Deal To Watch: Matchmaking for Investors

7M

Key Stats: Intro-Blue on SeedInvest

Valuation Cap

7M

Amount Raised

$0

Number of Investors

Not Known

Minimum Raise

$25,000

Maximum Raise

$1,070,000

Likelihood of Max Unlikely
Start Date

02/08/2019

Stop Date

03/22/2019

Days Remaining

19999918

Security Type

Convertible Note

Investment Minimum

$1,000

Deal Analytics

Click Here

Summary

At time of publication, February 24, 2019, Intro-Blue had raised $302,100 of the $2,000,000 Series A, Crowd Note funding.

Intro-Blue has been selected as a “Deal To Watch” by KingsCrowd. This distinction is reserved for deals selected into the top 10-20% of our deal diligence funnel.

The Problem

Connecting company executives with the right investors has been a challenging problem for as long as people have been investing. According to Greenwich Associates, globally, investors spent more than $2 Billion a year for corporate access.

Despite spending so much on corporate access, according to Ipreo, 85% of corporate executives report the suitability of investors in meetings as very important while only 13% of them are very satisfied with the meetings.

Not only were investors forced to pay for corporate access, often it was not a good fit. Investors who were doing the most business with brokers were the ones offered access to corporations. Corporate executives wasted time meeting with investors who were not interested in what they had to offer.

To create more transparency, the European Union enacted MiFID II into law in the beginning of 2018. MiFID II states brokers can not charge investors for setting up access to corporations. It also requires brokers to unbundle research and price it as a subscription.

The objective is to eliminate pay-to-play and expose exorbitant costs or biased research. In preparation for MiFID II, brokers slashed their research budgets by approximately 20% a year starting in 2016 and continuing through 2018, according to Greenwich Associates.

The Solution

Intro-Blue provides an end to end solution, maximizing executives and investors valuable time by ensuring meetings are a good match and enhance the meeting with robust research. Launched in July 2018, Intro-Blue is the merging of Intro-Act and Blueshift Research.

Intro-Act, launched in 2016, uses artificial intelligence to match corporate executives with institutional investors who are most likely to buy or sell their stock in the next 90 days. Utilizing the Intro-Act dashboard, a client can set up the meeting time and place with the match. The key missing piece of Intro-Act’s offering was research to ensure everyone is properly informed.

Blueshift Research, founded in 2008, is a boutique research firm which provides fundamental market research ideas for investors. The research component of Intro-Blue prepares participants to the meetings, with a video, financial model, and a research report. This has the added benefit of standardizing the format investors can expect when attending a corporate meeting via Intro-Blue.

Customers

Intro-Act has 11 paying customers subscribed to the service. According to founder, Peter Wright, Intro-Act is on track to have 20 customers by the end of March. Blueshift Research has 25 paying customers. Mr. Wright professed, Intro-Act’s rapid customer acquisition is proof of concept.

Blueshift research sends a daily product to 3,000 corporate executives and institutional investors. According to Mr. Wright there is a 5% open rate among institutional investors and a 10% open rate among corporate executives. Only 80 of the 3,000 sent the daily product asked to be unsubscribed.

Competitors

Currently, the closest competitor is Valuation Metrics. Valuation Metrics uses over 100 metrics to match corporations with institutional investors. Intro-Act uses 600 metrics. Valuation Metrics just ended a two-year collaboration with Rivel Research Group. Had the partnership not stopped, Valuation Metrics would have been a close competitor.

Mr. Wright is aware there are likely to be more competitors who will jump into competition with Intro-Blue. Mr. Wright expressed surprise Intro-Blue does not currently have more competition. MiFID II dramatically altered the investor research market and it is still shaking out and regrouping.

Team

Intro-Blue is the combination of two highly complementary companies already successful in the marketplace. The founders of both are veterans in their fields with strong networks.

Peter Wright has two decades worth of experience in the financial research industry. Mr. Wright’s experience is on all sides of financial research, accessing and distributing investment research, buy-side and sell-side analyst, and a director of research. From 2011 to 2015, Wright founded a ran a company which sought to optimize the mountains of information in finance.

Bill Jenks is the CEO of Blueshift Research. Mr. Jenks has decades of experience in research and sales. Mr. Jenks has experience building

Why We Like it

Market Timing: Intro-Blue is in the right place at the right time. MiDFID II has dramatically disrupted the market for corporate access and research. Firms who dominated the two markets have simply dropped corporate access and research from their offerings in favor of more lucrative products. This has abandoned a market which had $2 Billion in revenue. While the previous market providers had their reasons to abandon those products, it leaves a large opportunity for another provider to meet the market needs.

Experience: Wright and Jenks are financial market veterans. They have been in the industry their entire careers. They have worked at Wall Street’s marque firms. Their network, experience and reputation are likely to open doors and give them the wisdom to capitalize on opportunities.

Customer Base: Intro-Blue’s model is to recruit subscribers and keep them happy. They have successfully recruited subscribers and are on track to gross $1 Million in revenues their first year. The daily product’s significant distribution list and the exceptional open rate will serve as a powerful marketing tool.

Product Offering: Intro-Blue’s product is self-serve, end-to-end solution for corporations. In this era where there appears to be a trend of questioning financial services high fees, Intro-Blue’s solution is inexpensive and high value. A recent Harvard study reported CEO’s spend at least 50% of their time in meetings out of the office, many with investors. Intro-Blue’s product would optimize the investor meetings, dramatically reducing wasted time.

The Rating

Intro-Blue is a Deal To Watch. The founders have deep industry experience. Based on their career paths it appears they have identified this issue long ago and now the time is right to enter the market with a product to address it. With a $2B revenue market size, and a brand new solution that could face a longer adoption cycle, we think the upside is significant but may not take off in quite the same way we expect from a top deal.

Regardless, we think this present an attractive and healthy investment return opportunity especially because it is the only player in the market currently. However, there are likely to be others who copy Intro-Blue’s strategy.

One of the Goliath banks or research institutions could jump in and overtake the market. How Intro-Blue fares will depend on whether the Goliath simply absorbs Intro-Blue into their company or if Intro-Blue has enough of a lead to maintain market dominance. We think this is a strong investment if you consider that one of these players will look to reinvest in this space by acquiring a company such as Intro-Blue. Mr. Wright is aware of the market and acknowledged these scenarios’ so hopefully he will be focused enough on emerging trends to recognize a shift.

Intro-Blue was able to capitalize on start-up discounts for data and other key inputs to secure low costs. These costs will expire at the end of the year, raising their fixed costs. Intro-Blue is establishing an enviable pipeline of customers to get on their recurring revenue platform. If Intro-Blue continues to add customers and keeps them happy, it will go a long way to offsetting the increased costs.

Intro-Blue is positioned for growth and thus success. Lack of competition in the market could be a blessing or a curse. Once Intro-Blue faces more competition things could change. Intro-Blue’s founders are savvy enough to recognize this and likely will position themselves to capitalize on their first mover advantage.

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About: Meridith taylor

Meridith Blank Taylor has spent the past two decades providing strategic guidance to early stage businesses. Meridith has a BA from the University of Pennsylvania and an MBA in Finance from the University of Chicago.

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