru, an e-commerce platform inspired by the Daily Deal model. He described a strategic marketing stunt involving Starbucks vouchers that catapulted the platform into the public eye, which quickly established it as a key player in Singapore’s e-commerce sector.

2. Match.asia M&A Marketplace: Patric's new platform aims to facilitate M&A activities by connecting sellers and buyers in the lower mid-market, focusing on transactions below $100 million. Patrick also outlined the challenges and strategies of M&A and the importance of creating a well-integrated market ecosystem to support transactions. Streamline M&A searches would make it more affordable and accessible vs. inefficient brokers, and was inspired by the challenges he faced.

3. Southeast Asia Roll-Up Strategy: Patrick detailed his experience with roll-up strategies where multiple smaller companies in similar sectors across different markets are merged to form a larger entity, which improves market presence and operational efficiency. He discussed how this strategy has been effective in sectors like online food delivery and e-commerce, particularly in a fragmented market like Southeast Asia. He also shares his personal experience doing this with Dealguru vs. Groupon.

Jeremy and Patrick also touched on Patrick's early experiences adapting to life in Singapore, the nuances of navigating different business cultures, and the importance of resilience in the face of entrepreneurial challenges.

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(01:54) Jeremy Au:

Hey Patrick, really excited to have you on the show.

(01:56) Patrick Linden:

Hi, Jeremy. Thanks a lot for having me.

(01:58) Jeremy Au:

I'm glad we had such an engaging dinner conversation over M&A and everything. I was like, okay, you got to come explain a little bit this to me. Could you share a little bit by yourself, Patrick?

(02:06) Patrick Linden:

Sure. Sure. so I'm actually based in Singapore since 17 years already. Started a couple of companies here. I'm German. I actually come from a tiny village in Germany, about 4,000 inhabitants down in South but, yeah, I my studies, my undergrad, I did my master's in Germany and pretty soon after my master's towards the end of my master's, I was working on my first side hustle or project is then evolved and eventually it is what led me to Singapore. Being an entrepreneur, I guess for 20 years of my life ever since my, my master's and 17 years out of that here in Singapore.

(02:40) Jeremy Au:

Yeah. So what were you like as an undergraduate? You did your undergrad, you did your MBA in Germany. What were you like as a person?

(02:47) Patrick Linden:

I was always interested in business and entrepreneurship from a pretty young age because actually my dad passed away when I was relatively young. I was 13 years old at the time. And, know, it wasn't always as easy for my mom to make ends meet and stuff. So I did paper delivery. I like all kinds of stuff, summer jobs, et cetera. So this kind of seed for entrepreneurship, I think, was sewn pretty early on. And this then also informed my decision to go towards a business degree in my undergrad and also my master's later on.

(03:14) Jeremy Au:

Could you share about your earlier career choices out right after university?

(03:18) Patrick Linden:

Yep. So that's actually quite interesting because I've never been, know, gainfully employed. So I never had a full time job because I did my bachelor's, then I did know, one or two internships, traineeships at Mercedes Benz in Germany. One of those was actually here in Singapore earlier on in 2003. This is where I first got to know Singapore. They had an amazing office in Centennial Tower over there. this when I first thought, know, Singapore is an amazing place and Mercedes was a great company to intern for. So I went back to Germany, completed my bachelor's and yeah, I had this one year in between before I did my MBA.

And during my MBA, people ask me, fellow students, friends, how did I end up scoring an internship in Singapore, and this was quite a number of people and I helped them know, with contacts where to employ, which other companies here in Singapore are taking foreign interns and so forth. And out of this, an idea evolved. So I created this ebook called Internship in Singapore for Germany first, for German students. And towards the end of my MBA, know, sales were enough. I mean, it wasn't like amazing money, but it was enough for me not to be forced to take employment straight ahead.

So thought, okay, let's explore this. Let's see where this goes, how big it can grow, how big the market is. So basically, I did the same concept then for China, for India, for probably like seven, eight countries around the world. And this then morphed into a internship placement agency. And this then morphed into iHipo. So this is the company which eventually I started with two friends. So Arnout from Holland and Cheng King here from Singapore. And this was basically a stepping stone, how I came into Singapore 17 years ago.

(04:48) Jeremy Au:

Amazing. And what made you decide to stay?

