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Capital Markets, Dude


#271
Boom-Berg

Published:

Jan 19, 2019


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Posted In:

Capital Markets, Dude

Published:

Jan 19, 2019


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According to a leaked memo, Bloomberg has reached $10b in annual revenue. Despite incredible scale, Bloomberg remains private and may never go public. How could that be?

The answer lies in the company’s history of growing profitably with little outside investment. Bloomberg never raised venture capital – instead selling a (highly priced) product for much more than it cost to produce. Profits enabled consistent re-investment, obviating the need for investors who might otherwise want liquidity via IPO.

In fact, the only outside capital on record (~$30m) came from Bank of America in 1985, 4 years into the company. However, BAML’s minority stake was eventually repurchased by management, leaving control and governance largely to Mr. Bloomberg.

With few outside investors, financial information has rarely leaked – making this $10 billion data point somewhat significant. Plus, we can take a fresh swag at what the company might be worth.

Factset ($9.3b enterprise value) has traded at 6-7x revenue over the last couple years, while Thomson Reuters ($38.8b enterprise value) has traded at 4 – 5x revenue. Conservatively, this would imply that Bloomberg is likely worth $40 - $70b. An even higher valuation could be warranted if Bloomberg is more profitable or growing faster than these peers.

So Mike has set the standard. But who will be the next dude or dudette of fintech?

Portfolio News


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Flutterwave and Visa launch African consumer payment service GetBarter - Congratulations to portfolio company Flutterwave on their partnership with Visa in bringing their new product, Barter, to market! Barter is an app that facilitates personal and small merchant payments across Africa, and will be distributed by Flutterwave’s existing enterprise clients. Read more

Boom-Berg


Bloomberg hits $10 billion annual revenue, and employees are set to cash in - According to a report published on LinkedIn by analyst Jennifer Miton, the $10bn milestone was thanks to the growth of Bloomberg's data and research tools revenue channels which outpaced the growth of its terminal revenue in 2018. Read more

Industry News


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Payments company Square launches debit card for small businesses - The MasterCard debit card will allow companies to spend funds from sales they have processed via Square’s payments systems as soon as they have made the sale. Read more

Short-seller Bonitas Research targets US-listed Chinese P2P lender - Short-seller Bonitas Research has attacked Beijing-based lender Hexindai, a US-listed Chinese peer-to-peer lender, accusing it of fraud/lying to investors about crucial performance indicators in the prospectus for its 2017 IPO on Nasdaq. Read more

The hot new job in fintech: someone to deal with regulators - After several high-profile run-ins with regulators, financial-technology companies like Betterment, Coinbase, Robinhood, SoFi and Wealthfront are all hiring for compliance-related roles at varying levels of seniority. Read more

Tim Cook calls for ‘data-broker clearinghouse’ in push for privacy rules - Apple CEO Tim Cook has once again called for a comprehensive online privacy law, writing an op-ed in Time Magazine where he says the Federal Trade Commission should establish a data-broker clearinghouse. Read more

What happens to robos in a downturn? A Financial Planning Q&A with Josh Pace, President of TCA by E-Trade, touches upon robos in a downturn, RIA channel growth, and the potential entrance of the large tech incumbents like Amazon into the WM space. Read more

The hottest cryptocurrency, Tron, rekindles memories of the Bitcoin bubble - Digital token, Tron, and its founder, Justin Sun, may be the ultimate "fake it till you make it story", using its appreciating currency to acquire assets such as BitTorrent and its 100m monthly active users. Read more

Jack Bogle, index fund pioneer, 1929-2019 - The FT's obituary for Jack Bogle, the founder of Vanguard who changed investing for millions of Americans and built a group that became $5tn investment giant. Read more

Hostile takeover effort emerges for Ripple - As Axios tries to point out, there is a growing crypto battle between decentralization purists and a newer generation who doesn't mind the presence of central companies like Ripple (or, coming soon, Facebook). Read more

BitPay says it processed over $1bn in crypto payments last year - US based crypto payments processor also raised $40m in Series B funding this year, and added notable new customers added in 2018 including Dish Networks, HackerOne, and the US State of Ohio who is accepting Bitcoin for taxes. Read more

Palantir posted nearly $1bn in 2018 sales - The unusual disclosure from Peter Thiel's normally secretive, private data and analytics startup has surpassed investors expectations, with half of the revenue coming from government agencies and the other half from corporates. Read more

Financings


Bond-pro - Tampa Bay based provider of Surety and Specialty Insurance software products and services raised $10m in growth equity from Volition Capital. Read more

First Data - Fiserv is acquiring First Data for $22b with an all-stock transaction of $22bn. A giant will roam the land that will allow Fiserv to provide a range of payments and fin services. Read more

HyperScience - NYC based middle and back office automation platform has raised a $30m Series B led by Stripes Group. Read more

ScaleFactor - Austin based accounting and payroll SaaS platform has raised a $30m Series B led by Bessemer. Read more

Xpansiv - San Francisco based commodity intelligence platform has raised $10m of Series A capital from strategic investors BP Ventures, Avista Development, S&P Global, and Energy Innovation Capital. Read more


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