Mozes Victor Konig Launches MVK Ventures SARL

Oftentimes, when an innovator has a great, financially sound business plan, getting to the next step of acquiescing needed funds shuts them down.  In other words, many start-ups don’t start up as they fail at the first hurdle.

Mozes Victor Konig launched MVK Ventures SARL in 2011 precisely for this reason.  He understood what it was like to be turned away from business bank loans and thus decided to put his investing and VC experience into MVK Ventures SARL.

MVK Ventures SARL today acts as the connecting guiding force between potential start-ups and banks such as HSBC.  With the experience of working with these financial entities, MVK Ventures SARL is able to work on the fiscal side, leaving potential entrepreneurs and their teams with time to focus on developing a solid business plan and product.

Konig sits with each client and discusses what option is best for them.  From borrowing money from friends and family (not advisable) to trading services, bootstrapping (for those with enough capital, again not the best idea unless one has a huge cashflow), a business incubator or the various bank loans such as term or SBA lines or even a microloan.

Mozes Victor Konig on Understanding Secondary Markets

MVK Ventures SARL – headed by Mozes Victor Konig – has recently found its niche in the secondary market.  Established in 2011 as a way of helping startup companies get funding, since its inception the firm has provided access to fiscal backing to many firms.

The secondary market – also known as the stock market – is a market through which investors buy and sell their own securities such as NYSE, NASDAQ, Euronext, Hong Kong Stock Exchange, etc. The main focus of secondaries markets are investors exchanging with each other, as opposed to buying and selling from the issuing entity. One of the main differences between primary markets and secondary markets is that the former’s prices are usually set ahead of time whereas the latter’s prices are the result of supply and demand.

Konig has encountered various benefits directing MVK Ventures SARL to use secondary markets.  One of the most obvious of these being that investors are able to profit well in a much shorter time frame.  In addition, for working with companies needing investments, the stock prices in secondary markets gives him an edge in how to most accurately appraise the firms.

There is for sure an untapped niche in this area.  MVK Ventures has managed to benefit from this while helping its clients.

Mozes Victor Konig on Start-ups and VCs

Working in the Venture Capital industry can be a great opportunity for the right person.  It is not for everyone (and thankfully there are a multitude of entrepreneurial options available for those for whom it is less suitable) but it is a good option for some.

CEO of MVK Ventures SARL Mozes Victor Konig has been working in the VC community for some years now.  Specifically in the start-up venture space.  This is unfortunately an oft-untapped category of the industry. For example, back in 1997 figures showed that out of the $10bn Venture Capitalists invested, only $600m (6 percent) went to startups. MVK Ventures SARL has been trying to redress this balance.

The VC industry has been able to work with those with tremendous talent who require capital to get their idea off the ground.  These wannabe entrepreneurs just need a helping hand and then they can make a successful business.  Companies such as MVK Ventures SARL – which has to date created 32 portfolio investments, 9 exits, and 4 unicorns – wants be a part of this process.

Investors Fled Stock Market in March

The end of March saw an exit of about $40 billion from US equity market funds in a move that the Institute of International Finance called “remarkable.”

According to a survey conducted by the organization that works with banks and financial institutions around the world, several factors caused the exodus of money, including: trade uncertainty, higher deficit spending by the US government, higher interest rates instituted by the US Federal Reserve, and perhaps others that made the market look less attractive than it did before.

“Regardless of the trigger — trade tensions, the prospect of a higher U.S. fiscal deficit, Fed tightening — heightened market volatility and swings in risk appetite have had a big impact on fund flows in recent weeks,” the IIF stated.

There was a parallel lowering of fund outflows from emerging markets as well, hinting that investor panic is limited to the US assets.

Compared to $11 billion in investments flowing into EM equities in February and $28 billion in January, March saw only $7 billion worth of investments entering the EM market in March.

“The main driver of recent big swings has been the surge and abrupt reversal in flows to U.S. equity funds,” IIF said in its statement. “Since mid- March, U.S. equity funds have seen a remarkable $40 billion in outflows—entirely wiping out the strong inflows of $25 billion seen in the first half of the month.”