(04:50) Patrick Linden: It was just the opportunities over here. So even before we started Dealguru, which was then the larger, one of the companies I founded, which became significant. There were all these greenfield opportunities in Singapore and Southeast Asia. For example, online group buying was massive in the States, in Germany, wasn't really there yet in Singapore. So it was one greenfield opportunity where we decided to do something. It was the same story with online food. You saw that online food really worked in the States, in Europe. Nobody was really doing it here. So that's what we did. And then later on there was online fashion. There was know, Big Box, e-commerce. So it was really a time of fantastic opportunities. I would say.

The challenge there was a little bit, the the local say, funding scene, VC scene, that there wasn't as many as today, of course, and they weren't as well-informed, properly gaining capital to start these ventures early on was a bit challenging, but in a nutshell, I think it was fantastic environment. It still is. Singapore to this day, if you compare it to other jurisdictions, how you support it as an entrepreneur, know, how the government really supports the whole system. It's quite amazing. And I would recommend anybody to start a company here in Singapore. And other factors, it's it's an amazing region, right? Also for personal life. know, You can travel anywhere within one or two hours to nicest places in the world. I like surfing. We go to Bali all the time, but uh, yeah, no, I'm really blessed and super grateful to Singapore actually.

(06:07) Jeremy Au:

Yeah. And what's interesting is that, when you kind of like decided, you also decided to start building and be an entrepreneur, rather than say, joining a German company in Southeast Asia or, working at conglomerate. You decided to be a founder and your first company was at IHippo. Could you share a bit more about that?

(06:22) Patrick Linden:

Yep, of course. iHipo, so it's short for international high potential network, very long name, know, if you spell it out the idea was that we help interns, trainees, young graduates from Europe find opportunities here in Singapore and later on, beyond Singapore as well here in Southeast Asia. So we're basically matching the staff with the employers over here. So it was a marketplace, a job site essentially. And, iHipo was great because we founded it and we of remote. So three co-founders Arnout, my Dutch friend, Cheng King, my Singaporean friend was here in Singapore already.

And I was in, in India actually at the time, because I did the practical part of my MBA with Siemens BPO services in Bangalore at the time. And, yeah, eventually I there was a call for proposals under the iGEM program. You know that of course, Jeremy, like I think it was the first or second batch. And we submitted our business plan and they invited us to pitch. And this is pretty much how I made the jump over to Singapore because we received funding through the iGEM program from a fund called Timus Capital. So that's our common friends, Gwen and Bernard and James and so forth. And it was fantastic working with them. And yeah, we were probably the first or the second batch.

(07:30) Jeremy Au:

And after that you went off to build your second company which was Dealguru which sounds like, remember that day of all the short term deals. Can you share more about why you decided to leave, iHipo and build Dealguru?

(07:41) Patrick Linden:

Yep. So basically, built we built iHipo for probably one and a half or two years. And eventually we were approached by a Swedish campus recruitment firm. This was actually a deal, which my co founder Arnout led. And this campus recruitment firm, the name is Potential Park. They had a quite sizable offline campus recruitment business and they needed the online piece. So they made an offer, know, we merged together. We exited that way and after we exited, I had a custom IT development company for a while because basically I took over some of our IT stuff from iHipo here in Singapore. And yeah, I had this company probably for six or nine months and it was interesting. It was interesting from a cashflow perspective, but the essence of the work, I was probably not really built to fully enjoy that because know, we had amazing clients, but sometimes it was way of nitty gritty stuff you had to look after and so forth, but then towards know, October or November in 2019, Groupon really took off like a unbelievable rocket ship in the States.

It was growth in e-commerce never seen before in its velocity and sheer size as well. know, It was so simple. It was a combination of a really cool offer, time sensitivity really high discounts and displayed in from UX perspective in a very simple way. That was one deal per day, right? This is how we started one deal per day. And before that I've been tinkering around a little bit, thinking what could really work When it comes to e-commerce in Singapore, because remember back then there was like almost nothing. There was Gmarket. Gmarket , which is now called Qoo10, founded by an amazing Korean entrepreneur who had the same model in South Korea, I think. But apart from that, you know, there was no Lazada, there was no Shopee, there was nothing. So I thought, this could potentially work here in Singapore to really be part of that first wave of e-commerce, get people to shop for the first time by really, know, showing these amazing and selling these amazing offers.

