Jay Kahn of Flight Deck Capital has pitched Nikkei-listed Bengo4 as his stock pick for this year’s Sohn Hearts & Minds conference, following the recent acceptance of the electronic signature in Japan due to the Covid-19 pandemic.
Japan’s version of DocuSign, Bengo4 already holds much of the market, Mr Kahn told the conference attendees.
“Bengo4 operates in a market where over the last decade it was illegal to use electronic signatures to certify a legal document, a mortgage document or bank document.
“When COVID hit over the last year and a half, the Hanko stamp (traditionally used) was tremendously inefficient and a bottleneck to getting business done in Japan.”
Earlier this year, the Japanese government said it would allow electronic signature as an official form of certification for government documents.
Japan was woefully under penetrated in terms of e-commerce and software as a service, Mr Kahn, who launched Flight Deck in May, said.
“In terms of software, Japan only has four companies worth more than $5bn in the SAAS space traded on the Nikkei. We think that’s nonsensical and not sustainable. And over the next 10 years, we think there will be multiple multibillion-dollar software companies created in Japan.
“We are very much in the early stages of the J curve penetration in terms of the rapid adoption of the new signature in Japan over time.”
The market in Japan could grow to be worth $US3.2bn, up from its current $90m, he said.
“This company Bengo4 is attacking this market aggressively and is a breakaway leader. The document signature market is not one where 10 to 15 players end up succeeding, it is winner take most.
“As a result, we think that Bengo4 has the potential to be a multi bagger from here.”
This article was originally posted by The Australian here.
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