Deal to Watch: Simplifying Mutual Fund Decisions

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The Infinovate team has been selected as a “Deal to Watch” by KingsCrowd. This distinction is reserved for deals selected into the top 10%-20% of our due diligence funnel. If you have questions regarding our deal diligence and selection methodology, please reach out to


To simplify the process of making financial decisions, investment firms through the years have created portfolios (such as mutual funds) for the investors and advisors. In a race to offer the advantages of these funds to their customers, companies have remade the complexity that these instruments were made to avoid. By the end of 2018 alone, there were nearly 119,000 mutual funds across the globe. With so many mutual funds in existence today, figuring out the best one to buy into can be almost impossible. Even for financial advisors. To make investing easier, advisors and sophisticated investors can use their own financial models. But these have their own downsides. For starters, the manual input of financial data into Excel sheets or other software can be a pain. It’s a slow, grueling process in an otherwise rapidly-moving world. What data is collected can often be messy, and it is rarely predictive in nature. All of these complications result in an investment decision-making process that is still inconvenient and challenging.


Infinovate, LLC’s answer to the issues plaguing the industry is to create a subscription-based SaaS (Software-as-a-Service) platform that makes analyzing mutual funds less burdensome. Their platform takes real-time and historical data from more than 30,000 mutual funds and displays it on a single dashboard. Users can search, sort, and filter through the mutual funds based on their own personal criteria. This functionality gives them the ability to find the investment opportunities best-suited for them or, if it’s an advisor, their clients.


Management is promoting the product as a comprehensive, one-size-fits-all ecosystem. In addition to the aforementioned features, the platform also permits users to see the expected returns of the funds on a daily basis. For more sophisticated users, there’s the ability to add customized models that can then be run through Infinovate’s system. Users can also compare the expected returns calculated by the system to the actual returns generated over time. For funds that users do look at more closely, there’s the option to add notes.


Long-term, there are several avenues that Infinovate can take to further monetize their platform. One thing they are considering is the addition of advisory services. Specifics have not been offered up regarding what these services might be. Beyond that, the company does have connections with firms that it might be able to partner with. One of its affiliates is a business called The Renaissance Companies. It currently serves as an advisor to private equity, financial advisory, and other related firms. It also caters to high-net worth investors. Some of its top brass are also members of Lido Advisors, a wealth advisory firm.


Financial results for 2019 have not been provided as of this writing. However, we do know what 2017 and 2018 looked like for Infinovate. In both years, the company reported no revenue. For 2017, its net loss was $170,930. This loss surged to $633,193 in 2018. Its operating cash flows followed a similar path, with net outflows soaring from $141,680 in 2017 to $567,047 in 2018.


Up to this point, the company has relied heavily on what it calls ‘affiliate advances’ from The Renaissance Companies. By the end of 2018, these ‘advances’ had grown to $756,000. In early 2019, the company received another $400,000 from the same firm. Advances typically refer to fees received for goods or services that will be provided in the future. This may truly be the case, but in its financial filings Infinovate stated that these amounts accrue interest at the Fed Funds rate. The nature of this accrual makes these advances seem a lot more like debt.

A Niche Market

Pinpointing precisely what market Infinovate operates in is a challenge. In its own filings, the company referenced several asset management markets. These, in aggregate, have nearly $97 trillion in AUM (assets under management). These funds are split between nearly 26 thousand distinct firms. While these are the firms that the company is catering to, this is not fully representative of what kind of opportunity awaits Infinovate. 


Broadly-speaking, there are two different types of markets we can focus on here. One of them is the global financial technology market. This market alone is estimated to be worth about $199 billion this year. At an annualized growth rate of 24.8%, it’s believed the market will reach $309.98 billion by 2022. Another market to consider is what’s referred to as ‘Big Data.’ This space is estimated to be worth about $151.5 billion this year. By 2025, with an annualized growth rate of 12%, the market should reach a size of $267 billion.