And then I was, at the time, when I had this custom IT development company, I was working in a small coworking space and there was another German friend of mine working there, Jan Kroenius, his name. And he worked, he was also super early pioneer in the EV space. So we worked on a startup doing scooters and electric scooters for Singapore. It was ahead of its time, but amazing idea. But basically we became friends and then we said, okay, why don't we do an adaption of the daily deal concept here for Singapore, right? and combine our forces. And this is what we did. it was, the whole story was pretty amazing. We're, we were, of course we put in a ton of hard work, but we've also been lucky when it comes to the timing. The stars of aligned for so we were the first here in Singapore to launch.

And it became the daily deal wars for the next two or three years. They were like, I think 40 or 50 competitors by the end of month two, more or less the same concept. What really helped us early on. So one day before we went live with a platform we, a couple of days before that, we went downtown to a couple of the Starbucks outlets and we bought those $5 and $10 paper vouchers, right? And we bought a lot of them, like 10,000 20,000 bucks. We basically bought a couple of those stores empty of the vouchers. And then in the evening of that day, we sent an email and I recently came across this email in preparation for a talk I was giving. It was really funny. And we wrote to the guys at CNA, Straits Times, Business Times and so forth. People, watch out. We're going to launch a platform. It's called deal.com.sg tomorrow. It's going live. We're going to have this amazing Starbucks deal, Starbucks at half the price. And the slogan of the company deal.com.sg was Singapore at half the price for the first half year of the company's existence.

So we launched and interestingly enough, couple of the papers picked up the story. I think it was in CNA as well. And the website crashed know, a couple of times during the first day and we sold out the first day deal was like 10,000 or 20,000 bucks. But yeah, we also lost probably half of the money through that. And we had paper vouchers. of Our team had to put it in envelopes and send it out to the post office. So was a really fun story, but it created a lot of PR for us. And this PR effect being seen as the pioneer in that sector, it really helped us a lot, especially In the first one year, one and a half years of doing that business because when people thought about Daily Deals, they always thought about two players and we were one of them. And then there was the Beeconomic team. So Karl Chong and his brother, amazing entrepreneurs who then sold to Groupon and did really well. we always had this fight between deal and Groupon. And yeah, so that's the backstory of

(11:44) Jeremy Au:

Yeah. And, Dealguru eventually sold to iBuy for about $34 million about, one third in cash, one, two thirds in shares. And then eventually iBuy went off to list on the ASX. Can you share a little bit more about your thinking around that?

(11:58) Patrick Linden:

Yeah, sure. The total journey of Dealguru from start to listing was about slightly under four years. It was really quick. And if you look at all our key metrics, revenue, number of users, et cetera, it was all up and to the right for the first probably two and a half of those three and a half years. So it was exponential growth and doing that exponential growth phase, we had a number of really good opportunities to sell the business. Later on, when we moved more into the logarithmic phase of growth, right? So suddenly you go from couple of hundred percent year on year GMV growth down to, it was probably 20% somewhere there.

These options started thinning out. So of had to engineer our path to our own exit. And what we did was a roll up strategy. So we basically rolled up our sector across Southeast Asia, including one entity in Hong Kong, so ASEAN, together with a catcher group. We partnered with them and this allowed us to, as a group become sizable enough when it comes to GMV, I think we reached about a hundred million dollars in GMV which was sizable enough to achieve a relatively attractive listing in Australia back then.

(13:02) Patrick Linden:

So that was a great journey. Also how we orchestrated that whole roll up strategy, because it was basically know, going to all the individual entities and saying, Guys, what's your number know, what's your, your minimum price you want to see, and can we work around that? And then the delta was created on top of that through the sheer size we accumulated together.

So yeah, and then we were listed on the ASX. I stayed on for the company for about one year as the CEO. Then I stepped down, at the same time I co-founded actually already about two years prior to that, um, a company called Food Runner, and Food Runner then also became quite sizable Um, and yeah, this was similar. We did a similar strategy there, so we also did a roll up. Eventually, we sold it to Foodpanda in 2015.

(13:41) Jeremy Au:

Yeah, I think it was quite interesting because at DealGuru, you had grown that to over a hundred million USD in GMV. And then in parallel, you're running FoodRunner. How did you do or run two companies in parallel? Was it like bonkers? Because they are similar-ish in terms of like the rails, in terms of infrastructure, but very different in terms of, approach and go to market.

