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Out of orbit: Ex-Constellation Software executives launch tech investment business, but say it won't mimic former employer – The Globe and Mail



Two ex-Constellation Software Inc. senior executives have raised $320-million from billionaire investors to buy up emerging software companies around the world.

Paul Yancich and Daniel Eisen are the co-founders of Arcadea Group, a Toronto-based investment firm that aims to buy control stakes in “ultra high quality, lower mid-market software businesses,” with between US$4-milliion and US$20-million in annualized revenue and growing by 10 per cent to 70 per cent a year, Mr. Eisen said in an interview.

Both worked as dealmakers at Constellation and reported directly to president Mark Leonard. Mr. Yancich left in late 2019 after 3½ years, while Mr. Eisen was at Constellation for seven years until December, 2020. They also worked at separate times for Toronto private equity firm TorQuest Partners.

“It’s hard to overcompliment [Constellation] and Mark in particular in terms of having a framework for investing rationally,” said Mr. Yancich, 36. “We were lucky to have a lot of exposure there [to] really great investors and operators.”

Mr. Eisen, 40, added Constellation “was fantastic for us. … For Paul and I, thinking about what we wanted to do for the next 30 years of our career, it was really only possible to have that blank slate doing it on our own, which is basically why Mark started Constellation” in 1995 after leaving venture capital.

But aside from investing in small software companies, the pair stressed they are not trying to build a replica of Constellation, Canada’s second-most valuable software company behind Shopify Inc. Constellation has built its business by buying and holding hundreds of “mission-critical” software providers to a vast range of industry verticals from spas to public-housing providers to pharmaceutical manufacturers.

Constellation’s companies typically aren’t big or growing fast, if at all, but they are leaders in their markets with unthreatening competition. Constellation is renowned for applying strict financial discipline as buyers and operators to consistently expand cash flows, profits and returns.

“I think the most important similarities to Constellation are, [Arcadea is] focused on software, and these are not enormous businesses,” Mr. Yancich said. “From there, there are more differences than similarities,” including having “more flexibility” in their approach to dealmaking and generating returns.

Mr. Eisen added, “The continuation of Constellation is not the pitch we made to anyone,” nor do investors expect that.

For example, Arcadea’s strategy is to invest in companies for 10 plus years but not necessarily forever. Arcadea plans to buy about 15 companies with the capital it’s raised, aiming for founder-led businesses that haven’t taken venture capital.

The partners raised capital not in a fund structure with a set term, but as “evergreen capital” that investors are meant to keep parked with them for much longer, and which will be reinvested when Arcadea sells its investments.

Their handful of wealthy U.S. investors include Washington billionaire Mitch Rales, co-founder of Danaher Corp.; San Francisco Bay-area private capital investors Ed McGuire and Ian McDermott; and Sator Grove Holdings, led by former managers of the University of Notre Dame’s endowment fund.

With long-dated capital at hand, Arcadea’s founders are pitching themselves to companies as an alternative to “growth capital” funds that typically invest in fast-growing tech companies generating millions of dollars in sales with an eye toward exiting their positions within a finite period at significantly higher valuations, at a much faster pace than Arcadea intends.

They are also making the case that companies “don’t need nearly as much capital as venture capitalists would have you believe, and we know that” having talked to companies that took big investments then confessed they didn’t need so much money, Mr. Yancich said.

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Billionaire Hedge Funder Who Inspired ‘Billions’ Leads Investment To Turn Messari Into ‘Uber For DAOs’ – Forbes



Point72 Ventures, the venture capital firm of billionaire Steve Cohen, whose unconventional style helped inspire the hit television show Billions, is now in the bitcoin game, having led a $21 million Series A investment in cryptocurrency analytics firm Messari. 

Equally notable is that several of the largest cryptocurrency exchanges in the world are now also backing the firm, including London-based’s Blockchain Ventures, New York-based Gemini’s Gemini Frontier Fund, Wyoming-based Kraken’s Kraken Ventures and Antigua-based FTX’s sister company, Alameda Capital. The venture capital arm of Coinbase and several other investors also returned to this round after participating in the seed funding.

As the SEC and other regulators increasingly look to crack down on the companies that raised capital using initial coin offerings (ICOs), or otherwise use or trade those tokens, the investment marks a turning point in transparency for the often opaque industry, not by forcing innovators in the space to comply with regulations, but by providing them a clear path to voluntarily disclose data core to investors’ decisions. Messari founder and CEO Ryan Selkis describes the firm as part Big Four auditor and part JPMorgan analyst, with a dash of the U.S. Securities and Exchange Commission’s Edgar repository of information and “financial filing equivalents.”

