Untapped Global

Growth Stage

Profitable impact investing in emerging markets, made easy for everyone

Analytics

Raised to Date: Raised: $180,601

Aggregate Commitments $

Platform

Wefunder

Start Date

12/02/2021

Close Date

03/30/2022

Min. Goal

$100,000

Max. Goal

$1,000,000

Min. Investment

$100

Security Type

SAFE

Funding Type

RegCF

Series

Seed

Valuation Cap

$14,000,000

Discount Rate

10%

Rolling Commitments $

Status

Active

Reporting Date

01/19/2022

Days Remaining

70

% of Min. Goal

181%

% of Max. Goal

18%

Likelihood of Max
unlikely
Avg. Daily Raise

$3,763

Momentum
cold.svg
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Location

San Francisco, California

Industry

Financial & Insurance Products & Services

Tech Sector

Fintech

Distribution Model

B2B/B2C

Margin

High

Capital Intensity

Low

Business Type

Growth

Untapped Global, with a valuation of $14 million, is raising funds on Wefunder. The company offers investors the opportunity to invest safely and profitably in markets including Africa, Latin America, and Asia. The business is a pioneer in facilitating impact investing with its investment model, Smart Asset Financing. Untapped Global has been profitable in the first ten months with $1 million in annual recurring revenue and has been growing 40% month-over-month. Jim Chu founded Untapped Global in January 2021. The current crowdfunding campaign has a minimum target of $100,000 and a maximum target of $1,000,000. The campaign proceeds will be used for platform refinements, marketing to retail investors, and legal fees for regulatory compliance for non-accredited investors.

Summary Profit and Loss Statement

Most Recent Year Prior Year

Revenue

$237,063

$0

COGS

$0

$0

Tax

$0

$0

 

 

Net Income

$-89,303

$0

Summary Balance Sheet

Most Recent Year Prior Year

Cash

$5,490

$0

Accounts Receivable

$1,156,447

$0

Total Assets

$3,308,064

$0

Short-Term Debt

$506,800

$0

Long-Term Debt

$2,890,567

$0

Total Liabilities

$3,397,367

$0

Financials as of: 12/02/2021
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Ratings KingsCrowd Startup Rating Methodology Article

Analyst Report Analyst Report Methodology Article

Synopsis

Countries in the emerging market (EM) are experiencing rapid economic growth, making them attractive for investors seeking high returns. However, investing in the EM is often risky due to factors such as political upheaval and economic instability. There are many ways to invest in the EM, such as through exchange-traded funds, purchase of stocks, and international mutual funds. And there are a number of investment firms focusing on financing developing countries. However, there aren’t many solutions that focus on using real-time data to mitigate the risk for retail investors. Investing in EM economies can be daunting or complicated, and thus, a lot of small businesses in EMs can be easily overlooked.

Untapped Global is a financial technology startup building a platform for retail investors who are looking to make an impact by investing in EMs. Untapped Global started as an investment firm in 2012 and has generated revenue from enabling accredited investors to invest in EMs and support local entrepreneurs. The startup is now building a platform to make impact investments accessible to everyone. The company’s Smart Asset Financing platform tracks data in real time and makes investing in EMs less risky. Untapped Global has a distributed global team that directly interacts with local businesses and identifies opportunities for investment.

Untapped Global’s current Wefunder raise has been rated a Neutral Deal by the KingsCrowd investment team.

Price

Untapped Global is raising capital via a SAFE with a valuation cap of $14 million and a discount of 10%. According to the founder, the company has a revenue run rate of $2.4 million for 2021. This figure yields a revenue-to-valuation multiple of 5.8x. Financial technology (fintech) companies usually have a multiple of 15x, so Untapped’s multiple is very favorable for investors. However, it’s important to keep in mind that this reported revenue is not from the company’s new Smart Asset Financing platform. Instead, it comes from Untapped Global’s previous investment business. It’s still unknown how much revenue the company will generate after launching its product. Nevertheless, a $14 million valuation is fair for a fintech startup, especially when compared to other companies in the same space raising capital through crowdfunding.

