KingsCrowd

The Market Opportunity

Over the past decade, the world of alt investing (e.g., startups, real estate, credit, collectibles, art) has been completely revolutionized by technology, regulatory changes, and amazing companies like Wefunder, Yieldstreet, Fundrise, Rally Rd., and many others.

The $13 Trillion in alt assets (Source: Prequin) that historically have remained offline and often only available to institutions and ultra-high-net-worth is beginning to become available to the masses in a digitally native setting. We sit at the apex of this market, serving all end constituents with data-driven solutions.

This is one of the largest new financial markets that will ever be created from the ground up during our lifetime.

We envision a future where investing transcends traditional public markets. Individuals will seamlessly diversify their portfolios with startups, real estate, high-end art, and more. Investors in the next decade may think nothing of trading into and out of everything from startups to hotels, to vineyards and farms, to Picassos and Ferraris. 

The traditional 60/40 stock/bond portfolio of the past is quite simply that - a thing of the past! In the future, we envision a world where individuals may have tailored portfolios that look more like 50/20/15/5/5/5 across stocks, bonds, real estate/debt/land, startups, digital assets (e.g. crypto and NFTs), and unique assets (e.g. art, wine, collectibles, music royalties). 

The KingsCrowd Vision

At KingsCrowd, we started leaning into this bold new vision of investing over 5 years ago. We started by building the premier data company serving the alt investing sector, with nearly 100% coverage of Reg CF and Reg A+ markets and over 8,000+ tracked raises to date. 

Our ultimate goal is to own the world's private market data as all global asset classes become digitally native over the next 10-15 years. We are building for the long-term with the vision of being the Bloomberg of everything outside of public equities - such as private companies on Wefunder, debt on Percent, real estate on Fundrise, and other alts on Yieldstreet.

KingsCrowd is the one-stop solution for investors, industry insiders, and operators to thrive in the evolving alternative investment landscape.

In our worldview, in 10 years, Wall Street professionals will seamlessly use KingsCrowd to get the data they need to trade into and out of private alts and for individual investors to access KingsCrowd ratings directly in their brokerage account to make informed alternative investment decisions. 

Despite recent tech market turbulence, over the past two years we have worked diligently to fully realize phase one of our bold long-term vision that we see playing out in four key phases.

In Phase 1, we built all the components of what we look at as our long-term moat, which is centered on our data flywheel.

Our data flywheel fuels growth and separates us from our competition, unlocking new monetization opportunities. More data points on companies and alternative assets directly translate into greater value for our investors.

As investors interact more with our tracked data - by adding more companies to their portfolio, sending us more feedback on companies they've invested in, and providing more investor sentiment around where they are bullish and bearish - this enriches the breadth, depth, and accuracy of our dataset.

As our data from companies and users continues to grow, we also become more important to industry players - like founders raising capital and the funding platforms themselves - which leads them to share more data with us.

All of this creates a powerful network effect: greater data attracts more industry stakeholders while simultaneously improving our data quality and monetization potential.

Building for an AI Future

As AI and Large Language Models (LLMs) continue to evolve and proliferate, we believe we’re entering a pivotal moment in history for data companies. 

The race between giants like OpenAI and Google and the burgeoning world of open-source LLMs signals a future where we believe these technologies will become commoditized.

Rather than the underlying AI technologies themselves, what will truly set future AI applications apart are the datasets behind them. And we believe KingsCrowd is uniquely positioned to capitalize on this opportunity.

We've designed our data infrastructure with scalability and AI applications in mind, enriched by an extra layer of insight from our expert team of analysts. This data depth and expertise blend ensure our dataset is unparalleled and extremely hard to replicate.

Our unique dataset gives financial institutions, hedge funds, and sophisticated investors a competitive edge and powers our AI-driven tools and processes. These tools enhance investment screening and recommendations for investors, founders, and platforms alike, making KingsCrowd well-positioned in a future where AI is ubiquitous.

The Product

This data flywheel has enabled us to create a product suite that serves the following customers. 

Retail investors: We provide retail investors with a robust suite of tools that better enable search, diligence, and management of their startup investments.  

• Search: With our powerful deal search tools, we make searching the 50+ platforms and hundreds of deals available at any one time just a few clicks away. With our advanced search filters, you can find and identify investment opportunities that fit your investment thesis in seconds. You can also follow companies you are interested in, save your searches, and create CSV downloads for those who want to perform even deeper market analysis.