These are both large, attractive markets, but not everything in these spaces falls in Infinovate’s wheelhouse. In fact, their true opportunity comprises a small niche in these spaces. In all, according to one source, the market for financial analytics is estimated to be worth about $8.5 billion and should grow at a rate of 10.7% per annum, eventually hitting $11.4 billion by 2023. Another source pegs growth at about 11.4% per annum, with the market growing from $7.75 billion this year to $12.85 billion by the end of 2025. A third source, referring to the financial data services provider market, believes the industry was worth closer to $15.4 billion in 2019.


A big piece of the market opportunity is focused on the professional side of the equation. A smaller but vitally-important segment of it is the personal finance software market. According to one source, the global opportunity here is worth about $1.01 billion today. By 2023, with annualized growth exceeding 6.4%, the market should reach $1.21 billion in size. The US makes up a sizable portion of this space, coming in at present at $256 million. By 2026, with growth of 5% per annum, the industry in the US should reach $343 million.

Terms of the Deal

According to management, the platform as it stands today is completed. The company now needs capital to take it to market. In this vein, the firm is raising $1.07 million (with a minimum of $10,000) through a Reg. CF round. Total funding, including its Reg. D offering, can come up to as much as $2 million. Investors buying into the deal will receive stock valued at $10 per unit. But the minimum investment required in order to participate in the deal is $100. As of this writing, Infinovate has just $310 committed to its raise. This is likely due to the high valuation management is seeking. Their target pre-money valuation is $10 million. That’s astronomically high for a firm with nothing in the way of revenue and significant debt (or advances as management calls it) on its books.

An Eye on Management

The management team at Infinovate is a bit odd compared to the teams at most other startups. The firm’s team consists of executives at other, presently-running businesses. One member is Floyd Kephart, who currently serves as the Chairman of The Renaissance Companies. He has held that position for more than 32 years. At one point during his tenure, he also was the Chairman of Metis Financial Network, a position he held for 7 years. Another key member of the team is Blair Buick. She is the only member at Infinovate who has confirmed an executive title with the business. At this time, she serves as its Senior Vice President. She currently holds the same position at The Renaissance Companies. And in the past she was a Senior Vice President at Metis Financial Network.


There are two other members of the Infinovate team that are worth mentioning. One of these is Gregory Kushner. Though listed as a member of the team, he does not have a designated role that has been made available publicly. At this time, he also serves as the Founder and President of Lido Consulting, a Beverly Hills family office consulting firm. At the same time, he works as the Founder and President of Lido Advisor, a wealth advisory firm. The last member of the team is Jason Ozur. At present, he works as the Senior Managing Director and Portfolio Manager at Lido Advisors. He is also the Co-Chair of Lido’s investment committee.


Based on all of the data presented throughout this piece, we have elected to rate Infinovate a Deal To Watch. We believe that the firm offers investors with attractive prospects in the long run. Investors are always on the lookout for tools and data that will make their investment decisions easier. The specific market niche the company operates in is fairly small, but the growth rate it’s experiencing is attractive. Management also has significant domain experience, which is a big plus for investors. Untried management teams always come with extra risk, and that’s not a problem with this firm.


This is not to say that Infinovate is a clear and easy win with little to no risk. The nature and repayment of advances, for instance, could complicate matters down the road. The company is also pre-revenue and its net losses and cash outflows in 2017 and 2018 were significant. Another big negative for the firm is its high pre-money valuation. Even with a distinguished management team, $10 million is high for a company with no revenue. Realistically speaking, a valuation closer to $5 million to $8 million would instill more confidence. All things considered, these concerns warrant considerable consideration by prospective investors. But if management can succeed in monetizing the platform, the upside potential in the future could be quite attractive.

About: Daniel Jones

Daniel Jones is a graduate of Case Western University with a degree in Economics. He has spent several years as an equity analyst writer for The Motley Fool where he focuses primarily on the Consumer Goods sector but also likes to dive in on interesting topics involving energy, industrials, and macroeconomics, in addition to contributing equity research to publications such as Seeking Alpha.

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