Posted on

New breed of financial startup

Really interesting financial startups are popping up everywhere.  Most of what I’m seeing falls into a few different buckets

  • sentiment analysis: the ability to take social media’s temperature on a certain stock, certain market and forecast future price movements.
  • personalized recommendations: for years, the financial community got away with giving generalized information.  Now, it’s getting granular.
  • portfolio replication: lots of new tools, platforms that allow you to essentially program your investing activity to mimic another investor, a strategy, or an algorithm

I’m compiling this list of some of the best cutting-edge financial startups.  What do you think?

Continue reading “New breed of financial startup”

Posted on

The Future of Online Finance, Startups, and How to Win – with ValueCruncher’s Mark Clare [live]

Well, it’s take 2 for an event I’ve been looking forward to —

We’re hosting a live session with Mark Clare, investor, entrepreneur, and founder of ValueCruncher.

Mark’s written extensively about the competitiveness in the online finance space.

===> He’ll join us to talk about:

  • what the future of online financial content has in store
  • who’s positioned to win
  • the current market view of hot startups
  • what other entrepreneurs and executives in the space can do to assure success.

(If we’re lucky, he’ll talk about his own experiences founding and growing his own startup in the space.)

Please join us Tuesday September 6th at 5PM ET (1PM PT) live.

The online event is free but we’re going to cap attendance at 250.

Please bring questions and be prepared to ask them during the session.

>>>Sign up here to join us.<<<

Posted on

Using small bets to become a better investor — with Peter Sims (transcript)

On Tradestreaming Radio, we’re interviewing lots of innovative entrepreneurs, investors, and researchers all trying to make investors better at what they do. Check out our archives. Subscribe on iTunes.

Part of learning to be a successful investor comes from learning to fail.

Sometimes we’re afraid to fail so we don’t bother trying.  Other times we bet too much only to prematurely end the learning process.

Successful investing comes from making small mistakes, learning from them, to get to a successful outcome.  It’s as much about the process than it is the outcome.

Peter Sims, author of Little Bets: How Breakthrough Ideas Emerge from Small Discoveries, joins us on Tradestreaming Radio to discuss his findings after interviewing hundreds of successful businessmen, entrepreneurs, and social scientists. Continue reading “Using small bets to become a better investor — with Peter Sims (transcript)”

Posted on

Using small bets to become a better investor — with Peter Sims (podcast)

Part of learning to be a successful investor comes from learning to fail.

Sometimes we’re afraid to fail so we don’t bother trying.  Other times we bet too much only to prematurely end the learning process.

Successful investing comes from making small mistakes, learning from them, to get to a successful outcome.  It’s as much about the process than it is the outcome.

Peter Sims, author of Little Bets: How Breakthrough Ideas Emerge from Small Discoveries, joins us on Tradestreaming Radio to discuss his findings after interviewing hundreds of successful businessmen, entrepreneurs, and social scientists. Continue reading “Using small bets to become a better investor — with Peter Sims (podcast)”

Posted on

Financial voyeurism and the tradestream

Voyeurism drives a lot of our activities online.  Admit it — you’ve definitely googled or facebooked an old friend with no intention of reconnecting.  You just wanted to peer into their lifestream.

Venture Capitalist Michael Eisenberg told me once that many of today’s successful online businesses are winners because they incorporate some level of voyeurism.

If investing is about learning, we’re always interested in what others are doing, but sometimes it’s hard to figure out.  To see what a large asset manager is doing, we can check public portfolio filings.  Other times, we pick up what others are investing in over a game of pickup basketball.

Regardless of how we get this information, we place a value on it (sometimes, even a value greater than our own opinions). The collective tradestream (and dissemination tools like StockTwits and SeekingAlpha) allows us to drop in on the investing party our friends are having — at any time.  Not only can we get ringside seats into smart investors’ every activities, but we get their rationales for doing so.

It’s pure learning — both cognitive and the emotion set behind the trade.

Posted on

What the fat IPO pipeline means for investors

The size of the opportunity

We’re gearing up for some really interesting activity in the IPO market in 2010.  To put things in perspective, in 2010, IPOs returned 72% more money than the companies that exited in 2009 (although at $40B, that’s still about 40% less than peak levels in 2007).

According to Sarah Lacy’s recent article in TechCrunch, Exits Lag in the 4th Quarter, but IPO Hype Boils for 2011:

There is a lot of hype swirling that 2011 is going to be the big comeback year for the venture-backed IPO. And we’re talking about big, gaudy IPOs, not small ones that essentially function as another funding round. And interestingly, pundits and investors expect some new $1 billion companies to debut in both cleantech and Internet sectors.

Certainly firms like LinkedIn, Groupon, Facebook, Pandora, and Zynga have raised lots of VC money from investors who would welcome public liquidity.

Private Equity also benefits from IPO window

Venture backed firms — those started from scratch and basically birthed into existence for large splashy IPOs — aren’t the only ones benefiting from the opening of the IPO window for increased investor demand in new offerings.  Companies that received funding/buyouts from private equity firms are also gearing up for an exciting 2011.

According to Renaissance Capital

The past year has seen an modest uptick in offerings of companies backed by buyout firms – 37 in total, more than the two previous years combined

Big firms like HCA, TXU, and Harrah’s Entertainment are poised, waiting for the right opening to go public and make their PE-backed investors richer.

But…

It’s not all clear sailing for a couple of reasons

  1. time and money to exit:  In spite of the rah-rah of VCs saying how easy and quick it is for companies to prosper in the social media era, the inverse is actually true — successful companies may require more money and time to prepare for public markets.  According to TechCrunch’s Lacy, “The venture-backed economy is rapidly becoming polarized between quick flips or a long, hard-fought slogs even for the hottest companies.”
  2. fuzzy pricing for private firms: Investors in pre-public firms frequently talk their books, inflating performance and valuation of their portfolio companies.  Without a public mechanism to discover pricing, it’s hard to line up institutional investors for a large offering. The NYT has an article today about energy company, TXU and how pricing analysis by KKR and TPG has differed wildly.
  3. rise of secondary markets: Companies like SharesPost have provided necessarily outlets for founders and investors to cash out.  With the ability to take some money off the table and enrich themselves, certain companies would rather persist as private firms without the necessary headaches and scrutiny of running publicly-traded firms. Xpert Financial, recently launched, will play into this dynamic as well.  It’s possible that Facebook doesn’t go public for a loooong time.

Performance into 2011

While total IPO numbers still haven’t returned to 2007 levels in the US, performance is best since 2006, as average IPO rose by 23% this year.  Renaissance Capital is predicting a big year in small cap tech, consumer, and health care sectors.

Given last year’s result and if we see continued momentum, Asia Pac and Latin America look poised to not only float more new firms but good firms, with nice sized returns.

And this makes sense.  Many of the hottest Internet firms continue to find willing and able investors in the venture capital world (and out, as witnessed by Goldman’s interest in Facebook).  Other firms that have spent the past few years developing great products and even more interesting business models will tap the markets because they’re ready to grow into being real firms.

Source:

Exits Lag in the 4th Quarter, but IPO Hype Boils for 2011 (TechCrunch)

Buyout Firms Look for Easier Exits in New Year (Dealbook)

A Portfolio’s Price (NY Times)

DowJones data on 2010 transactions (DowJones)

Xpert Financial Offers Start-Ups an IPO Alternative (gigaOM)

Why Facebook won’t go public (Felix Salmon/Reuters)

2010: The Year in IPO Dealflow and Performance (The Reformed Broker)