plusrasgo Revenue & Valuation (2020)

hello everyone my guest today is jorge pastime he is a seasoned executive with broad experience in all aspects related to business development turnarounds fundraising corporate finance and strategic advisory he's got deep experience in m a private equity venture capital debt restructuring and chapter 11 processes because of this he's now in a pdp business called hippoticallo which plays in the real estate space it's going to be our focus today all right you ready to take us to the top yeah okay so what is hippotecalo and how do you make money basically protocol is an internet platform that permits investors and [Music] users of loans to finance their needs we basically uh make possible that both of them complete their needs so let's run through an example here i'm a real estate investor i'm buying a house for 500 000 how would i use your platform basically that we do is uh on one hand we have uh credit providers that are the best of that you mentioned that they have uh investment needs on the other on the other side we have the uh the people that needs uh uh the loans so we evaluate the the quality of the the potential borrowers so we um basically obtain the uh the uh financing for them uh and we provide the critical qualification to to the investors so this is a marketplace model you have investors that want to deploy capital you have borrowers that want money you're rating the borrowers you're connecting them with investors how much uh how much how much deal flow went through your platform over the past 12 months we started uh two years ago well basically at the beginning we reached a five million dollars portfolio and now we are 15 million dollars in our second year and we expect that 25 million for the third so just to be clear in 2019 you did five million through your platform and in the past 12 months you've done one five 15 million through the platform yeah and how do you make money basically we uh charge uh we have two sources of money basically uh uh we charge a fee uh which is the difference between the uh interest rate that we charge to the uh borrowers and uh the investors uh ask what yield do you optimize for basically uh the in the the average uh interest rate that we charge to the lenders is something around 13 and the cost of fund is stands in a run of uh seven percent seven percent okay so just to be clear you have investors that sign up for your platform so you can help them deploy money you have borrowers that sign up for your platform that pay a 13 interest rate this spread between 7 and 13 so 6 is how you make money yeah okay of course we cover our cost which is the notary cost and whatever now on 15 million in transaction volume through your platform and a six percent interest rate that you're making that means you did about nine hundred thousand dollars over the past twelve months yeah congratulations you're almost at the million dollar mark that's exciting how does it feel yeah it's exciting right yeah now has this always been your model you launched in 2018 did you always just charges spread yeah basically uh [Music] we uh because of touch purpose we we build a an efficient uh structure which use uh uh financial trust to build the uh the financial structure so that permits to us that uh to make a free of taxes almost free of taxes and break down the 15 million in deals that went through your platform this year how many deals was that the average is something around 40 40 glands 40 40 thousand dollars yeah okay so you had about 375 deals through your platform this year okay and and are those each individual customers or can one customer can one borrower use you over and over and over again no no no that they're different because the uh basically uh the people used uh the funds for a specific uh uh target suppose the case we have uh agricultures that that uh we make rollovers in that kind every year uh not uh conditionally by uh every year we we have made a rollover with some of them because they finance the uh the campaign the difference campaign every year but just to be clear when a borrower when one of these 375 borrowers uses your platform are they borrowing money for their primary residence or are they buying multiple properties for investment purposes difference because basically uh the [Music] residential mortgages sector is financed by the banks and we focus on other uh we detected another uh niche of uh for for our case which is the the people is not bankrupt social because that's that's the case of the agriculture for example for example interesting and and jorge have you have you raised any balance sheet capital yourself to lend out directly to consumers or are you just sitting in the middle right now and connecting investors and buyers for the financing of the next year we are doing that you're raising a fund yeah yeah because that we we have changed our model from p to p so to b to p because that is more efficient because when we uh that we have experience that we are we have an ability to uh find people that needs money but in the meantime that we we found the investors uh maybe we lose yeah uh part of our uh generation how much capital are you looking to raise next year for your fund to lend out to borrowers 15 million okay 15 million and what what do you think you have to pay on that 15 million is it an interest rate under 7 uh yes or maybe lesser it depends the case that uh the structure that we use because that we are uh thinking is uh basically to sell part of