• Small Business Champions capitalize on the essential, worldwide digitization of commerce.
• Recurring revenue from sticky subscription models provides predictable growth and investment stability.
• Dominant platforms build strong competitive moats through high switching costs and network effects.
• The trend offers global investment opportunities, tapping into a massive and growing market.

Beyond the Hype: The Quiet Money in Boring Businesses

Let’s be honest, shall we? Most of us are drawn to the bright, shiny objects of the investment world. The latest AI breakthrough, the electric car company with a messianic leader, or some cryptocurrency that promises to rewrite the rules of finance. It’s exciting, it’s headline-grabbing, and it’s usually a fantastic way to lose your shirt. While everyone is chasing these fleeting trends, I find myself looking at something far more mundane, and frankly, far more compelling. I’m talking about the companies that provide the digital nuts and bolts for small businesses.

It’s not glamorous. It’s the digital equivalent of selling shovels during a gold rush. But my word, it can be a remarkably steady way to build wealth.

The Great Digital Scramble

Think about your local butcher, baker, or candlestick maker. A few years ago, having a website was a nice-to-have. Then the world turned upside down, and suddenly, being online wasn't just an option, it was a matter of survival. Every small enterprise, from the corner cafe to the independent consultant, had to figure out how to take orders, accept payments, and manage their affairs without relying on foot traffic and a dusty old cash register.

This wasn't a temporary blip. It was a permanent rewiring of the economy. These small businesses aren't going back to the old ways. They can't. To compete today, they need the tools that allow them to operate efficiently online. This has created a colossal, sustained wave of spending on the software and services that make modern commerce possible. It’s an inevitable trend, and one that I think has years left to run.

The Unseen Architects of Commerce

At the centre of this shift are companies that have become the essential plumbing for small businesses. Take a company like Shopify. It has effectively become the default operating system for anyone wanting to sell things online without the headache of building a custom website. Once a business builds its entire operation on a platform like that, moving elsewhere becomes a nightmare. The cost and complexity of switching are so high that they might as well be locked in. For an investor, that "stickiness" is a beautiful thing.

Then you have the truly unsexy stuff, like Bill.com, which automates the soul-crushing process of sending and paying invoices. For a small business owner, this isn't just a convenience, it's a lifeline. It frees up time, reduces errors, and helps manage cash flow. These aren't frivolous apps, they are fundamental tools for survival and growth.

The Beauty of a Predictable Paycheck

What makes these companies particularly attractive to me is how they make their money. Most operate on a subscription model. This means they get a predictable stream of revenue every single month, which is the holy grail for any business. It’s not a one-off sale, it’s an ongoing relationship. As their clients’ businesses grow, they use more services and process more transactions, so the revenue naturally expands. It’s a wonderfully elegant model. A collection of these companies, such as the Small Business Champions basket, is built around this very principle of backing the essential service providers of the digital economy.

Of course, no investment is without risk. A sharp economic downturn would undoubtedly hit small businesses hard, and their spending on software would likely take a hit too. And as the opportunity becomes more obvious, you can be sure the tech giants will try to muscle in. But the best of these platforms have built deep moats around their businesses through network effects and high switching costs, which should offer some protection. To me, the potential rewards still seem to outweigh the very real risks.

Deep Dive

Market & Opportunity

• The total addressable market for small business software and services could exceed $500 billion globally.
• Successful small business software companies often see revenue per customer increase by 20-30% annually as clients scale their operations.
• Digital transformation has become a survival imperative for small businesses, creating sustained demand for enabling technologies.

Key Companies

• Shopify Inc. (SHOP): Provides a comprehensive commerce ecosystem and online store builder that handles inventory management and payment processing for small businesses.
• Bill.com (BILL): A platform that automates the accounts payable and receivable process, helping small businesses manage invoices, track payments, and improve cash flow visibility.
• PayPal Holdings, Inc. (PYPL): A digital payment system that serves as the backbone of digital commerce for millions of small merchants, providing a trusted payment solution.

Primary Risk Factors

• Economic downturns disproportionately impact small businesses, which may lead to cuts in software and service spending.
• Competition is intensifying as large technology companies increasingly target the small business segment.
• Potential for increased costs or operational restrictions due to regulatory changes around data privacy and financial services.
• Systemic risks associated with platform outages or security breaches at key service providers.

Growth Catalysts

• The ongoing need for small businesses to digitize operations creates sustained demand for services.
• Subscription and transaction-based models provide predictable, recurring revenue streams.
• Network effects create durable competitive advantages, leading to "winner-takes-most" market structures.
• Significant growth opportunities exist globally, especially in emerging markets where businesses are adopting digital-first models.