Occasionally, I like to share opportunities to invest in companies we know and love. |
Acquire.com, the platform we use to manage all our SPVs, is raising a seed round. |
Of course, as their clients, we’re biased, so I ran their deck through DealGPT, our proprietary deal analysis tool. My only changes below are edits for clarity and adding some graphics. |
👉 Click here to express interest, and we’ll introduce you to Brian, the CEO. |
Just a reminder that nothing here is either investment advice or a solicitation to invest in anything. Do your own research, and invest at your own risk. |
Let’s go 🚀 |
|
Brief Overview |
|
Acquire Invest Inc. is a Delaware-based fintech company founded in 2020, specializing in investment operations technology for private markets. Their flagship product, Invest I.Q., is a comprehensive cloud-hosted SaaS platform designed to streamline and automate investment operations for private market issuers, asset managers, family offices, fund managers, and fund administrators. By integrating teams, automating manual tasks, and connecting investors to offerings, Invest I.Q. enhances efficiency, reduces operational costs, and mitigates compliance risks in private market investments. |
Key Investment Details |
Minimum Investment: $50,000 Projected IRR: 32% [Calculations below] Total Investment Size: $500,000 Investment Type: SAFE (Simple Agreement for Future Equity) Investment Duration: N/A (Conversion upon future equity financing event) Name of Deal Sponsor: Acquire Invest Inc.; Founder & CEO: Brian Harstine; Co-Founder: John Hensel Review the deck |
👉 Click here to express interest, and we’ll introduce you to Brian, the CEO. |
Why this Deal is Worth a Look |
This investment opportunity offers exposure to a fintech company addressing a significant pain point in the rapidly growing private and alternative investment markets. Acquire Invest Inc.'s solution is timely with the private markets expected to raise $1.8 trillion in new capital in 2024 and facing increasing regulatory complexities and operational inefficiencies. The company's platform has the potential to capture substantial market share by providing a unified, automated solution that replaces fragmented systems and manual processes. Investing in Acquire offers the possibility of substantial returns due to the large addressable market, the company's scalable SaaS business model and high customer retention rates anticipated from switching barriers. |
Relevant Background Information |
|
The private investment sector is experiencing robust growth, with assets under management reaching $13 trillion in the U.S. alone. However, many firms continue to rely on outdated, manual processes and multiple disconnected software systems, leading to inefficiencies, increased costs, and compliance risks. There is a growing demand for comprehensive, automated solutions that can handle the complexities of private market operations, including regulatory compliance, data management, and investor relations. Acquire Invest Inc. aims to fill this gap with their Invest I.Q. platform, aligning with digital transformation and operational efficiency industry trends. |
Purpose of the Investment |
The investment seeks to provide Acquire Invest Inc. with the capital required to accelerate product development, expand sales and marketing efforts, and grow their customer base. The funds will enable the company to commercialize the Invest I.Q. platform, validate key business assumptions, generate revenue traction, and position itself for significant growth in an underserved market. The goal is to achieve $500,000 in Annual Recurring Revenue (ARR) by the end of 2025 and prepare for subsequent funding rounds to further scale operations. |
Key Investment Highlights |
|
Innovative All-in-One Platform: Invest I.Q. offers a comprehensive solution that automates investment operations, reducing the need for multiple software tools and minimizing manual tasks. Large and Growing Market Opportunity: With an estimated $1.8 trillion in new capital expected to enter private and alternative funds in 2024, there is a significant demand for efficient, automated operational solutions. Distinctive Features and Competitive Advantage: The platform includes unique features such as blockchain integration for secure transaction settlements, white-labeling options for branding consistency, and AI-driven automation for compliance and operational processes. Experienced Leadership Team: The management and advisory team bring extensive experience in fintech, investment operations, technology development, and regulatory compliance, enhancing the company's ability to execute its business strategy effectively. Scalable Business Model with High Margins: The SaaS subscription model offers high margins and scalability, with additional revenue streams from consumables and data services. Due to high switching costs, the company expects long-term customer retention. Early Market Traction and Strategic Partnerships: Pilot users are under contract, and the company is actively engaging potential clients, including fund administrators and asset managers, indicating early validation of its product and market approach. |