Federal Judge Says Cryptocurrencies are Commodities

The ruling by US Federal Judge Jack Weinstein labeling cryptocurrencies as commodities paves the way for the US Commodity Futures Trading Commission to classify and regulate them as such, according to a report from Reuters.

The Brooklyn-based judge’s decision, which stated that the CFTC has standing to proceed with a fraud lawsuit against New York resident Patrick McDonnell. The complaint was filed by the CFTC against McDonnell and his company Coin Drop Markets two months ago, in January 2018.

The lawsuit states that McDonnell allegedly sold fraudulent investment advice, or more accurately, was selling something non-existent. Customers simply did not get the advice that they paid for. In addition Coin Drop was not registered with the CFTC.

The ruling came officially on March 6 after a hearing during which Judge Weinstein stated that the CFTC found “a reasonable likelihood that without an injunction the defendants will continue to violate the CEA [Commodity Exchange Act].”

The ruling, found in the Memorandum and Order, declares that “the court finds the plaintiff has made a preliminary prima facie showing that the defendants committed fraud by misappropriation of investors’ funds and misrepresentation through false trading advice and promised future profits.”

US Brokerage Websites Perform Poorly to High Trading Activity

Can brokerage websites handle massive customer visits?

Tuesday was a bad day for the websites of several US brokerage firms. In the wake of Monday’s record stock market drop of 1,175 points, several websites either crashed or operated painfully slowly as customers took action the following day.

Fidelity said late Tuesday morning that they finally overcame what were intermittent technical glitches on its website. Earlier that morning customers were greeted with the following message when they tried to access Fidelity’s website: “Our homepage is temporarily unavailable but don’t worry, we’re working quickly to fix this problem.”

Visitors to the Ameritrade website saw this message on Tuesday: “Due to volatile market conditions we are currently experiencing slowness on our web platform.” The company recommended customers try a mobile app or other related company website for information or access.

The social media platform Twitter hosted complaints from those trying to get into the Merrill Edge website which is operated by Bank of America. A spokesman issued the following statement: “Our systems remain operational. Some clients reported slowness logging into My Merrill and Merrill Edge due to unprecedented trading volume.”

Monday’s crash was the largest point drop in stock market history. On Tuesday the market opened down an additional 500 points but rallied during the first half hour of trading to climb back into positive territory. By noon on Tuesday the market was up by 52 points.

Back in November Fidelity experienced some down time on their website that disallowed customers from reaching their online accounts. The company offered free trades by way of compensation.

On Monday several brokerages experienced temporary issues of sluggishness on their websites, such as T.Rowe Price and TD Ameritrade. The issues were quickly resolved.

Changing Cannabis Trends Offer Investment Opportunities

Photo courtesy of Plantlady223.

The movement to legalize recreational marijuana is growing across the country, and with it is an influx of capital into the industry.

It is twenty years since pot became legal for medical use in California in 1996. Recreational use began in 2012 in Colorado and Washington, and today there are 30 states that allow medical marijuana and nine that either passed recreational initiatives or already have them in effect. This trend is sending a clear message to entrepreneurs and investors, and top Wall Street talent is joining the party.

The legal cannabis industry is now valued at about $8 billion, but it is expected to triple by 2021 in annual sales, to $22.6 billion. If that comes to pass, then the marijuana industry will be substantially larger than the US’s most profitable sports organization. The National Football League had $13 billion in revenue in 2017, and expects to reach $25 billion by 2027.

During 2017 there were at least 27 venture capital investment funds in pot firms. Compare that to 10 similar funds in 2016 and 9 ventures in 2015. The money flowing into the industry is helping pay about 150,000 salaries in the legal weed industry, representing 20% job growth this past year.

Some of the companies are finding exclusive niches, such as Défoncé Chocolatier, founded by Eric Eslao, a company that makes pot-infused artisanal chocolates, which sell for $20 per bar.

This is not to say that there are no hoops that still need to be jumped through. The federal government still views possession of marijuana as a crime, making banks a bit fearful of doing business with cannabis companies. These companies get by with either using cash only or paying large bank fees for the privilege of having accounts.

