Episode 002 - FOCUS ON FINTECH Series: Federico Baradello, Founder & CEO, Finalis (1st modern broker-dealer & priv. M&A platform with customizable deal technology)

Distilling Venture Capital

Introduction

• Welcome to Distilling Venture Capital. I am your host, Bill Griesinger
• Distilling VC is a visionary podcast that provides an insightful and informed view of the key trends affecting the VC and tech startup world, including Fintech. My mission is to cut through and go beyond the hype that tends to dominate the tech and VC landscape. And provide you with information you can use.

Episode Introduction:

• Today’s Episode is part of my Focus-on-Fintech Series
• As background, When we talk about Fintech, Financial Technology, many in the sector think of technologies being deployed by startups in the areas of payment solutions (Transferwise, Square, many international players), peer-to-peer lenders (Lending Club, FundingCircle, Prosper, SoFi), digital banking – neobanks (many by non-banks), wealth management – robo advisors (Robinhood), AND also insurance-tech and real estate-tech, where the processes in those industries are being automated with technology, blockchain, smart contracts, AI, etc. There are many examples…
• I have the pleasure today to be joined by Federico Baradello, the Founder and CEO of Finalis. Finalis is a visionary company that is revolutionizing the way private deal making and M&A gets done. Thank you Federico for joining me today…
• One of the things that intrigued me about your business model was when I read a post you published near the end of March I happened to see on Linkedin. You brought into focus and pointed out statistics regarding the private M&A industry that I had not really paid attention to before as a huge Fintech opportunity…
• You drew the comparison and contrast of how there has been very little VC investment to bring technology and innovation to the enormous broker-dealer/M&A deal process, unlike what has occurred in Real Estate Tech and Insurance Tech, which are similar in size to private M&A from a commission/fee revenue perspective
• US Totals Invested in Fintech:
• • 2019 US Fintech investment - $59.8B; 2018 was $58B
  • 2019 Real Estate Tech ~ $15B
  • 2019 InsureTech ~ $12.1B
• Federico explains and discusses the reasons why the Investment Banking-private M&A business has attracted so little investment dollars (< $50 million) compared to the large sums raised by InsureTech and Real Estate Tech.
• You’ve pointed out that private deal-making is broken, noting that $4T+ of M&A and private placements are transacted operating on 1990s technology
• I thought it would be useful for listeners, [in the context of this dearth of tech/innovation spending in priv. deal M&A,] to take a few minutes to talk about the idea for and creation of Finalis.

The Finalis Business Model & Business Model Characteristics

• You’ve described the Finalis model as a “broker-in-a-box” solution… and, the first scalable BD that automates and brings together streamlined, efficient processes for Compliance (FINRA, SEC) as well as deal-flow technology solutions…
• Solution – “Lease a broker-dealer-instead” model
• Create technology to automate the process rails for priv. M&A transaction from beginning to end – Federico Explains…
• How did your prior experience as a Deal Attorney and your understanding of the existing incentives native to I-banking business provide you with the vision for creating Finalis?
• • It’s an execution-driven business
  • Paper the process – law firms get paid by the process
  • I-Banks are in it for the commission %, so incentivized to reduce costs and get to the close
  • Thus, not inclined, incentivized to leverage technology; there is a resistance to change that gets in way of the closing processes…

• In a prior conversation, you described Finalis’ Mission as, to “Empower Deal Makers” and your Vision as, to be the “world’s largest distributed I-bank.”
• Also, to become the “first scalable broker-dealer” in the private M&A industry. Can you elaborate on what this vision/mission means and how you arrived at it based on your direct experience doing and documenting deals?

Growth Prospects for the Finalis Business?

• Huge addressable market; How do you define the addressable portion you go after initially and strategies for executing?
• Private market deal-making was booming pre-pandemic and you’ve described the enormous size of the private deal M&A industry ($4T+). Do you have a view or prediction regarding what is in store for this industry post-COVID19?

Competitive Advantages

• Describe the competitive landscape, relative cost/pricing structure and how you leverage your expertise to bring a compelling value proposition to client firms
• Other competitive advantages, differentiation…

Closing Remarks:

• Company Name, Finalis; Federico provides an interesting account and story around where the name Finalis originated.

Contact Information, Finalis

• Those seeking additional information and wishing to learn more about Finalis can visit the firm’s website at, finalis.com
• Other ways to reach out and engage…

Thank you for joining me for this edition of DVC. I hope you found the topic interesting and it gave you things to think about. I am currently working on the DVC website. In the meantime, Please send questions and your comments regarding today’s Episode to: [e-mail]

Stay tuned for my next Episode in the Focus-on-Fintech Series where I am going to provide insights and real examples of the extremely hot Fintech market in Brazil; I’ll explore why it has been attracting record venture investment at a rapid pace. I’ll be interviewing a São Paulo, Brasil-based Fintech company that is at the forefront of this rapid growth – that also happens to be focused on the private investment market. Stay tuned. Thank you again and I look forward to joining you for my next Episode of Distilling VC.