0/ We've seen a lot of activity around the private market "exchange" race w/ $NDAQ spinning out NPM (alongside $SIVB, $C, $GS, & $MS) @cartainc launching CartaX, the @Forge_Global / @sharespost merger, etc

Forge is going public providing the first glimpse at #s in the ecosystem
1/ They quote $10B in volume inception to date across 19,000 trades (avg trade size of $526K) with 639 institutions, 123K accredited investors & ~399K registered users.

As of June they did $3.0B LTM, with $1.8B in '20 & $1.7B in '19 with a net take rate of 3.1% LTM
2/ They provide some good data about the private market landscape:
-Median age of tech co at IPO 4 years in '99 to 12 in '20
-Median valuation up from $493M in '99 to $4.3B in '20
-There are 762 "unicorns" with $2.4T in "market cap"
-Private market AuM is now at $13T
3/ They highlight the discrepancy between private company share turnover vs. public equity turnover (0.2% vs. 126%)
4/ From a trading perspective @Forge_Global offers single "primary" & "secondary" transactions (matching buyers & sellers, w/ company ROFR process), non-tender offer programs, tender offers, etc...
5/ In June over the LTM ~51% of their volume was institutional vs. 49% individuals. This skews higher than $COIN retail volume % which was 31% last Q.

Their take rate of ~3.1% vs. $COIN blended of 0.42%
6/ Forge also offers a custody product w/ $14B in AuC including $600M of cash across 1.9M customer & "partner customer" accounts.

They generate $497 per account.
7/ The deal values the co at a $2.0B market cap / $1.6B EV on $72M in '20A revenue / $123M in '21E revenue.

Big delta in a business like this vs. $COIN and other crypto exchanges that likely come public in the next 6-12 months.

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More from @JohnStCapital

15 Sep
0/ $AFRM CFO Michael Linford on $V: "You can't look to V & say V is a loser here: (i) We ride V rail for a meaningful number of our transactions, and (ii) We receive repayment for 45-50% of our transactions on debit card anyway so they are recapturing that"
1/ "The networks are critical partners for us today. The virtual card product runs on $V, all that virtual card revenue is our cut of a V transaction."

The $AFRM network isn't exclusively reliant on theirs nor is it independent of theirs.
2/ On their view of underwriting. They are focused on their Variable Profit # (Rev-Transaction Cost); they can handle a lot more losses if there's more revenue & vice-versa. "$PTON users are generally higher credit quality but don't confuse credit with income as it's not as high
Read 11 tweets
10 Sep
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
8 Sep
0/ @Adyen's Head of Group Finance spoke w/ UBS about all things Adyen. Growth YTD has been driven predominantly from existing merchants (he called out marketplaces & vertical software companies specifically) while noting some take rate decline due to their tiered pricing model
1/ No surprise & we're seeing this in all the spending data but two areas where the pandemic affected their merchants negatively:
(i) Travel
(ii) In-Store Retail / In-Store Volumes in general
2/ He spoke a lot about their issuing initiatives & what he believes differentiates the Adyen platform:
(i) Issuing in a global nature- clients can issue in Europe, NA, etc... on the same tech stack vs. most competitors building one region at a time
Read 7 tweets
1 Sep
0/ August was another good month for risk assets across the board w/ $SPY +2.9% (7th straight month of + performance, 8 straight months has happened in 14 calendar years), $QQQ +4.0%, $34B in VC funding, $BTC +13% , $ETH +34.9%, $SOL +304.3% & NFT's (punks, rocks, degen apes) +∞
1/ Over the past 10 years September has been the worst month of the year for $SPY (1 of 3 avg negative months w/ avg / median performance of (0.92%) / (0.18%) w/ 50% negativity. Looking at skew the mkt pricing in some fear:

SPY 5% OTM Oct Call 9.7 vol
SPY 5% OTM Oct Put 18.0 vol
2/ Looking at $BTC Sept is the only negative month of the year (Bbg has an avg return of (6.62%) actual avg return closer to (6.1%)) / median of (6.5%) with just 40% positivity.

There hasn't been a positive Sept for $BTC since 2016.
Read 7 tweets
31 Aug
0/ The $TOST S1 is showing the way for other Vertical SaaS companies focused on embedded payments.

Looking at revenue & gross profit contribution payments is actually the lion share today, with subscription revenue of ~10%, while hardware & prof services are loss leaders re: GP
1/ Their net take rate for 1H21 is 55bps (up from 48bps in 1H20); this despite gross take rate down slightly.

This isn't unique to $TOST & we've seen a similar phenomenon with $SQ's #s showing take rates trend higher YoY & vs. '19 w/ more debit usage & online / CNP transactions
2/ Despite the pandemic if we look at their GPV on a quarterly basis its largely grown QoQ every Q except for 1Q & 2Q20.

We're also seeing GPV / ARR per location trend higher.
Read 11 tweets
31 Aug
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

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