Asset Class Overview |
Investing in early-stage fintech companies falls under the venture capital asset class, specifically focusing on high-growth potential startups revolutionizing financial services through technology. Fintech companies like Acquire Invest Inc. are integral to the evolution of financial markets, offering solutions that enhance efficiency, reduce costs, and address regulatory complexities. |
This asset class provides exposure to innovative technologies that can disrupt traditional financial models, potentially leading to substantial returns. However, investing in early-stage companies also carries higher risks, including market adoption challenges, regulatory hurdles, and operational risks. |
Historic Performance of the Asset Class |
Asset Performance History:
Venture capital investments in fintech have shown strong growth over the past decade. In 2022, global fintech funding reached $75.2 billion across 5,048 deals, with early-stage investments accounting for a significant portion (source: KPMG Pulse of Fintech H2 2022). |
Fintech has attracted substantial capital due to its potential to disrupt traditional financial services and offer innovative solutions. Historical returns for venture capital investments in fintech have been robust, with numerous successful exits and IPOs generating significant returns for early investors. |
Market Trends:
Despite economic uncertainties, fintech continues to attract investment due to the accelerated digital transformation in financial services. Global trends such as remote work and increased online transactions have amplified the shift towards automation, digital engagement, and regulatory compliance solutions. |
Early-stage fintech companies addressing niche market needs, like investment operations technology for private markets, are well-positioned to capitalize on these trends. However, investors should be mindful of potential market volatility and the long-term horizon typically associated with venture capital investments. |
Comparative Analysis:
Fintech startups have demonstrated higher growth potential and increased risks than traditional venture capital investments. Due to the sector's rapid innovation pace, funds specializing in fintech have often outperformed generalist venture funds. |
For instance, the Cambridge Associates U.S. Venture Capital Index reported a 15-year annualized return of 14.1% as of Q2 2023, with fintech investments contributing significantly to these returns (source: Cambridge Associates Venture Capital Index). Early investors in successful fintech companies like Stripe, Robinhood, and Square have realized substantial returns, highlighting the sector's potential. |
Market Analysis |
Industry Overview |
Increasing Demand for Automation: The private investment industry faces pressure to modernize due to growing regulatory complexities, demand for transparency, and the inefficiencies of manual processes. Growth in Private Markets: The U.S. private markets have grown to $13 trillion in assets under management, with expectations of $1.8 trillion in new capital raises in 2024. This growth necessitates efficient operational solutions. Regulatory Compliance Challenges: Firms are grappling with complex regulations that require accurate reporting and data management, increasing the need for platforms that can automate compliance tasks. Technology Adoption Lag: Despite advancements, many private market firms still rely on outdated systems and fragmented tools, creating an opportunity for comprehensive platforms like Invest I.Q. |
Competitive Landscape |
|
Fragmented Solutions: Competitors offer partial solutions, requiring firms to use multiple software suites, leading to inefficiencies. Acquire's all-in-one platform distinguishes it from competitors. Established Players: Companies like Juniper Square, Carta, and AngelList have significant funding and market presence but may not offer the same level of automation and integration. Barriers to Entry: High switching costs and entrenched relationships with existing providers can be challenges, but Acquire aims to overcome this with superior technology and a strong value proposition. Niche Focus: By targeting mid-market private fund administrators and asset managers, Acquire can capture a segment underserved by larger competitors. |
Trends and Outlook |
Digital Transformation: Ongoing digitalization in financial services is expected to continue, with increased adoption of SaaS and cloud-based solutions. Investor Expectations: Investors demand more transparency, real-time reporting, and digital engagement, driving firms to adopt advanced technology platforms. Blockchain Adoption: Integration of blockchain technology for secure transactions is becoming more prevalent, aligning with Acquire's offerings. Market Growth: Projected growth in private markets and alternative investments suggests a sustained demand for operational efficiencies. |