“The defaults that many entrepreneurs, and builders in the industry have is to be transparent and cooperative,” says Selkis, 37. “And try to be as helpful and communicative as possible with their communities. The problem is, if you’re a core developer or someone that was early in a project, and you’re sharing certain sensitive information that even looks like it might be financial in nature, and then the SEC comes knocking on your door, it can create a tremendous amount of headaches.”

To help mitigate those concerns, Messari launched in late 2017, and has assembled a team of 35 people helping bring transparency to the crypto industry that frequently finds itself at loggerheads with regulators. Instead of forcing financial disclosures, in 2018 the firm bought New York-based blockchain analysis firm, OnChainFX for an undisclosed amount, and now works directly with the companies that create tokens to understand how the assets were distributed; Kaiko for markets data; Coinmetics for blockchain data sets; Flipside Crypto, Staking Rewards and several other providers for more niche assets; and ingests raw blockchain data by running its own nodes.

Click here to learn more about the Forbes Crypto Asset & Blockchain Advisor.

The data is then repackaged as Messari Pro, which lets individuals track and chart assets, and costs $30 a month; Messari Enterprise which was built over the past two years in consultation with Coinbase and now has “several hundred” exchanges, custodians and investment firms spending about $625 a month; and the membership based disclosure registry, called the Hub, in which analysts work directly with the crypto-assets creators to provide increased transparency about the projects for investors. Forbes receives media access to the Pro services.

Hub participants include the team behind the $10.5 billion Chainlink (LINK) cryptotoken that helps bridge the gap between blockchain transactions and data off a blockchain, the $2.9 billion Maker token (MKR) that powers a decentralized finance (Defi) economy, and is in the process of onboarding the $2.6 billion Axie Infinity (AXS) gaming token. Forbes estimates Messari generated about $4 million revenue last year, and Selkis says the firm is on pace to grow by three to four times by the end of this year. The company has broken even for the past two years, he says,

“At the end of the day, we’re not trying to invent every single pipe and build things from scratch,” says Selkis. “So much as curate where the best in class data lives, and then try to build standards around the different providers in different parts, the information stack. The end result is hopefully being able to pull together the equivalent of an evergreen financial filing for any assets that is available in the markets.”

As part of the investment, Point72 Ventures partner, Adam Carson, joins Messari’s board of directors, along with former Thomson Reuters exec Jeff Clavier, who lead a $4 million seed round in 2019, bringing the total amount raised to $25 million. Selkis says Messari has yet to dip into the seed funding, and until this point has been staying afloat with revenue generated.

With the remaining funds, and the new infusion, Messari plans to triple the size of its engineering and product teams and to expand into new territory that could put it in direct competition with $20 billion Broadridge, a New York firm best known for creating traditional and blockchain software that lets shareholders vote. Specifically, Messari plans to start building governance tools for decentralized autonomous organizations (DAOs) that rely on automated workflows written directly onto blockchains instead of centralized management. 

As Selkis describes the planned expansion: “It’s Uber for Dao Services. Integrations that make it easier for holders of these tokens to vote on-chain, or signal their support for proposals on-chain or ultimately even contribute their own human capital, their own labor, to participating in and submitting deliverables for some of these decentralized communities.” Selkis says he has no plans to follow his previous employer, CoinDesk’s footprints by expanding beyond data analysis into the more traditional news space. “We have similar functionality baked into our product,” he says. “But no, we’re not going to be running a news desk anytime soon.”

This is Cohen’s first major investment in crypto and puts him in line with a number of hedge fund titans who have recently entered the space, including Paul Tudor Joes and Alan Howard. Ironically, for a guy investing in a financial analytics startup, Cohen’s previous firm SAC Capital in 2013 plead guilty to securities fraud, and paid large fines. Since then, he’s been credited for inspiring the main character in Showtime’s show Billions. In 2020 he bought the New York Mets for $2.4 billion, and more recently as much as 15% of Point72 Capital’s value was reportedly lost as a result of bets against Gamestop. The hit was relative however, and Forbes estimates his wealth is still at about $16 billion.

Though a representative of Point72 Ventures declined to provide comment from Cohen, a May 2021 investor note hints at his imminent investment in crypto. “Steve and the Firm are always looking at ways to innovate and evolve our business,” the note reads. “We are constantly evaluating new market opportunities that support our mission of delivering superior risk-adjusted returns for our investors and offering the greatest opportunities to the industry’s brightest talent. We would be remiss to ignore a now $2 trillion cryptocurrency market.”