(13:58) Patrick Linden:

Yeah. So FoodRunner basically started in 2012, July, 2012. So we were at the point then about two years into building Dealguru, and we looked at other greenfield opportunities, big greenfield opportunities in Southeast Asia, and food was one of them. We saw food was extremely successful, online food, in the US, and in Europe, it was just eat getting a lot of traction Delivery Hero out of the Rocket universe, getting a ton of traction. And people weren't really doing it here Southeast Asia. So in 2012, we said, okay, let's do this. Let's create a relatively simple website where we connect the restaurants to the customers and we are in between and we basically do the deliveries, we do the processing and all And I also co-founded this with Jan, my co-founder in deal.com.sg. And it was actually, it was very intense, but we had an amazing team. So basically, after a while, my CFO in Dealguru became the CEO of Food Runner and operationally scaled that and manage that. And also in terms of the acquisitions we did, like in the Philippines, we acquired a company called City Delivery. In Malaysia, we worked with an amazing entrepreneur called Mark Simmons. We acquired his company called Room Service Deliveries, which was way, way large, but largely offline. So we brought the online piece, brought it, merged it all together. Yeah. And so, of divided and conquered a bit, but it was thanks to the amazing team we had.

(15:13) Jeremy Au:

I think, the funny part is that when you say like, Hey, I'm German, I moved to Southeast Asia around that time period, then everybody's going to be like, oh, you're part of the Rocket group and you're you're not

(15:22) Patrick Linden:

Yeah, that's the Rocket mafia. Yeah. We had like the deal mafia to some

(15:25) Jeremy Au:

So you're like the one German non-Rocket mafia person building in parallel as the entrepreneur in time. So obviously, Rocket was quite popular at a time as well, with all of his various launches as well. So were you taking any cues or points of view with them, et cetera?

(15:39) Patrick Linden:

Rocket actually was amazing, know, and we shouldn't forget that it did a lot for the ecosystem not only in terms of, stuff they helped foster and build up here in the region, know, taking a couple of guys from Germany, from around the world as well. So basically taking the best people in the subject areas and headquartering them here in Singapore for the largest part to conquer the region for the different business models.

So I think rocket was an absolute benefit. And there were a lot of things to learn from their approach, know, especially early on, if you build a tech companies and if you build a tech company, some of the key ingredients you need like this sheer crazy focus, just on build, build, build, get the first iteration out of the door and this unwilling drive for success, which Oliver Summer at some point, he penciled, I don't know if you remember that, but this kind of war declaration, which everybody had signed with their blood all the, all his global CEOs, know, that was a bit extreme, but there was also a couple of grains of truth in know, and the motivation it gave people.

So I think that that was pretty cool. So on our end, we had in deal and denied by, we had a lot of staff as well. We like 1000 staff at the end of the know, at the peak of the group, we had 1000 employees across six markets in Southeast Asia. And we also have something of a deal mafia, I would call it. So we had a couple of people who went on to start other interesting ventures, like for example Vadim and Samir they went on to start Gowabi in Thailand, which is really crushing it. It's amazing. And a few others. was it a good, of a birth for the ecosystem as well. know, Rocket asked a couple of other groups back then.

(17:02) Jeremy Au:

What's interesting is that after that you took a break and then you were back in Germany, right? So what was happening and what were you thinking about that?

(17:09) Patrick Linden:

Yep. So after that, actually, to be honest, I really needed a break for a while because it was at that point, going almost five years and on super high speed. I wasn't married back then. I didn't have a kid yet, makes things a bit easier, but still, at the ,end when we were a public listed company and then towards the face of time, when pushing growth really tough and bottom line, know, it got more competitive, the whole market here as well. There were times where, know, for weeks in a row, I would probably sleep properly one night throughout that whole week. And the rest was like thinking, Oh, what's here in the business, they're in the business. it was good that I took a break. So I took a break for a My brother founded a company then in Germany, in Berlin. I became an investor in short succession. I became the largest investor of that company. And then we didn't really have a guy looking after the finances, the CFO there. I stepped up and know, joined that company as a co-founder. So it's basically called the Deep Green Group. Deep Green Group is onto longevity, into lifestyle, into nutritional supplements. That's an entity which has been running now probably for around five years. And we're about 30 members of staff there. My brother operationally leads that business out of Germany, out of the Berlin office.