The Team |
|
Management Team |
Brian Harstine: Founder & CEO
Brian has a background in fintech and investment management. He previously founded and successfully exited a fintech startup and has experience in private equity investment manager due diligence and evaluation. |
Lisa Price: Co-Founder, President
For over two decades, Ms. Price has led and executed business development initiatives globally, specializing in mergers and acquisitions across the industrial, energy, and oil & gas industries. She also has deep experience and expertise in strategy and business operations. |
John Hensel: Co-Founder & Chief Revenue Officer
John has extensive digital finance experience, having served as a Senior Executive Officer and Head of Digital in the Middle East for DTCC (Depository Trust & Clearing Corporation). He co-founded Securrency and has a background as a Naval Aviator. |
Organizational Structure |
The team is structured with clear roles overseeing different aspects of the company: |
Executive Leadership: Brian Harstine (CEO), Lisa Price (President), and John Hensel (CRO) guide the overall strategy and revenue generation. Operations: Ben Apple oversees day-to-day operations and process optimization. Product Development: Led by Antony Broussard, focusing on platform development and technological advancements. |
Background and Experience |
The management team has a strong track record in fintech, investment operations, and technology development. Their combined expertise covers key areas necessary for the company's success, including product development, operations, legal compliance, and revenue generation. The advisory team includes experienced professionals with backgrounds in high-profile financial and technology companies, adding depth to the company's strategic guidance. |
Track Record |
Previous Successes: The founders have prior experience with successful exits in fintech startups, demonstrating their ability to grow and scale businesses. Industry Recognition: Team members have held senior positions in prominent firms like DTCC, Gemini, NASDAQ, and Blackstone, indicating a high level of industry credibility. Pilot Programs: The company has secured pilot users under contract and is engaged with potential clients, showing early traction in market validation. |
Reputation |
Acquire Invest Inc. is building a reputation as an innovative provider of investment operations technology. The management team's backgrounds contribute positively to the company's credibility, though it is still establishing its market presence as a relatively new entrant. |
Detailed Analysis |
|
Acquire Invest Inc.'s Invest I.Q. platform addresses the inefficiencies and complexities of private market investment operations. The platform provides an integrated solution that automates processes across the entire investment lifecycle, from onboarding and compliance to transaction processing and investor relations. |
Investment Operations Automation: By consolidating multiple functions into a single platform, Invest I.Q. eliminates the need for disparate systems, reducing manual data entry, errors, and compliance risks. Blockchain Integration: The optional blockchain module offers secure, scalable, and swift transaction settlements, enhancing operational efficiency and security. Client Engagement: The platform includes features for improved investor relations, such as onboarding tools, direct messaging, and customizable reporting, enhancing the overall investor experience. Scalability: Invest I.Q. is designed to scale with clients, accommodating growth from single offerings to managing multiple funds, making it suitable for various firm sizes. |
Revenue Model |
|
SaaS Subscription Fees: Clients pay subscription fees based on their plan type, offering predictable and recurring revenue. Consumables and Add-ons: Additional services such as data migration, reporting tools, and capital distribution tools provide supplementary revenue streams. High Margins and Retention: The business model anticipates high margins and low churn due to the platform's comprehensive features and the high switching costs associated with migrating to alternative solutions. |
Pros and Cons |
Pros |
Comprehensive Solution: Offers an all-in-one platform that reduces the need for multiple software tools, increasing efficiency.
Source: Company materials Market Demand: Addresses a significant need in a large and growing market with few comprehensive competitors.
Source: Preqin 2024 Market Outlook Report Experienced Team: Led by industry veterans with proven track records in fintech and investment operations.
Source: Company website Scalable and High-Margin Business Model: SaaS model with additional revenue from consumables leads to scalability and high margins.
Source: Company financial projections Early Traction: Pilot programs and engaged sales funnel indicate market validation and potential for rapid growth.
