For most of the past decade, selling software to small and mid-sized businesses in Southeast Asia has meant persuasion. A founder explains a better way of working, the owner nods, and the deal stalls because the old way still works well enough. That is changing, and not because owners have been won over. It is changing because governments across the region are moving tax and invoicing online, and a deadline does what a demo rarely could.
We expect regulation to be one of the steadiest sources of B2B software demand in the region over the next few years. This piece is about why, and what it means for the companies we back.
The deadline does the selling
Think about how a mid-sized distributor or manufacturer in Penang, Cebu or Chiang Mai decides to buy software. There is usually no IT team and no line in the budget for it. The owner or the finance lead makes the call, and they make it against everything else competing for their time. A tool that promises efficiency competes with hiring, inventory and the next customer order. It usually loses.
A compliance requirement does not compete in the same way. When the tax authority says invoices must be issued and validated electronically from a certain date, the question is no longer whether to buy. It is which tool, and how quickly it can be running. The sale moves from the someday pile to the this-quarter pile without the founder having to argue for it.
Why this region, why now
Malaysia has been phasing in mandatory e-invoicing since 2024, starting with its largest taxpayers and working down toward smaller businesses in stages. The Philippines has passed legislation to move larger taxpayers to electronic invoicing and is building the systems to receive it. Thailand has run an electronic tax invoice system for years, with adoption growing. The dates and thresholds differ by country and they keep moving, so any founder building here should read the current rules rather than rely on a summary like this one.
The direction is the same everywhere: more of a business's financial record has to pass through a format a government can read. For the many businesses that still run on spreadsheets, paper and a part-time bookkeeper, this is the first time software has been required rather than recommended.
What a good front-door product looks like
The products that do well at this moment share a few traits. They do the required thing completely: generate, submit and store the invoice in the format the authority expects, and handle rejections without a call to a consultant. They sit beside what the business already uses, connecting to the accounting package or the spreadsheet rather than demanding a migration. And they set up in days, because the owner is buying against a date.
This is evolutionary change in its plainest form. The business keeps working the way it works, and one task is now done for it. That matters because the training gap in this region is real. Many of these businesses have no one whose job is to learn new software, and a product that asks them to work differently will meet resistance at every desk. A product that removes one obligation and asks for nothing else gets in.
It also has to be trusted. A tool that touches a company's tax filings is handling something the owner cannot afford to get wrong. A clear record of what was submitted, when, and with what result is not a feature. It is the reason the owner signs.
The front door is not the house
Here is where we are careful. Compliance gets a company in. It does not, on its own, keep the company there. Once a mandate is in force, many tools will meet it, and meeting it becomes a commodity. A company whose whole value is that it makes you compliant is selling something that will get cheaper every year.
What holds a position is what the company does with the access it earns. An e-invoice is a clean, structured record of a sale. A business that issues all of its invoices through one system has, often for the first time, reliable data on who owes it money and when. That opens the next jobs: reconciliation the finance team no longer does by hand, payment collection, cash-flow forecasting, and possibly working-capital finance built on invoices that are already validated. Each one moves a task the business used to hand to an outside bookkeeper, or simply skip, into a tool it runs itself.
So when we look at a company in this category, the first question is not how well it handles the mandate. It is what the mandate lets it do next.
Built for more than one rulebook
Each country is writing its own version of these rules, with its own formats, timelines and validation systems. That is a reason to plan for a second market early, not a reason to stay home. A company that builds its compliance layer so a new country's rules slot in without a rewrite has a route across the region. A company that hard-codes one country's format has built itself a ceiling.
Home markets here are too small for most B2B companies to reach real scale alone, and waiting too long to go regional is one of the most common reasons good companies stall. Regulation that is moving in the same direction everywhere, at different speeds, gives a well-built company a sequence of markets to enter as each one's deadline arrives.
How we read it as investors
For us, this is where the thesis meets the timing. We back B2B companies serving businesses that larger funds tend to overlook, and we look for openings where customers are underserved and the demand is already there. Mandated digitisation creates exactly that: a large number of smaller businesses that must buy something, served by incumbents who were built for larger customers and price accordingly.
The questions we ask are simple. Does the product get in with one required task and no new way of working? Does it earn the trust that comes with touching a company's tax record? Does it have a clear next job once it is in? And can it cross a border without being rebuilt?
The challenge
If you are building B2B software for smaller businesses in this region, look at the rule changes coming in your customers' markets over the next two years. Find the one that turns your customer's problem from something they tolerate into something with a date on it. Then ask what you will do for them once you are through the door, because that is what they will still be paying you for after the deadline has passed.