Headed up to San Francisco

This post is by Jeff Carter from Points and Figures

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Figured my friends in the Midwest would need to see some Jimmy Buffett since it’s pretty darn cold there right now. Anything to warm you up.  I am glad to not be in the freezing weather. Dodged a bullet there.  Feel for you since I have been there and will be there again soon.   I fly from San Jose to Nashville tomorrow.  Be back in Chicago soon.

I spent the day in LA. It was lovely. Had a nice lunch, a salad of course. Went out to dinner with my daughter and her boyfriend. They live here. Today I am headed up to Plug and Play for the Morningstar Asset/Wealth Tech event. I am on the lookout for new startups that need funding.

Different VC firms look for different things when investing. I think it’s fair to say we key on a few things.

  1. The people.  Can they execute?  Do give you the impression that they will be easy to work with and get stuff done?
  2. Is the product a platform, or does it have the potential to be a platform?  If it’s just an app, the exit is not likely to be good enough for our fund in B2B Fin Tech.  Apps tend to get bought at sub $100MM.
  3. Is it linear in nature, or something totally different?  Totally different becomes blow out. Linear winds up being commoditized.
  4. Can they sell?  B2B Fin tech is all about sales cycles, sales processes and if they can get it done.
  5. If it’s a SaaS, what’s the churn?  B2B Fin Tech tends to churn less because the decision to engage with them is not taken lightly.
  6. Can they exit at a big multiple?  For us it is $225MM or more.

We don’t care who is going to buy them?  I used to worry about that when I first started investing. I worry more about how people are going about building a great company.  Build a great company, delight your customers, and the exit will take care of itself.

There is a lot going on in wealth tech.  I am an angel investor in Riskalyze and Ycharts, and both target this market.  Our fund has made investments in wealth tech with Holberg Financial.  Customer acquisition costs can be really high, but if you get them, the long term value of those customers can be very lucrative.  While there is certainly room for AI, Algos, blockchain and the other trendy stuff, a lot of that has been overdone.  People want unbiased and neutral advice like Holberg Financial gives them.  They don’t want slick tech necessarily.  They want to learn and feel secure.

If you are an HR manager, you would do well by your employees by giving Holberg a ring and finding out what they can do for you.

A lot of times in wealth tech, it’s more about psychology than it is return.  Why am I feeling the way I am feeling today?  Especially when you see the recent volatility we have had in the market over the past few months.