• Diligence: We provide quant ratings on every active Reg CF and Reg A+ equity opportunity available to investors. Our detailed rating breakdowns are powered by 300+ data points on each company. The algorithm has been developed over 5+ years by former VCs and data scientists, with early data showing promise!

• Manage - Our portfolio management tools allow you to track all your investments across Wefunder and other platforms in one place. You get in-depth analytics on your portfolio companies and updates when your companies list new funding rounds or have an exit/failure event. Our valuation tracker tools can also help you track investment returns over time. Our portfolio tool is the most robust tracking tool in the industry.

• One-Click Diversification - We built an ETF-like fund product with KingsCrowd Capital, a data-driven fund exclusively investing in deals on platforms like Wefunder. One investment exposes investors to 100 of the top-tier companies utilizing our proprietary rating algorithm. In time, we see an opportunity to expand to create a suite of themed funds (e.g. female founder funds, impact investing, etc.) and alt-asset funds (e.g. real estate funds). Our first fund has over $1.6M AUM and sold to 57 LPs in just a few days. We have made 25 investments out of the fund in 2023 and plan to continue to make 25 investments out of our first fund through 2026.

• Education - We also have two of our industry's leading podcasts and newsletters! We host the only quarterly demo day series that brings together the best founders raising across all platforms to live pitch our amazing investor base with hundreds of attendees and industry-leading sponsors. 

Platforms: As the industry's definitive data source, we help many of the top funding platforms navigate the online private markets. Our dashboards provide real-time insights into competitor performance, issuer funding trends, and broader market dynamics. Our data and insights are so respected that top platforms regularly cite them, solidifying our position as the market's trusted authority. 

Founders: We understand the unique challenges and complexities founders face when raising capital online. At KingsCrowd, we have made two strategic moves to serve founders with data-driven solutions.

First, we have leveraged our database to create a founder valuation and market comps tool. This tool allows founders to learn about where to list, how much they can expect to raise, and what appropriate deal terms of similar companies have been. We also facilitate platform introductions if there is a founder-platform match made through our program.

Additionally, we acquired a majority stake in LawCloud (Co-Founded by Doug Ellenoff, a leader of the JOBS Act) and rebranded it as raisepapers.

The raisepapers brand is focused on creating more data-driven solutions for founders, starting with our core offering: the easiest-to-use, lowest-cost solution for filing all needed SEC forms to raise capital online.

Leveraging KingsCrowd's extensive data on these filings, we are uniquely positioned to help founders effectively and efficiently file all necessary forms to raise capital online in a more cost-effective, streamlined manner than traditional lawyers.

This strategic approach allows us to get even closer to the data and to create long-term solutions around investor relations. We aim to drive greater transparency and data-sharing with the growing investor community, creating a powerful feedback loop within these emerging markets.

Institutions: We have numerous institutions interested in or already buying our data. One of our first institutional client channels are universities. Universities buy our financial data to power research about these emerging online private markets. We have served PhDs and Professors at universities including Duke University, Notre Dame University, Auburn University, The University of Michigan, Indiana University, Howard University, University of Arkansas, and more. 

In looking at Bloomberg's business, it appears they do tens of millions of dollars in sales to universities yearly. We think we have a similar long-term opportunity. We have also had other institutions, such as a hedge fund, invest in KingsCrowd with the hope of tracking liquidity and other types of data as secondary markets evolve.

The Business Model

We're emulating Bloomberg's highly successful monetization strategy. The beauty of our data-driven model lies in its scalability: we can tailor insights from the same core dataset to serve diverse client segments – institutions, asset managers, and Wall Street players – as the online private market expands.

In the future, we anticipate a surge in demand from institutions seeking to offer alternative investments to their clients. For instance, Public.com acquired Otis in 2022 to offer the ability to invest in alts like movie rights. As more brokerage firms and asset managers look to offer alts, we can sell our ratings and fund products to firms, like Public.com, that want to provide alt research tools and fund products to their clients. 

We also see growing interest from hedge funds and asset managers looking to diversify out of public equities and into alternative assets. Our unique data and insights will be a premium commodity for those seeking an edge in this emerging market landscape. At this point, we look to provide data-powered solutions to these types of clients at a much higher premium than our current retail-focused offerings. 

