Bond broker, author and teacher Jim Koetting is trying to make buying bonds simple for people with no experience.
St. Louis startup PFITR is focused on bringing market transparency and true pricing data from the bond market to institutional investors working for cities, counties, hospitals, banks and credit unions, so they are able to tell if they are making well informed investment decisions with their portfolios.
“The challenge in the fixed income securities market is the incredible lack of transparency,” said Koetting, founder and CEO. “Good pricing data and analytics is not public, and it is very expensive.”
How PFITR’s BPV tool works
Koetting explained that when an institutional investor goes out to buy a treasury, agency, muni, or corporate bond they go to their trusted bond broker who makes a recommendation. That recommendation is always biased because there is a commission built into the price the fixed income security unlike equities.
The more risk equals a higher pay day for the broker, according to Koetting. However, with PFITR’s BPV tool users are able to see a bond’s fair market value, pricing history, and risks associated with the investment.
“Many bond sales people loath this tool because they can’t make as much money on a well-informed buyer,” said Koetting.
Koetting added that better informed buyers of fixed income securities make better decisions and are better fiduciaries. He said that well-informed decisions can lower risks and increased returns.
“Our Bond Price Validation provides market transparency, imperative reference data and analytics that may lower transaction costs,” said Koetting. “We provide proper valuations and risk analysis before you make purchases of fixed-income securities.”
Current customers pay $450 to $1,500 per month to use PFITR’s BPV tool.
Raising funds for an unknown industry
When Koetting first launched the company in 2013, he raised funds from friends and family. Later he went through the ITEN Mock Angel Program to learn how to communicate the business idea to angel investors.
“The main challenge we had while fundraising was that the bond market is just not sexy,” said Koetting. “However, the bond market is the largest market in the world.”
After graduation from the ITEN Mock Angel program the team applied to the Capital Innovators accelerator and made it to the finalist round. While halfway through the Capital innovators accelerator, PFITR was accepted into the St. Louis FinTech Accelerator SixThirty.
Koetting’s next step was to find out how to get the capital to scale the platform so he joined the VC FinTech accelerator in Little Rock, Arkansas. After raising more money through the accelerator, PFITR is now starting to build their sales team.
What’s next for PFITR
PFITR currently has several monthly users including cities, counties, water/sewer districts, port authorities, banks and insurance companies.
Koetting said that his big vision is to transform the stewardship of tax dollars through technology and education throughout the United States.
“My passion is to build the tools, the internal investment controls, the market transparency, risk analysis and everything these buyers need to be good stewards of our tax dollars,” said Koetting. “With trillions of taxpayer dollars currently at stake in capital markets, even the slightest improvements in government investing methods improves the lives of our citizens.”
Mel Lucks is a regional freelance journalist and former intern for Silicon Prairie News and AIM.