our portfolio and uh that that will uh permit us to implement a secure structure so just maybe reduce our interest rate so just to be clear in order to resell your paper you have to own the paper i thought that the len that the investors on your platform actually held the paper are you actually holding the paper right now that's correct that's good now basically that we will we will make an initial infusion of capital and we will make a rollover on that i don't understand how that works let me explain you uh basically uh we will we will inject some uh capital uh the partners will inject some capital in order to fund an initial uh portfolio of five million dollars okay so we will sell that and we will use it i see and then you recycle the capital yeah that's correct yeah how long how long are these loans to borrowers how long you have to wait to get your capital back it depends the case because uh it depends on the sector because if the borrowers are financing the uh if they are agricultures that they are short-term because they finance a campaign how short-term something around six months or lesser okay duration so these are really like construction loans then they're not 30-year amortizing home traditional home mortgages that's that's the targets of the banks um got it you're doing short-term construction loans really yeah we are not competing with the banks i see okay and now have you built this company bootstrapped or have you raised capital no uh bootstrap that's okay congratulations that's great and so i guess that means you're operating right at about break even right now yep okay that's good too and um how many people are on the team today uh we are five five people how many engineers one only one one what are the other four different other one yeah the other ones are business ones i see okay very interesting so do you see a path here to up selling some sort of software product to these 375 borrowers that used you over the past 12 months is there a software play here or is it really just going to be a yield and a spread business on the funds you raise and what you versus what you lend at by accident we enter on the uh on the software side because that trying to solve uh one hour uh problems that we face that we build a partnership with two developers and that we we did is uh giving them our experience to uh build a tool that they will be able to sell to other people similar to us not not the same but similar to us and they were really successful and i we didn't see the did do you owe me do you own the ip though or did they own it no no no they own it we lose that that deal oh that's a big mistake yeah definitely yeah that was the reason because we were rethinking our strategy not not for ipotica and trying to think that yeah we have the ability to uh find solutions uh for every sector and we can build samsung in in other sectors and that's what that was that with it that's great we are in the middle of several projects uh using the experience the bad experience last last question here before we wrap up with the famous five um what does it cost you to find a new borrower that does a forty thousand dollar deal what's your cac basically uh this is the cost of uh of the uh our ceo or our ceo activity yeah because uh that's the most um i believe that that's the most uh easy part of the of the game okay jorge let's wrap up yeah let's uh let's wrap up here with the famous five number one favorite business book sorry what's your favorite business book oh the corruption of the capitalism number two is there a ceo you're following or studying uh basically uh pesos number three what's your favorite online tool for building hippotecalo oh i don't know none no number four how many hours of sleep to get every night uh no more than six six and what's your situation married single kids marry you uh 95 or four four kids wow and how old are you 57 last question what's something you wish you knew when you were 20 uh basically uh oh everything about technology [Music] guys there you have it hippotechalo.com that's h i p o t e c a l o dot com they launched two years ago they did five million dollars of lending to be home borrowers basically construction loans they match them with investors they return to investors seven percent they charge the borrowers a higher rate of 13 percent they make a six percent spread so they did three hundred thousand last year this year they passed 15 million in dios their platform netting the company about nine hundred thousand dollars in gross revenue next year well they're going to go raise their own fund and take more margin for themselves all right thanks for taking us to the top thank you one more thing before you go we have a brand new show every thursday at 1 pm central it's called shark tank for sas we call it deal or bust one founder comes on three hungry buyers they try and do a deal live and the founder shares back end dashboards their expenses their revenue arpu cac ltv you name it they share it and the buyers try and make a deal live it is fun to watch every thursday 1 pm central additionally remember these recorded founder interviews go live we release them here on youtube every day at 2 p.m central to make sure you don't miss any of that make sure you click the subscribe button below here on youtube the big red button and then click the little bell notification to make sure you get notifications when we do go live i wouldn't want you to miss breaking news 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