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Dec 29, 2020 16 tweets 3 min read Read on X
0/ Thoma Bravo just filed a $900M S1 for a SPAC entitled Thoma Bravo Advantage.

They've executed 270 software transactions & in '17, '18, and '19 were named the top performing buyout firm based on all funds raised from '05-'14; so this is a notable new entrant. Image
1/ They talk about extending their expertise in the public market, "We believe there is a robust pipeline of high quality software companies that are both ready to take advantage of the opportunities that the public market has to offer & would benefit from partnering with us."
2/ They also provide some macro data- "The overall enterprise software market, estimated to be about $477B in '19, is anticipated to grow at a 7.9% CAGR through '24. There are currently ~990 software companies w/ post-money valuations of $1B+ which is their relevant pipeline
3/ They quote an IDC metric estimating the size of the SaaS market to be $184B in '19 & growing at a ~15.4% CAGR through '24; while highlighting 39 SaaS IPO's since 2018.
4/ Since '01 the firm focused almost exclusively on software, making investments in ~80 software companies, representing ~$65B of enterprise value, & their portfolio companies have invested in about 195 add-ons to these platform businesses, representing ~$14B of additional value
5/ "Accelerating global digitalization of businesses & the shifting “work from anywhere” environment are reinforcing the critical nature of assets in this sector, & proving the resiliency of such assets. Software companies continue to disrupt traditional enterprise-focused
6/ industries at an unprecedented pace, taking advantage of new technologies to drive productivity in ways that were not previously possible. In addition, the proliferation of cloud technologies is enabling these businesses to scale faster and at lower costs than ever before.
7/ As software companies change the way traditional business is done, they are positioned to benefit from significant value creation. However, so far, the preponderance of that value creation has been captured by the private markets."
8/ This is a trend both Thoma Bravo & Vista have spoken about at length...that ~94% of software companies remain private.
9/ "Industry trends are converging to increase both the size of individual investments and the number of potential software investment opportunities. The shift to cloud technologies has allowed new entrants to grow extremely rapidly, gaining scale & attractive unit economics
10/ earlier in their company lifecycles. Acquisitions have allowed software co's to gain additional customers, products & services, as well as the associated revenues of those businesses, while avoiding some or most of the operating costs when integrating them into existing co's.
11/ There are significant benefits to companies being publicly traded during their growth stage, including having access to capital markets and a currency for potential acquisitions, as well as increased brand awareness."
12/ This is perhaps the most important point. Given how well SaaS co's have traded YTD these companies should be able to utilize this currency to be acquisitive. With the right investors you can execute a PE style roll up much more effectively publicly.
13/ They highlight a few strategic points for a business combination excluding: (i) Market Leading Software franchise (ii) Strong momentum & a differentiated growth opportunity (iii) High ability to achieve operational improvement (iv) High proportion of revenue from predictable,
14/ recurring revenue (v) Strong management team (vi) Fragmented market with near-term inorganic growth opportunities and (vii) Sensible valuation.
15/ If 2020 was the year of the SPAC this was a fitting way to cap it off with one of the top PE firms regardless of asset class joining the party.

This should be a sign to all that the SPAC vehicle of pre GFC has changed & YTD has attracted some of the highest quality sponsors

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More from @JSCCapital

Sep 26, 2022
0/ In a podcast with Druckenmiller @DavidNovakOGO coined a few "Drucks Nuggets" advice that he has given over the years & had him extrapolate on it:

1. Do not invest in the present. Always imagine where the world will be in 18-24 months and invest for that.
1/ 2. Put all of your eggs in one basket and watch that basket carefully
3. Invest & then investigate
4. Look at leading & lagging industries (e.g., market internals such as housing, retail, trucking)
5. Be imaginative of what can go wrong (and what can go right...pick up change)
2/ 6. Be dispassionate about decisions.

Druck echoed similar sentiments to his Palantir interview where he says this is the hardest macro environment he's ever encountered to try to have any confidence in a forecast 6-12 months ahead.
Read 9 tweets
Nov 29, 2021
0/ Last month JPM published a piece on payments entitled "Payments are eating the world" introducing their "POWER+" framework.

