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Why we invested in Global Good Exchange

Global Goods Exchange (GGX) is an AI-enabled exchange of commodity goods, both AI and exchanges have a high likelihood of blitzscaling.

Literally trillions of dollars of raw materials are bought every year that you never see on the Chicago Mercantile Exchange. There is a very big world beyond the pork belly and crude oil futures trading that occurs in organized exchanges. Chemicals, ingredients, byproducts of manufacturing, the list is long and nearly all of the trading happens over the phone and in chat apps like WhatsApp. Picture a buyer pinging a few known sellers and brokers for a chemical, getting a text response with price and quantity, and haggling over text. Spencer Connaughton (Linkedin) and his team have spent a good deal of time researching these markets, talking to the buyers and sellers, and have figured out a clever way to use AI to put them on a path to far more efficient price discovery and automated trading. We have known Spencer for a long time, and have backed GGX in a pre-seed round to see if they can capture some order flow in a few of the more interesting markets. GGX will be a very valuable company should they find product market fit and scale fast to become the exchange that enables hundreds of these niche commodity markets to flourish. So that’s the bet.

Investors often ask the question “Why you and why now”, and the answers are particularly crucial in a winner take most market. The “Why you” speaks to the strength of the team, and Spencer has studied this opportunity non-stop for three years; he knows it better than anyone. The technical team he has assembled understands transaction systems inside and out. So we feel good about tech risk and team risk here. The market is unbounded, so we are not concerned with market risk. “Why now” needs some more careful thought. There was a company called VerticalNet back in the dotcom days that proffered a similar value proposition. It flamed out. This is not a new idea. But getting an entire set of buyers and sellers to simultaneously adopt new technology was too much to ask. A darling of ICG with a multi-billion market cap, VerticalNet ultimately and very visibly failed.

Enter the modern LLM, which solves the tech adoption issue. GGX inserts a virtual buyer or a virtual seller into the conversation. These AI agents can use existing channels to bring more buyers and sellers to a transaction in real time, with no new tech adoption by the current players. Once they know the market participants, they can gradually transition them to enhance trade management tools, and ultimately to a pure exchange model. When Spencer demos the beta product to buyers and sellers, they want it right away.

We love the concept, and the team, and as always, we will be rolling up our sleeves to help them Blitzscale.

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