(18:14) Patrick Linden:

And I came, I actually, I came back full time to Singapore towards the end of 2018. And yeah, this is then where I met my wife, know, settled down here again and I also did quite a bit of angel investing here in Singapore in particular. But yeah, then basically this, then led a little bit to the formation of my current venture, which I started together with Marcus, Match.Asia.

(18:33) Jeremy Au:

You're, I guess, fourth startup officially, I guess.

Hey, actually probably did a couple of, did a couple of them in between, know, which failed, which didn't really work out. But yeah, you gotta shoot for some and some work

(18:43) Jeremy Au:

Tell me more about Match. Asia.

(18:45) Patrick Linden:

Yeah, sure. So basically the backstory of Match.Asia is when I built with my co founders in particular, Dealguru and and food runner. We were in a couple of M&A processes uh, both as a buyer and a seller, but focusing on the seller part. Now we worked with traditional banks traditional M&A advisors and If you want to get a good quality one, usually what you end up doing is paying a fixed retainer, so we used to pay, I think, 10,000 euros per month at some point, 10,000 US, 10,000 Sing two out of three times, just by the nature of things, it doesn't really work out.

So you probably have been in that relationship for the last five or six months, know, out of pocket, a hundred thousand Singh took probably 15 to 20% of your time as a C level or founder. And then it doesn't work out. You go back to build, build, build, and probably you try it again in a year or two from now. So it's a little bit hit and miss and a little bit ad hoc. So even back then I thought maybe there's a better way to do this using a platform approach. One of the bankers who's an amazing guy whom we worked with Marcus. So he's my current co-founder Marcus Young, he established a very successful M&A Advisory firm called Seabridge Partners and Seabridge Partners is our sister company today.

So it's 10 years old, Focus on the tech sector here in Singapore every year doing a couple of marquee deals and Marcus has quite impressive investment banking background, specialized on M&A spent many years in Japan, build up the color buyout fund back in the day, speaks fluent Japanese. so, so Marcus and I, ever since 10 years ago, we came, know, good friends because we share a lot of the same values. So we were friends first for a while.

(20:07) Patrick Linden:

We did a couple of investments together but we also looked at venture opportunities here and there. What would be a potential to do together until about one year ago, we said, okay. A platform is missing for the ecosystem over here to facilitate M&A, make M&A accessible to the lower mid market. So basically everything below a hundred million US dollar in enterprise valuation, because those guys typically don't have access to M&A because they're not willing to pay these quite high fixed fees and so forth. If you look at the typical SME sector, which is about 60% of our volume in places like Singapore, Indonesia ,there's a complete lack of information, know, which company is selling, which company is buying, who might be open of my peers to consider roll up opportunities, mergers to consolidate our industry.

This information is not out there, right? if you look property, for example, How did people their beautiful houses here in Singapore 50, 60 years ago? Probably they put a poster in front of their gate, right? They had a couple of offline agents, and then they hoped that somebody would walk by and see their property and pay the price they'd like to have. And then the platforms have completely changed that game. Property Guru today works all the intermediaries, know, with the agents makes gets like a million times the exposure people got back in the day. So it's an amazing job when it comes to property, we're trying to do the same thing when it comes to and help bring companies on the radar.

But yeah, this is basically it, how it started. So we started developing the concept and testing that with a couple of experts in the field about one year ago went live then in January of this year. And announced and yeah, working on it ever since.

(21:30) Jeremy Au:

So there already are like these marketplaces in Singapore and a few of these other countries as well. They're pretty obviously not as well designed in terms of UX and so forth. What do you think you're doing that is different from the way that they're running?

(21:42) Patrick Linden:

Yeah. So there are a couple of markets and it's great to have these marketplaces around. And if you look at places like Japan or South Korea, it's very common to work with these platforms and everybody does it. The seller, the buyer, the intermediary, the local M&A broker, the banker. In Europe, there are also a few of those in the US there are the players like acquired.com acquisition.com. So these platforms are there and they're changing the game. In Southeast Asia, what we found is that you have kind of these platforms, which are self signup ones. There you have the issue. We are not directly self signup. We're not like a Craigslist. So we create every single seller, which is coming onto the platform. We have personal onboarding call with them. We help them in the preparation phase and the matching, as well as in the closing of the M&A process but we maintain a pretty high quality when it comes to the sellers on the platform, which allows us to get the most attractive buyers and investors on onto the platform as well.

