It’s no secret that there are many wealthy South Florida residents — including 30 billionaires at last count.
So it shouldn’t be surprising that the region has given birth to a company that says it plans to update large-scale private investing (think companies, not stocks) for the 21st century.
Digital SPV is the brainchild of entrepreneur Herwig Konings and executive, entrepreneur, and angel Investor Mario Pazos. The idea was born when Pazos tried to buy a piece of Kongings’ existing business, InvestReady, an accredited-investor verification site.
“It’s extremely cumbersome, tedious, and intensive,” to take a stake in a company as an angel investor, Pazos said.
Angel investors in many parts of the country, including Florida, typically create special-purpose vehicles in order to take part in seed investing rounds. The opportunity is now enormous: Pazos estimates there are more than 70,000 angel investments a year, with up to 300,000 “angels” participating. (SPVs also are frequently used in other private investments such as multi-party real estate deals.)
An expert panel of judges agreed, naming Digital SPV winner in the fintech vertical of the 2019 Miami Herald Startup Pitch Competition’s Community Track.
Digital SPV is a niche product; it’s unlikely your granny will ever use it. But as SoftBank COO and Business Plan Challenge judge Marcelo Claure noted, the idea addresses a major market need.
“The company is solving a pain point for many people,” he said.
With Digital SPV, the process of managing a large angel investment is automated. Among the tasks no longer needed to be performed manually: communicating with investors, or investors communicating with a company; any and all filings, including tax documents; fee tabulation; and performance reports.
And though it may not be for everyone, it’s easy enough for anyone to use. Simply log on to DigitalSPV.com and register your information. Then choose your investing operating structure, add special provisions and set up your “deal room” with the necessary legal documents. The cost is $999 a year.
For Pazos, Digital SPV is a “legal fintech” company. Unless they are specialists, lawyers often lack the savvy of an investor — and an investor may not know the fine print about forming investment corporations.
The company was originally self-funded, but has received $1 million in commitments. It also sponsored a breakfast at the Angel Capital Association’s annual summit in Chicago last week.
“The room was full to the gills,” said Marianne Hudson, the ACA’s executive director. “[The founders] took a calculated risk that they would find a lot of angel investors interested in their technology, and it looks like they were right.”
The company anticipates adding more than 500 users by the end of 2019.
Is Digital SPV automating work now done by humans? Konings says no. “Our technology will be disruptive — but we don’t want it to be destructive,” he said.
They imagine the technology working hand in hand with attorneys, CPAs and financial advisers..
“As long as we’re able to crack that code that lets us work with providers, we will be able to scale faster,” he says.