Ginnie Mae Investigating Churning Used Against Vets and Servicemen and Women

Ginnie Mae, the government-owned corporation which lends money for home purchases to qualified people at more affordable rates, is conducting an investigation into unethical practices involving lenders possibly pressuring veterans and other members of the military into mortgage refinancing which they do not need.

The corporation is able to keep its costs down by guaranteeing repayment on $2 trillion worth of mortgage bonds, even when the borrowers default on the underlying loans. Ginnie Mae is investigating because the securities backed by them support a number of federally sponsored housing projects, including a few which loans are made via the Department of Veterans Affairs.

Ginnie Mae is afraid that some lenders are unethically putting pressure on veterans and military personnel to refinance loans that are part of Ginnie securities. According to Michael Bright, acting president of Ginnie Mae, lenders are pestering consumers relentlessly to try and convince them refinance. This behavior, which is called churning, creates high fees for the lenders and harms the servicemen and women by leaving them with larger loan balances in the end.

Congress is starting to take notice of the practice. Senator Elizabeth Warren, one of the finance industry’s most vocal critics, wrote to Bright, asking him if some of these lenders were abusing the Ginnie Mae program by using strong-man marketing tactics.

Bright answered Warren that he launched a task force to look into churning and any other abusive practices engaged in by lenders who were approved to issue Ginnie Mae-backed bonds. It is possible that the agencies could block the lenders from their programs if they believe restrictions on refinancing can’t be imposed or will not work.

“There are clearly some Ginnie Mae-approved issuer companies who appear to be taking advantage of the VA program to aggressively market and churn loans in our securities,” Bright wrote to Warren.

 

Major US Payment Processor Buying UK-based Worldpay

A merger is under way between two rival payment processing firms: the US-based Vantiv and the UK-based Worldpay. Vantiv has submitted a formal offer to purchase Worldpay for close to £8bn ($10.4bn). The offer was made after many weeks of negotiating terms of the deal, including the relocation of UK employees when the merger is implemented.

The deal values Worldpay’s shares at $5.16. When the deal is finalized Worldpay’s headquarters will move to Vantiv’s home, Cincinnati, Ohio, in the USA. As a single entity, the company expects it will be able to process about $1.5 trillion worth of payments and about 40 billion individual transactions per year. This should bring the company’s revenue up to about $3.2 billion/year.

Vitav has grown by leaps and bounds of late, becoming the largest payment processing company in the United States after its acquisition of Mercury Payment Systems and Moneris Solutions. The company is now ready to broaden its base in the European market with the purchase of Worldpay.

Worldpay not only processes traditional payments from brick and mortar shops; they also work in the growing e-commerce space, a market Vantiv would like access to. Due to the huge growth of spending on-line companies that facilitate online payments, like Worldpay, are ripe picks for well-established payment companies as a way for them to reach into the internet marketplace.

Vantiv predicts that the takeover will boost their annual savings to about $200million by the end of the third year. This will be offset against the cost of integrating Worldpay into Vantiv, which is expected to come to about $330 million, almost all over the first two years.

American Economy: Good Growth Records

During Q2 2017 the US economy witnessed some impressive growth; actually the fastest it has encountered in the last two years.  Some of this has been attributed to President Trump since economic growth reached 3% during his first full quarter, marking the highest it has been since Q1 2015, and more than double that of Q1 2017.

This optimistic economic climate has also been attributed to stronger consumer spending as well as better business investment.

The sentiment was echoed by Patricia Buckley recently who wrote: “Healthy employment growth and moderate increases in GDP continue to define the US economy, even as the composition of the labor force evolves.”

Still, while this does indicate cause for positive thinking (with unemployment lower than it has been since 2001, at 4.3%), there is still the matter of the fact that growth is somewhat underwhelming.  For example, while there has been 2-3% of salary increase (above inflation), it’s not great.  And while confidence in CEO and small businesses is high, businesses are not investing as much as they should.

Yes, we’re on the right tracks.  But we’re not out of the woods just yet.