Truvalue Labs
Hendrik Bartel, CEO and co-founder of Truvalue Labs
- Truvalue Labs provides banks and asset managers on Wall Street with data and analytics around ESG factors to help them assess investments.
- Hendrik Bartel, chief executive and co-founder of Truvalue, is seasoned in the Silicon Valley startup world. He worked at three startups before going to business school, where he got the idea for his latest fintech, Truvalue Labs.
- For seed and Series A fundraises, it's key for startup founders to win the confidence of investors, Bartel said.
- Capturing the attention of Wall Street can be hard. But once deals are signed, Bartel said, serving those customers is one of the stickiest business models he's ever seen.
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There's a lot of talk of tech encroaching on Wall Street's turf. And fintech is a crowded market, with challenger banks like Chime to trading platforms like Robinhood raking in VC cash and notching unicorn valuations.
But there's another segment of fintech aimed at serving, not unseating, the legacy players of finance. In doing so, they often have to fuse tech hype with old-school Wall Street sensibilities.
Truvalue Labs is one such B2B player, providing banks and asset managers on Wall Street with data and analytics around ESG factors to help them assess investments.
Hendrik Bartel, chief executive and co-founder of Truvalue, is seasoned in the Silicon Valley startup world, working at three startups before going to business school at St. Mary's College of California.
"The impetus for Truvalue was going back to business school, after having participated in three startups from start to finish," said Bartel.
While pursuing an MBA, Bartel developed an interest in financial data and spotted a need in the market. ESG-minded asset managers often use inconsistent data to rate environmental, social, and governance factors related to companies.
"There's a number of ratings providers out there in the market, but there is no regulatory oversight or standard of how ESG has to be reported," said Bartel. There was also little correlation between ratings providers results, he said.
When looking for an ESG investment, it's hard to know how environmentally or socially responsible a company actually is. The data is often self-reported, and relies on analysts to review and update it.
Learning that the data was heavily human-driven, slow to update, and unaudited was what drove Bartel to found Truvalue.
Building credibility
Bartel founded Truvalue in 2013 with a team of coworkers from his earlier startup days. With a few exits already under their belts, the team self-funded as they started building the platform.
"We got lucky through some of the exits over the years that we were actually able to bootstrap the business and get to where it's more than just a PowerPoint, where there's actual code, where there's something that's working already," Bartel said.
Initially, the team wasn't building with being a fintech in mind, Bartel said.
"I'm not from what's called fintech. I'm from technology," he said.
And the Silicon Valley-based team lacked Wall Street experience.
"We didn't really have the experience to know what it means to participate in capital markets," Bartel said.
Before raising a Series A, Bartel wanted more credibility. So Truvalue hired a chief marketing officer and chief data and analytics officer who both previously worked at Thomson Reuters, and a chief financial officer with more than 25 years of experience.
For seed and Series A fundraises, it's key for startup founders to win the confidence of investors, Bartel said.
"I would say seed and [Series] A really come down to the team, the gel between the team, and what you have done before," said Bartel.
Scaling for Wall Street
During the first few years, Truvalue focused on building a marketable product.
"We really spent on building a technology stack and understanding the intricacies of fintech and capital markets-grade data sets," said Bartel.
They collected historical ESG data, built audit trails, and weaved corporate actions into the data. Bartel wanted to make sure Truvalue was building a product that asset managers and analysts would use.
"That's the challenge that I see with a lot of alternative data companies that are run in New York these days," Bartel said. "On principle, some of these ideas sound really good, and it might work on a small sample, but it's not scalable."
Fintechs building data platforms need to think about backtesting, audit trails, and application across markets and indices, he said.
Playing on the herd mentality
"One of the key challenges I still struggle with as an impatient entrepreneur is looking at the sales cycles and looking at the herd mentality in the capital markets industry," said Bartel.
On the Street, there is a sense of FOMO, he said, where asset managers want to make sure competitors aren't getting ahead with the latest data.
Because of this herd mentality, serving Wall Street can be challenging. For consumer-facing products, 1% market share could be substantial, depending on the market. But Truvalue is leaning on a network effect for customer adoption.
That said, Bartel has seen high customer retention rates once deals are signed.
"Once something is deployed, it's the stickiest business model I've ever seen," said Bartel. "It's so hard to rip something back out because it's just ingrained in a workflow."
And with that stickiness, Bartel noticed that customers were looking to expand their contracts. A firm would use Truvalue in one business area, and then other business units would see the benefits of the platform, and the contract would grow, Bartel said.
"It's much easier for us to grow with an existing account than capturing new clients," said Bartel.
