Industry insights

Empowering the MSMEs: How TeQatlas Closes the Funding Gap with Direct Investor Access

9 Aug 2023
3 min read

Traditionally, investment opportunities have been facilitated by specialized financial institutions, leveraging their deep expertise to identify and support entrepreneurs. At the same time, access to investments in these intermediaries was limited to select high net worth and institutional investors, requiring EASY alternatives to close the funding gap and interact directly with investors to widen options for raising capital.

MSMEs maintain control and agility while doing business. Rapid growth companies continue to delay accessing the public pool of capital via IPOs, aided by policies and regulations permitting the widening of investor base without going public (e.g., Jumpstart Our Business Startups Act (JOBS Act)).

Entrepreneurs cannot rely on bank finance to be available at every stage of the business cycle. While business angels fill some of the gaps left by traditional venture capital at the early stages, a lot must be done to formalize business angel networks efficiently and connect investors with promising ideas.

A long-lasting problem

For decades, investors and entrepreneurs in the private equity market have been drowning in fragmented solutions with limited interoperability and unstructured data complexity when making investment decisions. The replication of diligence costs investors about $4.9 billion each year, according to TeQatlas research. Solving a billion-dollar problem in a trillion-dollar private equity market is not achievable by any one fragmented solution in isolation.

An alternative solution is also expected to focus on investors with motives beyond financial return. There is a need to funnel capital to newborn companies that would not have been qualified by traditional venture capitalists but provide non-financial returns (e.g., alternative energy projects or local development projects). Established companies could raise capital directly from their customer base, potentially reducing costs while supporting customer engagement.

Private Equity Market and Its 180 Inefficiencies

At present, investees and investors with matching risk and return profiles find each other through costly, bilateral search and diligence processes that create massive inefficiencies and inhibit the flow of capital to where it is most needed. Furthermore, the lack of connectivity between existing databases, deal-sourcing platforms, and investment tools means we are far from leveraging our assets to the most significant effect. All of this results in an exponentially fragmented market that is opposed to rapid scale.

Our team has gathered and analyzed expertise from both sides of the capital raising market. We experienced around 180 market inefficiencies that led to inefficient capital allocation on a global scale.

TeQatlas expects to have a select portfolio of these MSMEs looking for funding and partnership opportunities, establishing a high-quality service, and providing superior deal closure conversion rates. We grant an opportunity for businesses to interact directly with investors to widen options for raising capital and enable a more diversified pipeline of investment opportunities for investors to support a richer innovation ecosystem.

Find a cost-effective way to raise capital without getting distracted from doing business.

Much of MSMEs’ time and resources are taken up by looking for relevant investors and other capital-raising alternatives. While many solutions exist to solve one or many of the problems discussed above, many pain points emerge as customer expectations rise. The threshold at which a product is considered sufficiently feature-complete is very high. Though entrepreneurs use these solutions, they are unsatisfied with the status quo.

On the other hand, digital democratization and increasingly entrepreneurship-friendly policies have fueled a rapid increase in the number of startups, making effective screening and selection processes by traditional funding options (e.g., venture capital) increasingly difficult. Investors are naturally limited to exploring a finite set of investees at any given time. As a result, they reject many companies based on simple filters (such as a lack of academic pedigree).

Globally, 91% of HNWIs consider service quality an essential wealth-management selection criterion, while nearly 84% found fee structure critical when selecting a new service provider. 

(World Wealth Report 2019, Capgemini)

In the face of rising customer expectations for personalization, efficiency, and low costs, capital-raising services will become more virtual and customer-driven. There is an opportunity for a sufficiently comprehensive solution yet much more accessible (concerning cost and usability). MSMEs become more tech-savvy; they tend to choose the seamless customer experience that a technology provider can offer.

TeQatlas aspires to provide users with a highly flexible, intuitive, and personalized experience at a fair price by using AI and Blockchain technologies in investment management. Constant analysis of vast data streams structured properly will alleviate many bottlenecks in the deal-closing process, allowing MSMEs to grow their business instead of through continuous fundraising.

‍Our leading-edge technology will improve the market visibility of smaller players, allowing them to find relevant financing opportunities. MSMEs will be able to leverage the same AI technology as more significant players, filling the gap in investment strategies, performance, and risk management cost-effectively.

TeQatlas aims to consolidate the existing fragmented approaches and data pools across the entire value chain to streamline data and capital flow and establish predictive data-driven capabilities, risk assessment, and liquidity. We focus on finding an ideal combination of human, Artificial Intelligence (AI), and Blockchain technologies via collective expertise sharing and compliance.

Our mission is to develop an advanced infrastructure that fuels the adequate flow of data and capital to unite value-driven people globally – follow us on this exciting journey!

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