Regulation and The Retail Investor

One of the things that came out of the lunch we did at the University Club the other day was the focus of the SEC. There are several agencies and independent organizations that regulate finance and the SEC is at the top of the pyramid.

I have spoken to both SEC and CFTC regulators on cryptocurrency. They seem to be working together and are not engaged in turf battles. Right now, they say that’s the case and you have to take them at their word. In past engagements, like the CFMA Re-authorization in 2000, it was a brutal bare knuckle battle between agencies and the industries they regulated.

Here are a couple generalizations.

When we think about markets the CFTC regulates, they are not targeted to retail investors. They exist for the risk management and risk transfer of professional investors and big time industrial organizations. That requires a different touch Continue reading "Regulation and The Retail Investor"

A Bit Of Reprieve

Congress started to roll back some of the Dodd-Frank law last week.  This is good news.  The reason I started blogging way back when was because of the debate over Dodd-Frank.  You could see the freight train coming.

Sarbanes-Oxley was another act that was done in haste to combat one or two companies wrongdoing.  Again, the end result was that companies were staying private longer. A lot of that has been fixed but why did we do it in the first place?  Spite.  Populism.

Government regulation is keeping the middle class and poor from growing their wealth.  They are locked out of many types of investments because of the overlords fear.  It’s wrong.  One of my hopes with cryptocurrency is that this can be remedied.

Dodd-Frank was and is a terrible law.

The legislation gave the government the power to intrude deep into our lives.  The headline stuff on Continue reading "A Bit Of Reprieve"

Ycharts +TD Ameritrade

The news came out last week but it is worth highlighting. Ycharts integrates with TDAmeritrade now on their Veo One platform.  Ycharts is a B2B Fin Tech company I invested in back in 2009.  Their target market is RIA’s, wealth managers, hedge funds and other firms like that in the investor universe.

Ycharts is like a Swiss army knife for investors.

I have used it successfully to pick strike prices for options trades.  It is the best research terminal on the web.  It’s not for moment to moment trading. It’s an example of the quiet things going on behind the wall that you might not notice because it’s not on your phone.  But, they add a lot of value.

 

The Stock Buy Back Question

With the new tax policy, a lot of questions are coming about what corporations do with the extra money.  There are three things a company can do with extra cash.

  1.  Let it accumulate.
  2.  Invest it in productive assets inside or outside the firm
  3.  Buyback shares or issue a dividend.

Letting it accumulate is a bad idea.  The only reason to let cash accumulate is if the company wants to be acquired.  That means companies can invest or give it back.

Investing can be several different flavors.

  • They could buy other companies and ingest them. (M+A, sort of a private equity thing)
  • They can invest in property plant and equipment or do some research and development.  (invest in physical assets)
  • They can hire more people, raise salaries or create better retirement programs, or pay for employee education. (invest in people)
  • They can set up a corporate VC Continue reading "The Stock Buy Back Question"

A tale of two startups with ‘superstore’ ambitions: Robinhood and Cadre

 “If you think about Amazon, they took the book model, built brand equity, trust, credibility, and now they are a superstore for any retail product,” Cadre’s cofounder and CEO Ryan Williams told attendees at an industry event in San Francisco last week. “We’re doing the same for the investments world.” Robinhood’s cofounder and CEO, Vlad Tenev, speaking… Read More

Startup that sells your salary data to VCs gets bought by Solium

 Investors don’t want their portfolio companies to pay you too much, or too little. So they pay Advanced-HR for its compensation data pulled from 2,500 startups. With a generic name, the service has flown somewhat under the radar since launching 20 years ago. As startups grow more professional while staying private longer, they’re getting serious about how they structure equity… Read More

Homebrew closed $90 million fund

 Homebrew is announcing the close of its third fund. This time they’ve raised $90 million, an increase from $50 million in 2015 and $35 million for its debut fund in 2013. Led by Hunter Walk and Satya Patel, the seed stage venture firm has spent the past five years investing in U.S.-based startups at the onset. Several of its portfolio companies have gone on to raise significant… Read More

Raise softly and deliver a big exit

 In the world of venture capital, the prospect of a successful “exit” looms large in the minds of investors. A VC’s business model is less about the money that goes into a startup than it is about what comes out. It’s true that most companies fail to exit gracefully, and of those that do, surprisingly few exit by going public. Read More

Cardlytics up 3% following IPO, raised $70 million

 Atlanta-based Cardlytics made its public debut on Friday, closing the day at $13.37, just a little above the IPO price of $13. The company sold 5.4 million shares, raising $70 million. Cardlytics works with financial institutions like Bank of America and 2,000 others to run cash back programs. It partners with brands across restaurant, retail, travel, grocery and home subscription categories… Read More

Is This A Market Melt Down?

