ROBO-ADVISOR INVESTMENT MEMORANDUM

Abstract

Magnetis is a Brazilian robo-advisor that promises to be the next generation platform for investing. Similar to all robo-advisors, Magnetis constructs a custom investment portfolio based on the customer’s needs and risk tolerance. It then uses algorithms to monitor the performance and to re-balance the portfolio when necessary. Currently, Magnetis is asking for US$4 million of series A funding to provide a 24 months of runway. Roughly half of the funding will be used to improve the robo-advisor product, and the other half will support customer acquisition. Magnetis is not specifying whether the US$4 million will be provided as a high interest loan or be exchanged for a percentage equity in the company. The main external stakeholders are emergent, established, and affluent Brazilians located in the smaller cities in Brazil’s interior region. In addition, there are two auxiliary stakeholders: the Brazilian government and Easynvest—the investment brokerage firm that Magnetis uses to execute trades. Magnetis must coordinate its business operations with both of these stakeholders. The main internal stakeholder is the Magnetis team, comprising of a product development, business operations, and marketing division. Magnetis has currently provided very little information on their proposed deal structure. We anticipate that they would like to raise US$4 million in exchange for 28.5% equity in the company.