The Competition

In the online private investing data providers field, we stand out with our unique and differentiated approach. Our long-term vision prioritizes solving real pain points for all stakeholders in the market, from investors and founders to platforms and institutions. We achieve this through a highly scalable and mature business model, built on a robust data flywheel that fuels continuous improvement and innovation. 

While competitors may offer fragmented pieces of our offering, they lack the cohesive business strategy, brand credibility, and the proven track record of KingsCrowd. KingsCrowd goes far beyond, providing deep insights, user-driven feedback, and a comprehensive view of the private markets landscape.

The Secret Sauce - Our Proprietary Data

Our data flywheel delivers unmatched value because it's built on an exceptional foundation. So how do we create our data, and where does it come from? 

We generate over 300 data points for every company we track.

Our data is compiled from a multitude of sources including: SEC form filings, funding platform APIs, historical performance that leverages our database, third-party databases (e.g. for market sizes), our own analyst insights (e.g. founder experience), and invaluable user-generated data, such as our proprietary crowdsourced bullish/bearish ratings.

Traction

Data-driven businesses typically face two initial hurdles that we have had to overcome.

The first obstacle was gathering enough data to make anyone interested in what you are doing. For instance, when I started KingsCrowd in 2018, there were only a handful of yearly deals, and we had little data history. 

The second obstacle was building initial brand trust and credibility. When I started this business, incessant naysayers asked me why they should trust KingsCrowd. We were nobody, and people treated us that way. 

After investing millions in building our data and ratings platform and taking the time to nurture our brand across the industry with investors, platforms, and founders alike, we have emerged as the most trusted, well-regarded data brand in our industry. That, along with our 5+ years of highly accurate historical data on a fast-growing market, has made our core dataset a highly valuable commercial asset. 

Over the last year, we have focused on commercializing our business across all key segments we see in the near term. We have shown an ability to grow revenues very well despite a challenging market environment. Last year, we grew by 60%+ while reducing overhead by 85% (unaudited, cash-based accounting) on our path to achieving break-even by late 2024/early 2025. 

We have built traction around data, brand, users, and now revenues, cementing our product market fit and sustainable growth trajectory.

The 2024 Strategic Plan And Uses of Capital

In 2024, we have three focus areas for KingsCrowd:

1. Top line growth: In 2023, we generated 50% of our revenues from business lines that didn’t exist the year before, including data sales, founders tools, and sponsorship/events. We found a clear product-market fit with these segments. Now is the time to lean into these and double and triple down where we see growth opportunities. 
2. Product Excellence: Our focus is on improving retail investor customer retention by delighting customers with a best-in-class experience. More importantly, customer feedback has clarified that we need to help investors beyond just making investment decisions. This includes adding new ways of tracking your investment performance over time and providing resources like a tax tool for tracking gains and losses in a simplified way.
3. AI automation and efficiencies: In 2023, we launched AI-enhanced analyst reports powered by our proprietary database, which has enabled us to provide more market coverage with fewer resources. Moving forward, we plan to continue to find internal efficiencies utilizing AI-powered tools and internal items we are building to make our data processes scalable and cost-effective. This focuses on enhancing data quality and helping us keep costs low as we drive profitability.  

With these focus areas in mind, we are raising capital for four key purposes: 

1. Onboarding VP of Business Development: In January, we welcomed Mike Vandenbos to the team as VP of Business Development. Mike will focus on growing our sponsor partnerships, data sales, and build out our educational resources for founders and accelerators. KingsCrowd will continue to build community and startup ecosystems by growing our virtual and live event program, which right now includes our quarterly demo days. We will also provide a marketing/sales budget to support our Business Development efforts. 
2. Tech budget: Invest in more tech staff/consultants to support tech investment efforts to improve the product, create new product capabilities, and create more AI-powered solutions to enable better scaling of internal processes.
3. Bolster balance sheet: In our efforts to achieve profitability, we not only want to hit profitability, but we want to have a strong balance sheet to ensure the business's long-term health.  
4. Leave room for acquisitions: We think opportunities are beginning to present that will provide room for future acquisitions that may accelerate our ability to enter new asset classes or geographies. Having a strong balance sheet can assist in closing these potential deals.

We believe focusing on the above areas will allow us to spend the next two years leaning into Phase 2 of our journey. By leaning into profitable growth will allow us to decide when and how we raise future funding at a desirable time and maximize future shareholder appreciation.