Our investment thesis in HETIKUS
Our very first Regtech investment in the Saas platform Hetikus, the first all-in-one solution for compliance issues for financial markets, and we cannot be more thrilled about it!
A couple of days ago, I read in CNBC that Twitter and Facebook could be facing billions in fines due to GDPR. A few months before that, I was flipping through Bloomberg and saw that G&S was facing penalties of up to 45M for MiFID II misconducts. If big corporations are falling, then who is safe? That question does not have an easy answer as GDPR, MiFID II, AML regulations are just the tip of the iceberg.
Did you know that more than 120 new regulations will have to be implemented in the EU between 2018 and 2022 (according to a KPMG paper)? Astonishing, I know! This same paper also states that the main pain for 80% of banking executives in Spain is the Finance Regulation.
Investing in a company such as Hetikus is where our pride kicks in as well as the need to be part of the change in mentality when it comes to compliance issues.
Hetikus is the first Regtech all-in-one modular platform that addresses regulatory challenges and facilitates the delivery of compliance requirements. The solution is created to guide legal changes within organizations in highly regulated markets and financial institutions.
Having reached this point, you’ll probably be asking yourself: Ok, that sounds good but… why Hetikus? I’ll try to give a straight-forward answer with three bullet points:
- Modular vision: During our first meeting with Javier (CEO and Founder @Hetikus), he surprised us with an in-depth knowledge of the problems of the industry. It is, of course, something you can expect from someone that has been in the sector for 7+ years, but his approach to the solution was inspiring. A set of modules that communicate between them in order to generate a flow of information and processes within the company sounded like something that Inveready wanted to be a part of. A clear example of these situations is how hard it is for companies to find the balance between KYC and Data Privacy new regulations (MiFID II vs. GDPR).
- Proven implementation capabilities: Our second surprise with Hetikus came when we first visited their offices to discuss the development status of their product and their roadmap. The plans and implementation tool they had in place to organize their development were meticulously done, which proved to us their will and power to execute their future planning. In just a couple hours they showed us in detail how they achieved the development of the first module on time and with limited resources. The possibilities for them to grow and their product setting the norm for other companies was endless, and all they needed was a bit of financial push to make it happen!
- Market opportunity: As I said before, the level of complexity in the regulatory market has boosted in the last decade and requires disruptive solutions to reach the market. Some figures that prove it: (i) Global regtech investment has grown from $923 M in 2014 to roughly $4 Bn in the first half of 2019, (ii) the current value of RegTech industry within the banking and financial sectors is estimated over $200 Bn and (iii) more than $300 Bn in fines have been paid by USA banks since 2008.
Having said that, this poses another question why is Inveready backing a project in a pre-launch phase? No need to worry, the answer is simple and threefold:
- First Regtech investment: In Inveready we’ve been seeking for the ideal investment in the regtech industry (it might have something to do with the focus on processes from one of our Managing Partners 🤣).
- Chance of adding value since day 1: As a financial institution, Inveready understands the pains of the sector and has the connections to help the Hetikus team in product development, product-market fit, and go-to-market strategy. We strongly believe that joining an early-stage project in this industry is an opportunity to bring to the market the ideal product for financial institutions.
- Rick-profitability ratio: We know how overpriced global SaaS projects get once they get after the first months with growing MRR. For that reason, we see the best momentum to have an attractive risk-profitability ratio in early-revenue (or even pre-revenue 🤯) projects with top-tier teams and the confidence of achieving a short time-to-market.
To sum up, great vision, a fantastic team, and a huge market to conquer. Stay tuned if you want to be up to date with Inveready’s investments. ⚠️SPOILER ALERT! ⚠️ There are a couple more to come in the upcoming weeks, so stay tuned.
