Sunny Long co-founded the fintech Pie Systems in San Francisco, but chose to launch the VAT refund service in Copenhagen. The startup found their product-market fit in the cold North and capitalized on the power of being small.
Tax free shopping is predominantly an arduous, analog experience. Tourists need to fill out papers – as in actual physical forms – to get their VAT refunded after a spontaneous splurge on holiday. Shopkeepers themselves have had little insight into the process let alone access to data or revenue. Cue Pie Systems.
The fintech startup was founded in San Fransisco around 2017 with a simple, yet promising goal: To make VAT refunds less of a hassle to the benefit of both tourists and shopkeepers. The question was where to launch?
“We went to Silicon Valley and managed to meet Danish VC Eric Lagier. He told us to consider Denmark for launching our product. Their VAT is one of the highest in Europe, and the people are open to trying new technologies. I boarded a plane to Denmark two weeks later,” Sunny Long, co-founder of Pie Systems says.
On their first trip, they interviewed store owners from all over Copenhagen to gauge their interests and needs. The interest in their product was huge. In fact, a shopkeeper from Fields – a Danish shopping mall – wanted the product asap.
“After our first trip, we developed a prototype and came back to Fields and tested it with the store owner in March last year. Disregarding a few technical hiccups our pre-MVP product worked,” Long remembers.
The power of being a small fish in a smaller pond
The product-market fit was the final green light to move forward with Denmark as the market to launch the startup’s service. Not only due to the VAT-levels and the tech savvy population, but because of the Country’s small footprint.
“Denmark is a small market when it comes to tourism. If we had launched in France or Spain, we would have been the tiniest of fish in a huge pond. Instead, in Denmark, we have a fighting chance to grow,” Long remarks. Since starting in Denmark, Pie Systems has worked closely with both Copenhagen Capacity as well as Copenhagen Fintech Lab.
The Copenhagen Fintech Lab is an association that works to help danish financial technology startups. When Pie Systems incorporated in Denmark, they also moved into the association’s coworking space the Fintech Lab. And that was when Long discovered the other benefits of operating in a smaller market.
“The people at Copenhagen Fintech has been an excellent entry point for networking. As a result, we were easily able to connect and garner feedback from countless parties. Our network has been expanding steadily. Once you meet a few people, you can reach almost all of Denmark,” Long says.
Refreshingly honest people in a cold city
For now, Long is still commuting between Copenhagen and San Fransisco, and he has noticed many areas where the two regions differ significantly. The climate, for one, is considerably colder in the Danish capital.
“When I look at Silicon Valley, I see the world’s capital of technological innovation. Talent, great ideas and VCs flock there. Denmark is not at that point, yet. But I do see shades of it; for instance the Fintech lab,” Long highlights.
Long and one of Pie System’s other co-founders recently received Start-up Denmark Visas and expect to spend more time in Denmark soon. Long remarks that hiring technical talent is proving difficult, but half of the startup’s workforce is Danish now.
“It is refreshing to come here and have an honest conversation. Danes are remarkably straightforward, which makes our business that much easier to develop to cater to our customers. Pie is still in its early stages, and are now looking to engage with more stores and merchants in Copenhagen,” Long emphasizes.