The Modern Investment Bank - For Indie Hackers, No Coders & Bootstrappers
Hello,
So I have been thinking lately about how I take trypital.com to the next level. I was speaking to old co-workers of mine in the investment banking/management space yesterday and it clicked.
"A modern investment bank for non-vc internet and technology companies". Essentially, what I have with Pital right now but our focus would be on M&A Advisement utilizing data science and private/public company research for investors in both spaces.
The idea is this, instead of something like Flippa, we only allow exclusive and approved CEO's/businesses/people on the platform. These people can then list their businesses as well as we provide the m&a advisement from valuation and projections to the escrow for the transaction, etc.
Then, we act as both an advisor, research shop, and marketplace allowing businesses to buy each other. Essentially we would be a bolt-on marketplace for businesses. I feel like this would be great for IH, no-code, bootstrapped, smaller, and non-vc route companies. I feel like Flippa kinda caters to the under $100K market and this would be focused on the $100K to $10 MM market allowing for more quality companies and no annoying domain selling like Flippa has.
What do you think?
I'm not a banker but reading "modern investment bank for non-vc internet and technology companies" reminded me of a blog post I read arguing amongst other things that debt financing will become more and more in demand for tech companies. This is in opposition to the VC equity model of the last few decades, and driven by the fact that SaaS metrics are becoming better understood and more predictable.
Here is the link, perhaps you will find some useful tidbits there (scroll to the "Financial Operationalization" header): https://luttig.substack.com/p/when-tailwinds-vanish
As a tech founder, this really resonates. Debt financing might be even more applicable to smaller indie businesses rather than venture-scale unicorns that the article seems to have been focusing on. Small tech companies don't really have great financing options as incumbent banks don't understand tech.
Sorry if too off-topic outside your M&A idea, just voicing my tangential pain point :)
This is music to my ears! I am a huge fan of debt if you can afford it. Debt is the cheapest form of capital by far (other than internal cash flows) so I could not agree more. It's sad that the finance world has made people scared of debt when in reality it is the best form of funding. It just has to be done right.
Some of my finance nerdiness coming out! :)
pick a niche. Circle up did a similar thing with CPG. Also why couch it as advisement, I assume for legal reasons? do take a look at FE international, Microaqcuisitions and other similar ideas.
also permanent capital and maybe build tools like what the ltse team has built. If the goal is to monetize ownership sales transactions, then build 409A valuation tools and metrics tools, may be partner with usesummit ?
Interesting! I will look into that! I was actually really thinking 409A because the automated Multiple Valuation tool Pital offers is literally as fair market value as it gets and what 409A valuation firms give for their fair values (sometimes combine DCF a little). Interesting!
Are you fully informed about laws and regulations in this industry and do your platform/site/business satisfy all obligations?
Liability - any guarantees or insurance if something bad happen? For example, if your platform vet positive the company like Wirecard and some bad deal happens with another user of your platform, do you take responsibility for flawed due diligence process?
Also, 100k to 10mm market doesn't sound like a bootstrapers and no-code level, it's closer to whale level.
Thanks for the answer! I am just engaging in interest so the details are not down yet. When it comes to licenses and regulations I used to be an investment banker and went to school for such so I do understand them.
I guess for the due diligence effort we would have to take the responsibility, no? That would be the point of us, just like any investment bank/m&a advisor.
For the deal size, I was thinking of 100K to 10MM because the platform would be a bolt-on platform for business to business acquisitions. This most typically happens with bootstrapped companies with this type of size and with companies that are looking to boost profitability so thus do so with bootstrapped (usually highly profitable) businesses. Although the number is of course lower than 100K and under, I know personally of 100's if not 1000's that do that number as a bootstrapped and/or no code company. I have built one of them and the hope is that would continue.
Whats you think?
I have asked for the first two points (legality and liability) because I don't see them on your landing page / website, you have put the focus on machine learning (which people still don't understand and many times is just a smart pattern matching) instead of real-life experience and focus on the main pain point of investors - trust. You can call them bootstrapers or no-code saas startups or whatever but at the end they are investors (time, money, knowledge) and they don't want to be burned with bad deals.
The point is - you should have "about us" page where people can see that you know what you are doing, you stand behind your word, you know regulations, you guarantee to offset some risks, etc.
Also the pricing - this price on the site is for the current service, financial forecasts only? Because if you want to include idea from this post into current pricing, it's way too cheap, below any sustainable level.
I know for the fact that very basic (but professional) due diligence report on some company cost at least 150 usd and include analyzing data from various official sources and government bodies like SEC, FINRA, FDA, FCC plus company mentions on social media platforms, finance blogs, forums and comment sections to find anything off-the-picture about the company.
Idea could work if executed smart. Over time you would be able to do some business matching (blue sea strategy), for example company X have excellent product in Y category but lacks shelf space (or online exposure) and company Z owns good retail locations (or websites) selling same type of Y products and both would make nice profits if you match their interests...
Interesting. Yes, the pricing right now, and everything just reflects what we currently offer automated valuations and financial forecasts. We do not offer anything other than that currently. The above is just an idea I had of possible product expansion. Something definitely interesting though. I know if I had this for my past business I would have absolutely utilized something of the sorts to expand product lines and grow via horizontal integration (if done right of course). I considered using Flippa but something about it just knocks me off guard (I think its all the domain sales they try pushing) so I wanted to see if I was the only one. Thanks!
Flippa is bad example, and many knows that, many got burned buying fake numbers and pumped statistics that goes down immediately after purchasing the domain/website, while many other earned 10x more than they should because their fake-visitor bots did a good job. Just saying, if you are planning to do this as a service, you should heavily invest into DD and full research of every company, on all possible channels, something like stock trading people are doing trying to figure out where to invest or what to short.
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