Source: Company updates |
Cons |
Early-Stage Company: As a relatively new company, it faces risks associated with early-stage startups, including market adoption and execution risks.
Source: Venture capital industry reports Competition from Established Players: Competitors with significant funding and market presence may pose challenges.
Source: Competitor analysis Regulatory Risks: Operating in the fintech space involves navigating complex regulatory environments, which could impact operations.
Source: Regulatory compliance literature Client Acquisition Costs: High customer acquisition costs may impact profitability in the early stages.
Source: Company financial statements Dependence on Market Conditions: Success may be influenced by the overall health of the private investment markets, which can be cyclical.
Source: Market trend analyses |
IRR Buildup |
Explicit Returns |
|
Fixed Components |
Subscription Revenues: Based on projected customer acquisition, the company anticipates steady subscription revenues with high margins. Consumables Sales: Additional services provide supplementary income, enhancing overall revenue. |
Variable Components |
Customer Growth: Revenue growth depends on the customer acquisition and retention rate. Market Adoption: Wider market adoption could significantly increase revenues beyond initial projections. |
Return Modeling |
Base Case |
Assumptions: |
The company successfully closes and services initial customer deals, achieving $500,000 ARR by end of 2025. Customer acquisition costs remain within projected budgets. Market conditions remain stable, and the company faces no significant regulatory hurdles. |
Forecast IRR: Approximately 44% |
In this scenario, steady growth leads to moderate returns, reflecting successful market entry and execution of the business plan. |
Upside Scenarios |
Assumptions: |
Accelerated customer acquisition due to strong market demand. Successful partnerships with major fund administrators and service providers. The platform becomes a preferred solution in the industry, capturing a larger market share. |
Forecast IRR: Approximately 72% |
Enhanced growth and market penetration result in higher revenues and profitability, leading to significant returns. |
Downside Scenarios |
Assumptions: |
Slower customer adoption due to market resistance or stronger competition. Higher than anticipated customer acquisition costs. Regulatory changes impose additional compliance costs. |
Forecast IRR: Approximately -13% |
Challenges in market adoption and increased costs reduce profitability, potentially leading to negative returns. |
Catastrophe Scenarios |
Assumptions: |
Major regulatory hurdles render the platform non-compliant. Significant technological failures or security breaches damage reputation. Inability to secure additional funding leads to operational shutdown. |
Forecast IRR: -100% |
In this worst-case scenario, the investment is lost due to insurmountable challenges. |
Probability Weighting |
Base Case: 50% probability Upside Scenario: 25% probability Downside Scenario: 20% probability Catastrophe Scenario: 5% probability |
Expected IRR Calculation: |
(0.5 x 44%) + (0.25 x 72%) + (0.2 x -13%) + (0.05 x -100%) = 22% + 18% - 2.6% - 5% = Approximately 32% Expected IRR |
This calculation considers various factors: |
Historical Comparables: Similar fintech startups have achieved significant growth and returns. Market Cycle Analysis: Current market trends favor digital transformation in private markets. Execution Risk Factors: The team's experience mitigates some operational risks. Macro Considerations: Economic conditions support continued investment in fintech solutions. Industry-Specific Factors: Regulatory environments are becoming more conducive to fintech innovation. |
That’s all for today. Love the deal? Hate the deal? Smash reply to let me know. And don’t forget: |
👉 Click here to express interest, and we’ll introduce you to Brian, the CEO. |
Until next time. |
Cheers, |
Wyatt |
Disclosures |
The information provided does not constitute an offer or a solicitation of interest in any securities offering. Any indication of interest provided in response to any solicitation materials may be withdrawn or revoked, without obligation or commitment of any kind before being accepted following any qualification of an applicable offering, and any such offer, solicitation or sale of any securities will be made only by means of an Offering Statement. No money or other consideration is hereby being solicited, and will not be accepted without such potential investor having been provided the applicable offering document. |