If it's a pure self sign up and you have every corner cafe and every small business here and there, which also amazing businesses in themselves, you will lose some of these more high potential buyers and investors because they're saying there's too much noise on the platform. So we basically, we started about 5 million US dollars in enterprise value. And most of our range is 10 to a hundred million. We have a few deals which are larger as well. So that's the main differentiator. We have a bit of more created approach.

And then we also, I would say we're going at it quite intensively. So we get a lot of referrals from VCs, PEs from their portfolio companies. We do a lot of, like yesterday, we gave a talk in the Prudential SME event. We do a lot of these kind of grassroots events as well. We work with local brokers and intermediaries as well. That's important to point out because at the end of the day, we're building an M&A ecosystem for the lower mid market And yeah, we're, we're making everybody's pie bigger. We were not taking anything away from anybody. Similar how property guru is doing with property.

(23:25) Jeremy Au:

And what's interesting is that, we were discussing about, a roll up strategy that should be more prevalent to some extent in Southeast Asia, and you've already conducted it once before while at Dealguru, but could you share a little bit more about what your thoughts are on this strategy?

(23:37) Patrick Linden:

Yep. So the thoughts like you mentioned, Jeremy, they they stem a bit back from what we did with deal guru and with food runner. The feedback early on when we were, for example, just based at that point in time in Singapore, only in Singapore and Malaysia, and we approached large strategics in Europe and the US to talk about acquisition, they were like, Oh, where's Singapore? It's this tiny point on the map. My huge market here is Europe. And it doesn't help me with my board or my shareholders to pitch that I'm acquiring a Singaporean company who might add, way little to my overall revenue, because if it's a consumer play, market is limited to 5.5 or 6 million consumers in the example of Singapore. But it's a different story, if you're saying, I just acquired the leading player in the online food delivery sector across all of Southeast Asia because then it's a different story, right? And they can present in a much better way to their board, to their shareholders, why they did this acquisition. And it's a future growth story because growth is so much faster in this region than in places like North America. And thirdly, it becomes quite defensible then because if you have one huge market and then other competitors are trying to enter that market, it's like one recipe basically to enter that market here in Southeast Asia.

You have so many different countries and every culture is a bit different. Every like way of doing business. Some countries really allow for doing largely everything online and others, you still need to send the local sales rep to the office but once you mastered that across a couple of countries here in South Asia, it's actually becomes very nice and very defensible because it's not so easy to replicate for someone else.

(25:03) Jeremy Au:

What are some of the challenges of doing this?

(25:05) Patrick Linden:

The first big challenge is that people often think, I need like 20 or 30 million bucks ready in the bank in order to pursue that, because I need to buy those other entities. In reality, it can be done much smarter. So what we did was, we said, there's some amount of cash upfront, say for 10, 15% of your business. And then contractually, we secure based on certain KPIs the group has to hit, but also you have to hit. We secure the path to majority, 51% or more. And then the payouts come sequentially to that. Or in the easiest form, you just agree on a merger. So you build a new hold code and then you merge all the individual entities into that. The hold code typically has one sizable piece in the middle, which is the biggest one in terms of revenue. Usually also it's where the founders leaders of that team step up and become the founders of the combined entity. And then you inject capital, you integrate it a bit and it's interesting because you earn your upside on the Delta by combining these individual pieces. Then later on, if you sell, or if you list the combined entity, and there, there are lots of opportunities in that space and we see it all the time at Match because, we have probably around 250 sellers right now on the platform. And all of those are great sellers and a lot of investors, we see these, like, for example, B2B loyalty platform amazing business in Vietnam, we see one in Singapore, we see one in Malaysia, we see one Indonesia, and it would make so much sense to combine that, for example, in the framework of a rollup, leverage synergies, and then grow that as a regional business. So there are a couple of these sectors, which are quite interesting to look at for rollups.

(26:30) Jeremy Au:

Yeah, I think what's interesting is that a lot of folks know that's happening, but they don't know how to compete. And they often think about maybe like the easier way to do it is just to enter the market themselves, and compete directly. What's your warning or what's your threshold for saying like, Hey, it's actually better to buy, to enter rather than to compete and enter?