Market

About 80% of the global economy comes from countries in emerging markets (EMs), notably China, India, and Russia. Untapped Global focuses on impact investing in EMs across the globe, especially in Africa. In 2020, impact investing in EMs was worth $715 billion, with an impressive annual growth rate of 17.9% between 2015 and 2020. Since Untapped Global focuses mainly on impact investing in Africa – which makes up 17.5% of the total global population – this makes a market size of $125 billion. However, there are a lot of players in the impact investing space, and Untapped Global will be limited in the market niche it can capture. If Untapped Global captures 10% of the $125 billion market, this will be a $12.5 billion opportunity.

There are many factors contributing to the growth of impact investing, such as governments providing tax breaks, increased interest from both nonprofit and for-profit organizations, and domestic and international demands for cheaper goods. However, this market is also volatile because EMs often occur alongside political and economic volatility

Untapped Global is targeting a risky but rapidly growing market. It has high potential if it manages to establish itself among the strong competition for impact investing.

Team

CEO Jim Chu founded Untapped Global in 2012 to support and finance local businesses around the world. Chu graduated from Stanford University with a BA in quantitative economics and international relations and an MA in international policy. Chu has previously founded a few other companies that supported social impact in developing countries and social networking for startups. Chu also has experience in business development and international marketing for CISCO for seven years, where he worked with international and global customers. He also serves as a board director for a few companies, one of which is MCE Social Capital, a nonprofit investing firm that provides opportunities for underserved people internationally. Although Chu has entrepreneurial experience, he notably doesn’t have any past exits. However, Chu’s experience is rich in international business and impact investing. His experience and large international social network makes him a very fit founder and CEO for Untapped Global. 

Co-founder and fund manager Dan Nolan has a BS in civil engineering and MA in international business. Nolan brings around six year’s worth of international and financial experience to Untapped Global. However, he does not seem to have held any position for longer than two years – with the exception of his role at Untapped – which may indicate a lack of deep professional development.

The company has other team members that are based internationally. Many of them have international experience with technical, investment, and managerial roles. However, the team lacks marketing and sales members, which can be important to attract new customers, especially since the investing platform is expected to launch soon.

Overall, Untapped Global has a lean team. However, its existing members have diverse backgrounds and skills, and the founder and co-founder have a lot of investing and entrepreneurial skills. Untapped’s team provides a strong foundation for the company to continue growing.

Differentiators

There are a lot of players in the impact investing and emerging markets (EMs) industry. With a large and global market, it is no surprise to see venture capitalists and investment firms racing to dominate the space. Even though most players are focused on institutional investors, retail investors can still invest through exchange-traded funds, such as Black Rock and GlobalX. Nonprofit microfinancing organizations also exist such as Kiva, Women’s Microfinance Initiative, and Zidisha. These organizations lend money to small businesses with little or no interest fees.

What differentiates Untapped Global from others is its business model and data-driven platform. The company’s Smart Asset Financing uses a fixed income financial model and allows retail investors to invest in diverse assets rather than a single company. This model helps to reduce risk for investors. Untapped customers can choose three-, six-, or 18-month terms and can get 3% to 8% return at the end of the maturity term of the revenue share note. A 3% to 8% return is decent, but investors looking for high returns over short time periods may prefer options like microlending as it is much less volatile than EM investing and often has high returns. Untapped Global will need to rely on its mission of impact investing to help draw customers to its platform.

Another reason Untapped Global stands out is its local presence in the countries it invests in. The Untapped team directly interacts with the companies they want to finance and collects real-time data about them. Untapped Global tracks both the chosen asset and the companies’ finances, so where investments go and how they are being used are all visible to investors. This transparency adds a layer of defensibility to the company’s offering and mitigates risk for customers. 

However, some things are still unknown, such as how the company assesses the risk of investments and how the team chooses companies it invests in. Untapped Global might be one of the first to make an idea similar to crowdfunding in EMs. However, the idea is not highly defensible, and other bigger players can easily enter the market.

Performance

According to Untapped Global’s founder, the revenue run rate for the company is $2.4 million for 2021. The company has a monthly growth of 40% and a 24% investment rate of return. The company is operating at a gross margin of 67%, which is high for a company in the financial technology industry. The financial industry has an average of 14% gross margin ranging from 5.1% to 40.5%. Untapped Global didn’t report revenue in 2020. According to the founder, there was no revenue, which is a bit concerning. This gap is likely due to COVID-19. Emerging market (EM) economies are usually vulnerable to epidemics because they don’t have a social safety net or strong fiscal policy. 