The investment appears to be well-timed, as companies like Messari are primed to capitalize on recent comments by numerous SEC regulators. In April crypto-friendly commissioner Hester Pierce, known as “Crypto Mom,” advocated for a so-called safe-harbor period where token issuers could operate for three years before being held accountable to certain requirements. In spite of such industry-friendly proposals, earlier this week newly appointed SEC chair Gary Gensler, doubled down on his predecessor Jay Clayton’s claim that every ICO is a security. If Gensler follows through with much anticipated, and feared, regulatory clarity, such data plays could make crypto financial information almost as valuable as cryptocurrency itself. 

“There’s some [regulatory] comments and solutions that can be put forth,” says Selkis, “that don’t just cripple the pace of innovation within the industry, and instead build off of tools like ours, or Dune Analytics, or any of the other open source data companies that are trying to solve this transparency problem and make it easier for investors and market participants alike to actually understand what’s going on, feel like they’re operating on a level playing field, and demystify some of these projects.”

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$364 Billion Investment Manager Invesco Files For Bitcoin ETF – Bitcoin Magazine



Independent investment firm Invesco, which currently operates 233 ETFs in the U.S., quietly applied for a Bitcoin ETF on Thursday.

The filing for a Bitcoin Strategy ETF falls under the 40 Act, a notable move that follows public recommendations by SEC Chairman Gary Gensler. Gensler spoke of the potential paths to a Bitcoin ETF earlier this week, at the time stating that he believes the act “provides significant investor protections” and that it will be used to evaluate applications.

Invesco is the first firm to file after the preferences expressed by Gensler. Eric Balchunas, senior ETF analyst for Bloomberg noted on Twitter that it was a “rare 6am filing = rushed it out. Won’t be surprised if we see 5-10 of these by Friday night.”

Noted in bold on the filing is that “the Fund will not invest directly in bitcoin.” The fund’s strategy is to provide exposure to the bitcoin price largely through exchange-traded futures, and to a lesser extent, exchange traded products, and private investment trusts that hold bitcoin.

The ETF would largely provide price exposure to bitcoin futures, Grayscale Bitcoin Trust, as well as several Canadian Bitcoin ETFs.

Invesco’s filing is just one among a series of funds seeking Bitcoin ETF approval in the United States. Notably, Goldman Sachs, Grayscale Bitcoin Trust, and Viridi Funds have all recently filed for or begun to offer investment vehicles tied to Bitcoin ETFs.

A Bitcoin ETF would give a massive boost to adoption, providing Bitcoin price exposure to millions of Americans.

If approved, the Invesco ETF is proposed to become effective 75 days after its filing. 

Image via Invesco website

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IGM posts record profit in second quarter – Investment Executive



The firm also reported record-high investment fund sales of $1.9 billion for the quarter, more than doubling the $864-million total a year ago. Assets under management and advisement hit a new high of $262 billion, up 5.4% from the previous quarter and 39.2% from June 30, 2020.

“The result reflects record-high second-quarter client inflows across the companies and continued strong investment returns for our clients,” said IGM president and CEO James O’Sullivan in a statement.

The company’s wealth management business, which comprises IG Wealth Management and Investment Planning Counsel (IPC), reported a $134.3-million profit, up 33.6% from the previous year.

IG’s assets under advisement totalled $112.2 billion, up from $93.8 billion a year ago. IPC reported assets under advisement of $31.2 billion compared to $26.6 billion on June 30, 2020.

IG saw record client inflows of $670 million, compared to net outflows of $62 million a year ago.

Wealth management revenue for the quarter totalled $627.6 million, up from $531.1 million in 2020.

Asset manager Mackenzie Investments saw record investment fund sales of $1.7 billion for the quarter, up from $1.1 billion last year. Mutual fund sales accounted for $1.1 billion compared to $376 million in 2020.

Mackenzie reported mutual fund assets under management of $61.7 billion (up from $60.1 billion) and ETF assets totalling $4.9 billion (compared to $3.1 billion a year ago). If investments in ETFs by IGM mutual funds are included, ETF assets totalled $10.6 billion.

Asset management revenue for the quarter totalled $248.3 million, up from $190.8 million in 2020.

In an interview with Investment Executive last month, Mackenzie president and CEO Barry McInerney pegged alternatives and environmental, social and governance funds as growth areas for the firm.

He also talked about how Mackenzie is addressing the challenge of advisors shrinking their product shelves in response to the client-focused reforms.

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