(26:48) Patrick Linden:

Yep. That's a super interesting point because we're seeing a lot of micro piece, you know, search funds. So this is exactly the case. People who have domain expertise in a certain field. And let's say, for example, they are digitally superfit, digital transformation and so forth. And there's so many SMEs outside of the tech sector in Singapore, for example, who would really benefit greatly from that added knowledge. So it's not only the capital they bring, but it's also the knowledge they bring. That's a really interesting avenue to look at if you are contemplating instead of going into that market first on creating your own entity, there are a lot of amazing businesses out there which already did the groundwork and maybe there's a way to partner with them to acquire a part of that business. Potentially even a minority at the onset, a smaller SME business, then inject your capital, inject your knowledge, grow that business, 2X, 3X over the next couple of years. And then sell it or develop a rollout strategy for it.

(27:37) Jeremy Au:

I think you mentioned something that's quite interesting, which is that there's also this new development called search funds, right? I think that's more popularized on the East coast, like at Harvard. And then there's entrepreneurship through acquisition, which is what they call it in Chicago at the Booth School of Business as well, I guess on the West coast at Stanford. So what do you think about this new search fund movement?

(27:56) Patrick Linden:

It's good. You need the expectation management though. So we, we talk to a lot of search funds and and these micro piece, sometimes there's a fluent border, between them, but, do they actually have the money to back up their strategy? Because you need to manage those expectations with the seller, right? And sometimes, the situations are there where small search fund portrays themselves as they already have the money in the bank. In reality, they do not but if at the onset you say, okay, I have a principal commitments from capital injectors. And once I found the target, once we come to a deal, dear seller, I can avail of that cash and it's going to take a couple of months and then we can do it. So that's probably one piece of advice I would give to set the expectations. But yeah, I think that's, there's a lot of opportunity.

This, this, sector, like you mentioned is already really prevalent in the U. S. And in Europe as well. It's only starting in South Asia, and I think there's a lot of opportunity. The main challenges surfacing the opportunity surfacing the targets, right? How do you get to know which companies are for sale? Which companies trade at reasonable valuations? They're meeting the founders and figuring out. Is there chemistry? Can you work together so forth?

(28:57) Jeremy Au:

Yeah. I think it's really common in America because of like lots of different things, right? One is obviously first of all, like there's a long history of multiple generations of businesses, right? So there's a set of targets as one. Then two is they obviously have some capital structures that incentivize private equity, in terms of like carrot interest and exemptions and, kind of like, yeah, small business loans program. So that's structural liquidity improvements. And of course, the third thing is there's actually a large generation of private equity players, right? So there's like large PE, medium, small.

And so there's a set of sellers that if you buy a search fund, you can actually eventually sell it eventually to a larger private equity fund. So I think there's a lot of structural pieces where I've known searchers, search funds, When you're comparing, buying in the US versus buying Southeast Asia, they're pretty much like, I'd rather just buy in America, right?

Even the lawyers are more experienced. I know who to talk to. The lawyers in Singapore and Southeast Asia don't know how to do a search fund even. Versus I think Southeast Asia, there's like more of these like issues, right? Could you share more about what the Southeast Asia search fund industry looks like from your perspective and what needs to change?

(29:59) Patrick Linden:

We're hoping to be a useful tool of the infrastructure with the platform we're providing. That's the main thing which needs to change. Where do they find deal flow? Where can you find deal flow? If you're a search fund and just starting out, you might be yourself. You have a co founder, you might have an analyst, a couple of interns. How do you do the research to get hold of those opportunities? Because you need to look at quite a number of opportunities, in order to drill down, which is the one I want to go after, right? Then it's know, also regional differences. There might be businesses which are more attractive to roll up or sectors, which are more attractive to roll up here in Southeast Asia, versus Europe or in the States. These opportunities are all out there.

