A Mongolian tech start-up is preparing to expand through a pioneering new method of attracting investors.
Erxes (stylized as erxes, all lower case) is a software company that merges marketing, sales and customer service tools into one application. It was founded by three Mongolian entrepreneurs in 2017; Mend-Orshikh Amartaivan (MJ), Bat-Amar Battulga and Naran Batjargal, who are now the company’s chief executive officer, chief technical officer and chief operating officer respectively.
The trio aim to take market share from companies that offer marketing and management software individually, such as Mailchimp (email marketing) and ConvertFlow (website conversion). According to its website, erxes says its single application, which costs $29 per month for five people, could save small marketing teams thousands of dollars every year.
“We have 18 staff in three offices,” MJ said to Mongolia Weekly. “Due to these challenging times, we're operating from the Mongolia office, as all core members are Mongolian nationals. We have a few remote staff working from the US and France.
"In 2021, we're planning to set up our US office.”
The idea started after the founders had worked in tech for a while but couldn’t find software that could wrap different services into one application.
“We couldn't find a complete solution that addressed our needs,” MJ said. “That's when we decided to create a customizable customer engagement platform. The main goal was to meet the unique needs and requirements of each startup or company at a reasonable price.”
In the three years since it started, the company’s software has been picked up by KFC, Xerox, Toyota, Volkswagen, Toto, Pizza Hut and others.
In order to fund more growth, erxes has chosen to undertake what’s known as a Continuous Agreement for Future Equity (CAFE), which is based on the continuous securities offering (CSO) approach. It allows investors to make cash investments in a company at any single time to get company equity at a later date.
This means erxes will put 9 percent of their equity on the market, allow the market to say what it thinks the company is worth, and raise money when that valuation goes up.
According to Fairmont, this approach avoids some of the barriers associated with traditional public offerings, such as issuing a fixed number of shares and negotiating their price with investors.
Another key difference is that erxes won’t be listed on any public stock exchange. Instead, it will simply have an ‘Invest Now’ button on its website.
The CSO model doesn’t necessarily mean the company won’t hold a traditional IPO sometime in the future, although Amartaivan said that the approach isn’t on the cards for now.
“We're still open to any opportunity that might arise in the future,” he said. “But we're not expecting to launch a traditional IPO anytime soon, as it does not align with our current focus.”
Over the next two years, Amartaivan says the company is focused on setting up shop in the US to improve their customer experience.
“We're planning to set up our US team in the upcoming year. This will allow us to provide faster and smoother customer service,” he said. “It's kind of a no-brainer considering more than 40 percent of our existing 1 million downloads and the majority of our SaaS customers are from the US.”
Even though erxes is now hitting the big time, it remains keenly focused on its Mongolian roots and the role it plays in diversifying the Mongolian economy beyond mining. Amartaivan told Mongolia Weekly that he’s optimistic about the tech industry in Mongolia.
“People are getting hired as remote engineers for foreign tech companies,” he said. “Some are setting up offices in Mongolia as a gateway to other Asian markets. So, I think this is proof that there is a bigger potential in Mongolia.
“One of our goals is to bring forth Mongolian engineers on the global tech stage. Once we pass this benchmark, hopefully, it will set the path and make it easier for other Mongolian startups to follow.”
Join Mongolia Weekly and get our premium content delivered weekly to your inbox. Try it now for free and access unrivalled coverage and analysis of Mongolian politics, economics and current affairs from our specialist journalists and contributors based in Ulaanbaatar and across the globe: just follow this link.