These 5 themes (& 20 micro themes) are responsible for ~$54T of the ~$240T in global payment flows:

Platforms
Online
Wallets
Embedded
Real Time Image
1/ When looking at the opportunity for FinTech / Crypto to disrupt banks there's the view that payments are a "solved" problem despite a ~$2T+ rev opportunity

Jamie Dimon notes JPM moves $8T/day across 52M payments of which ~98% is same day & 78% is real-time. Image
2/ JPM pegs global payment volume for platforms / super apps at $36T ($32T in China & $4T ex-China).
-The avg adult has 80 apps on their phone but uses 9 daily
-Super Apps aggregate complexity into a single destination & embed payment capabilities enabling txs w.o leaving the app Image
Read 16 tweets
Nov 1, 2021
0/ @nubank filed their F1.
-They have 48.1M users as of 3Q21 w/ a NPS of 90+, adding 2.1M new customers / month on in 3Q21 & 80--35.3M MAU (73%)
-They are the 1st credit card or bank account for 5.1M+ users & have 1M+ SMEs.
1/ They position themselves as a better solution for consumers & SME's across "Five Financial Seasons":
-Spending (CC, Mobile Payments, Rewards)
-Savings (Personal / Business Acct)
-Investing
-Borrowing (Personal Loans)
-Protecting (Insurance) Image
2/ Not only do they have 48.1M users but they are the primary bank account for 50%+ of their active consumers who have been with them for 12+ months. They have 28% of the Brazil population age 15+ (and have been rated the #1 Bank in Brazil by Forbes each of the past 3 years).
Read 16 tweets
Sep 10, 2021
0/ Yesterday was $AFRM's 3rd earnings call as a public co but @mlevchin treated it like Day 1 articulating the vision for AFRM to "unbundle the credit card," discussing TAM, product roadmap, the 10-year+ vision, & recent trends / consolidation

Worth a listen given BNPL debates.
1/ For FY21 $AFRM facilitated 16M+ transactions & $8B+ in GMV for 7M users with merchants +5x YoY

Initial FY22 guidance of $12.75B of GMV vs. high-end Street at ~$12B (doesn't include $AMZN, or Debit+, modelling $PTON (-30-35%) YoY vs. Street +, $SHOP is implied at ~$600M-$1.0B.
2/ He spent a lot of time talking about the @Returnly acquisition & looking at other ways to add value for their merchants.

He highlighted their merchant marketplace (~1/3 of FY21 tx's occurred here)
Read 12 tweets
Aug 31, 2021
0/ @patrick_oshag had former Notre Dame CIO Scott Malpass on the pod, Malpass took ND's endowment from a 3 person team (a priest, a receptionist & himself) & $425M in 1989 to ~$14.0B when he stepped aside last year w/ endowment spending going from $19.5M to $425.7M over that time
1/ He became CIO at 26 w/ 2 years of work experience & is one of the more underappreciated capital allocators of the last 3 decades.

Malpass was one of the first CIO's to embrace the Endowment Model having a greater equity allocation, diversification, & investing into alts.
2/ He thinks there are maybe ~40-50 institutions in the world that can implement this model successfully (which is why most endowments underperform) as it requires significant resources, access, continuity of the team, buy-in from the capital base, etc...
Read 13 tweets
Jul 23, 2021
0/ We had Druckenmiller give another warning this AM about more gov't spending.

"In Spring of '20 economy was in a black hole & it was the most uncertain period [Druck] has seen in his lifetime. Congress did the best they could do & spent $2.3T. Fast forward 5-6 months & we
1/ didn't have a great depression, it turns out we had the sharpest V recovery in history.

By early Fall the 30 year trend in retail sales was above trend, this took 5-6 months, in the Great Depression it took 10 years, post GFC it took 5 years, this was a very different animal
2/ than precedent economic periods. It wasn't until after retail sales were back to trend that $575B of the $850B of transfer payments were spent. Over 1/2 the $5.2T spent on COVID was after economic crisis was already over."
Read 8 tweets

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