I mean, in Singapore, for example, the air con servicing market. They're like 101 players out there. Nobody really came out with the big one consumer brand. And every time, know, we go, we have a great air con servicing guy. But sometimes you don't find the phone number or somewhere and then you get advertisements from 20 others providing the same service. And it's a high margin business. I learned recently. There are a lot of guys in that sector operating at 20, 30% EBITDA margins. And then some of them quite sizable as well, a million, 2 million upwards when it comes to revenue. That's the sector, for example and, and, air conditioning is on the top of everybody in Singapore. It's a nice thing when it comes to marketing potential as well. So yeah, there's a couple of these interesting little pockets which are unique in Southeast Asia and which are made for search funds.

(31:15) Jeremy Au:

I'm looking forward to hearing how the air conditioning rollout strategy has been executed by a platform soon then.

Could you share about a time that you personally have been brave?

(31:23) Patrick Linden:

Brave, brave in a professional context, I would say. Probably in the early days of deal group deal.com.sg when we launched. So we did this whole Starbucks, the Starbucks event and then, basically we were bankrupt probably the week or, or the, the first week or the second week after. And personally probably I had like 20,000 sing to, to my name in, in combined net worth. And I didn't really have, I mean, I don't really have a rich family to fall back upon and time me through. But then I remember this moment I was sitting with my co-founder in the Hawker Center. And we were having that coffee and we thought, okay, know, we got a ton of publicity.

Amazing, but we are kind of out of cash. And that was a very desperate moment. It was like looking into it, into the abyss because we tried to raise from VC,from local funds in, Singapore. And we made the rounds, and back then nobody really believed that e commerce could work in Singapore, they were all like, Oh, there's a shopping mall every hundred meters in the city. Why would anybody ever buy something online? That wasn't like a theme we got. But then, yeah, we were, and I'm super grateful for this. We did this PR and action we did. carried some waves also internationally. So our main investor then, saw that their research team saw our company and then they reached out and literally, I guess like one month or two months after launch of the platform their principal flew down and it was literally almost a napkin deal.

They, I mean, we got the funds we needed. They got a great deal when it comes to the size of the equity. But, yeah so that was a moment, but that's like in your, I was 29 at the time, I think, and then without family yet so you can take greater risks, there was a challenging moment.

(32:51) Jeremy Au:

How did you feel? Because obviously that's a very tough financial situation to be on, right? And a lot of folks had to make a decision either to keep going or to fold, right? And Call it a day. How did you think about it?

(33:01) Patrick Linden:

Yeah. I had this somewhat naive belief and I think naivety is something which is super useful if you're a founder of an early stage startup, if you had the full set of information. What could go wrong? Why would you ever start something? But I had this naive belief and division together with my co founder Jan, that this thing is going to work out.

There was just like, we had so much conviction. Also the traction we saw on the platform, this thing is going to work out. So let's just tie over another couple of weeks and then something's going to happen, which is make the, which is going to make the business underpin it with some more finances and this is what happened.

But yeah, it was a gamble. It was a quite sizable gamble, but it also, keep in mind that the money I had to my name, 20, 000 thing or something. It wasn't like a huge amount of money, right? If I would have really lost it all and then I would have started a job somewhere, it's not like you lose a million bucks or something like that.

So, And this was also an interesting thing. Then when you go like from nothing to the first hundred thousand, it's like a massive difference. And then, also mentally those frameworks, how they change over time. But yeah, that's basically the story.

(33:59) Jeremy Au:

Yeah. On that note, I'd love to kind of like summarize the three big takeaways I got from this conversation. First of all, thank you so much for sharing about your early journey to Singapore from Germany, but also why you decided to be a founder in early days. I think really fascinating to hear about, I think the early set of decisions that you had to make around being a founder and opportunities that you got to see.

Secondly, thanks so much for sharing about your entrepreneurship journey, especially on the deals side. I thought it was fascinating to hear about some of the operating decisions that you had to make around like rolling ups, different entities, but also the growth side and the stories about how you had to buy Starbucks cards to make it happen in the publicity. And even how the first deal of cash that you got into the company was a napkin deal.

Lastly, thanks so much for sharing about building and founding Match. Asia about, M& A. I thought it was fascinating to hear about how you think about why the market needs this, but also how you see this is different versus the current players. I thought it was fascinating for you to also share your expertise on why more companies should be exploring M&A either as a way to grow but also talking about search funds and other possible M&A activity that could happen. On that note, thank you so much, Patrick, for sharing.

(35:01) Patrick Linden:

It's been amazing. Thanks a lot, Jeremy. Really enjoyed the conversation.