Short answer if you don’t want to read the rest of this is, no this is not a meltdown.  It’s not a correction either.  For newbies, meltdowns look like this.  If you believe this is a market meltdown, then perhaps you follow the Super Bowl Indicator too.  When an NFC team wins the championship, buy the market.SPY Chart

SPY data by YCharts

If you are only watching Bitcoin, it is in meltdown phase. But, it’s not as if you had to be Methuselah to see it coming. The Bitcoin bubble might have been the easiest one to pick out in recent memory. However, it was impossible to short. You could have shorted it with futures once they started trading but it was very thin, and margin requirements were pretty high so your risk was high in an irrational market. The GBTC is 75% off of its high.
GBTC Chart

SPY Chart
SPY Chart
Continue reading "Is This A Market Melt Down?"

The Hard Thing About Small Funds

One of the most difficult things about being in a small fund is how much capital to allocate to an investment.  Many funds put the exact same amount in each deal.  That doesn’t seem right to me because the valuations of each deal are always slightly different.  Cap tables are different.  The capital needs of the company to get to exit will almost certainly be different.

Others are very random in their approach.  They might put more in one deal because either they understand it better or they trust the lead investor more.  Perhaps something clicks between them and the team so they feel more comfortable putting more money in.

When you are a small fund, the math gets really difficult.  You try to forecast the future, but of course that only usually plays out well on a blackboard. There will only be Continue reading "The Hard Thing About Small Funds"

We Don’t Teach Basic Finance In School

It is sort of amazing that in America we don’t teach basic finance in public high schools.  I remember I had to take a required class in personal finance at my high school.  It was taught by a teacher that had no interest in teaching and didn’t understand basic finance.  She was more interested in trapping us and sending us to the principal’s office.

One of the best things my wife and I did was save for retirement.  Since I was self-employed, I had to save for my own.  We maxed out on contributions every year.  Early in our careers we worked for big corporations and maxed out on the retirement plan that they offered.  It makes a difference.  When we turn 59.5 there will be money waiting for us.

I have read a couple of things and had a couple Continue reading "We Don’t Teach Basic Finance In School"

Uber’s big SoftBank deal has officially closed

 SoftBank’s $1.2 billion primary direct investment deal has officially closed, according to Uber itself, which confirmed the deal closure and provided the following statement to TechCrunch via a spokesperson: We’re proud to have SoftBank, Dragoneer and the entire consortium in the Uber family. This is a great outcome for our shareholders, employees and customers, strengthening… Read More

US & Canada VCs favor late-stage giants over upstarts in Q4

 Startup investors in the U.S. and Canada have been putting a little less money to work across a lot fewer deals in recent months. After three quarters of rising investment at early through growth stage, VCs have cut back in the fourth quarter of 2017. We look at some of the key data points for the just-ended quarter and year, including early and late-stage funding, round counts, M&A and IPOs. Read More

Winning deals as a new venture capital fund

 This is my third time joining a new firm and second time starting one of my own. One would think that I would remember the challenges of building up a new firm, like a type of muscle memory, but I always forget how hard it is to stay relevant and have a seat at the table for top-tier deal flow. Read More

Alkami raises $70 million for mobile banking software

 There’s a startup in Texas that’s been quietly building the technology that powers mobile banking apps. Plano-based Alkami has developed a white label service that credit unions and banks use across digital platforms. And Alkami’s 4.5 million users have generated enough revenue for the company to justify a $70 million Series D round, led by General Atlantic. Existing investors… Read More

Menlo, Benchmark, First Round sold Uber stakes worth hundreds of millions

 Uber finally got its secondary transaction done with SoftBank buying billions of shares last month. Now we’re learning more about who sold what. It was already known that major shareholder Menlo Ventures was looking to sell shares, but we’re  hearing confirmation that it wagered the majority of its holdings and successfully sold close to half of its stake, which the… Read More