TruMid’s New Financing
I usually talk about new US Treasury platforms, but what’s going on in the corporate space? TruMid has garnered a $10M investment from Deutsche Boerse.
German exchange operator Deutsche Boerse Group (DB1Gn.DE) has made a $10 million investment in Trumid. … .
Trumid, which is backed by venture capitalist Peter Thiel and investor George Soros, will collaborate with Deutsche Boerse to develop products and services for the European market.
This brings TruMid’s total Series A investment up to $37M at a $100M post-money valuation. I believe that’s on top of the $8M Founder and CEO Ronnie Mateo reportedly sunk into the platform to begin with. It is fair to say that TruMid has been more expensive to build then I think anyone imagined. Heck, they’ve raised more money than all the startup US Treasury platforms combined!
Will it all work? I’ve been skeptical of auction systems in the past. They’re too complicated and they force buy-side firms to change their trading workflow. MarketAxess also seems to be running up the score lately. But, the corporate bond liquidity situation is dire enough that traders are willing to experiment with anything. TruMid, which specializes in the especially illiquid high-yield bonds, did $1 billion last month in volume. Some of that is new issue volume that’s free, but if they were able to capture their rack rate of an 1/8th of a point, that’s still about $1.25M in revenue on only $50M in bonds traded a day. Not a bad business if they can scale that number 10x.
I recently spoke with the head of strategic investments at a large bank who had passed on investing in TruMid. He thought that despite declining to invest, TruMid was “the only startup in the corporate bond space that had a chance.” He was utterly convinced that if anyone was going to have a shot at taking on MarketAxess, it was them.
I think that’s fair. However, one note of caution for the TruMid guys on the Deutsche Boerse investment before they get too cocky:
This is not the first time that Deutsche Boerse has taken an equity stake in a fixed income trading startup, having backed London-based Bondcube in 2014. Bondcube, however, filed for liquidation in July 2015, three months after its launch.
