We fixate on businesses where the steady state unit of value lies in a core software – not commodity financial – product. While financial products carry little terminal value in a vacuum, they offer considerable utility as an enabling mechanism in service of best-in-class software.

On Software

Our raison d'être is rooted in the idea that (a) software – above all else – drives user captivity and (b) absent user captivity, a business has no long-term compelling or sustainable right to distribute financial products.

Therefore, how software – not financial services – **functionally drives user captivity is, perhaps counterintuitively, the lens through which we evaluate businesses.

A captive user base comes together when software:

1. Convenes users – internally within an organization and externally between counterparties – into a single digital platform.
2. Coordinates and automates critical workflows that are often complex (multithreaded, offline) and manual (labor-intensive, time-consuming).
3. Uncovers critical ****insights from said workflows, which feeds back into and improves on the role of software as a coordination and automation layer.
4. Compounds all of the above; software eventually functions as the de facto system of record when it reaches a critical mass of users and data.

On Financial Products

FinTech businesses are most exciting (and valuable) when financial products enable best-in-class, user-captive software.

Financial products can enable software in three distinct ways:

1. Pricing & Monetization. By layering financial products typically priced against transaction volume over software monetized via recurring fees and usage, great businesses balance the relative predictability of recurring revenues with the upside of a transaction-based model.
2. Engagement & Retention. Once software becomes the system of record, users have an incentive to transact directly in-platform – in turn facilitating more engagement. Owning the transaction layer also unlocks an opportunity to distribute ancillary financial services that reinforce user captivity.
3. Acquisition & Qualification. Financial products occasionally function as the initial hook to software adoption. The data required to underwrite and verify users also has a second-order effect on improving the core software offering.