It is important to note that the investment platform is yet to be built, and all the company’s revenue and growth is from financing global companies with accredited investors. People looking to invest in this Wefunder’s round will only be investing in the Smart Asset Financing platform the company is building. However, the company’s strong performance this year means there is clear interest for impact investing in EMs.  In fact, Untapped Global successfully raised more than $1 million from accredited investors in October 2021 to fund the Smart Asset Financing platform, which means there is interest in the company’s concept. 

Overall, it’s still hard to measure the company’s success and performance with no product yet. The new platform has not been fully tested with retail investors., Although it seems there was interest from accredited investors, it’s hard to judge how much traction Untapped Global will attract.

Risks

An investment in Untapped Global comes with an above-average risk profile. The main risk lies with the product. The company has not released the Smart Asset Financing platform yet. Although Untapped Global has started building it, it will likely be some time before the platform is fully launched. This delay will extend the company’s timeline for showing results, adding risk for investors. The platform has not been tested with retail investors yet, so it is hard to assess how much revenue it will generate after being launched. Untapped will also need to add marketing and sales team members to ensure customer acquisition. Lastly, the product is not highly defensible. Both impact investing and emerging market investing are crowded markets. Well-funded competitors could find it easy to replicate what Untapped Global is doing. 

Bearish Outlook

Untapped Global is building a platform that focuses on investing in the emerging market (EM). This business model carries a lot of risks. There is evidence showing that the success of the EM financial market does not always last long. EMs are more volatile than economies in developed countries due to factors such as political corruption and vulnerable currencies.  The big question is whether investors would want to take on these risks for the 3% to 8% return they can get with Untapped instead of investing somewhere else. 

Another risk is product scalability for Untapped Global. Investments in global companies are hand-picked by Untapped Global’s on-site team. Although this ensures a high-quality investment, this model also means the company might be slow in expanding beyond the countries and companies it has been working with in the past decade. 

Bullish Outlook

Untapped Global has proven its product-market fit even before launching its product that targets retail investors. The company has been able to generate more than $1 million in annual revenue with a 40% monthly growth rate from accredited investors. The company works directly with local entrepreneurs in developing countries and collects real-time data to track all investments it makes. This adds a layer of security when investing in the emerging markets (EMs). 

Even though the EM economy is uncertain, it is expected to outperform developed countries. The annual GDP is forecasted to grow by 5.5% for EMs, compared to 3.5% in developed countries, for 2021 to 2023.

Although Untapped Global has no product yet, it has more than 15 operating partners in different countries. The company has already established a network and a good reputation internationally, which should make it easier for it to attract new entrepreneurs and investors over time.

Executive Summary

Untapped Global is a financial technology (fintech) company that is building a Smart Asset Financing platform. This platform will allow retail investors to invest in diversified companies in the emerging market (EM) in exchange for a return during a time period the investors choose. Untapped will track all investments in real time, which lowers the risk for its customers. Although the company does not have a product yet, the company has been generating revenue due to its investment in foreign companies through its accredited investors network. The company raised more than $1 million from accredited investors, which shows there is an interest in the platform. The founder and co-founder of Untapped Global, though they have no exits, have vast investing and entrepreneurial experiences, especially internationally. The market opportunity is large and growing, and Untapped Global’s valuation in this round is appealing for investors.

Investing in a platform for EMs is potentially lucrative but volitalile. The economies of these countries are usually uncertain, and the COVID-19 pandemic has made them more unstable. Untapped Global has also not launched its platform yet, which means it’s hard to know how much traction it will gain from retail investors. Not all risks of investing in EM can be forecasted, so the company has to find customers who are willing to take high risk for a 3% to 8% return. Although the platform’s mission is laudable, it isn’t particularly defensible. There are many other major competitors in both impact investing and EM investing that Untapped will need to prove itself against. The company will likely have a hard time acquiring customers and scaling its product due to its lack of a sales or marketing team. Although Untapped Global might be a good opportunity for those looking to make a real social impact and support local entrepreneurs, it might not attract customers who want to invest in EMs to build wealth. Therefore, Untapped Global has been rated a Neutral Deal.

For questions regarding the KingsCrowd analyst report for this company, please reach out to support@kingscrowd.com.

Analysis written by Yasmin Sharbaf, December 23, 2021.

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Untapped Global on Wefunder 2021
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Platform: Wefunder
Security Type: SAFE
Valuation: $14,000,000

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