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Shotspotter: A New Weapon To Combat Violent Crime

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U.S. violent crime is near a modern day low but the events of the recent past raise disturbing questions.  How does law enforcement deal with random gun violence.  A seven-year-old company named Shotspotter Inc. (SSTI: 17) is using technology to help first responders.

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Taking It To The Streets

Shotspotter claims to be the leader in being able to immediately detect the location of a gunshot and instantly relay this information to law enforcement officials.  The idea is that by cutting the response time to violent attacks lives can be saved and bad guys quickly stopped.

Shotspotter founders have created a SaaS-based subscription model that already has signed up customers in urban high crime areas of the United States as well as Puerto Rico, the U.S. Virgin Islands and South Africa.

In addition the company has tailored Shotspotter for application to school and corporate campuses as well as public transportation centers.

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According to their S-1 filing last June: When our sensors detect a potential gunfire incident, our software analyzes and validates the data and precisely locates where the incident occurred. An alert containing a location on a map and critical information about the incident is transmitted directly to law enforcement or security personnel through any computer and to iPhone® or Android mobile devices.

Shotspotter is not a startup.  They have been around since well before 2010 with close to $20 million in annual revenues on their books.  So far they have not turned a profit.  Proceeds from their $31 million public offering will help with working capital and other needs.

Veteran Management Should Help

Management is lead by CEO Ralph Clark who has been with the company since 2010 and a veteran of the security industry for many years.  The overall age of management is around 50 something.  In other words, they are not kids on skateboards dreaming up the latest super awesome App.

A Complex Problem Needs New Solutions

It hardly needs mentioning that the many outbreaks of gun violence create the need for new and more effective ways of dealing with this problem. A March 2016 report published by The American Journal of Medicine stated that the gun homicide rate in the United States is more than 25 times the average of other high-income countries.  Recent random acts of mass violence merely add another layer.

According to a 2016 report by the FBI, the number of active-shooter events in the United States in 2014 and 2015 was among the highest for any two-year average period in the preceding 16 years.

Recent Financials Show Good Signs

Financial information shows the company revenues rising from $11.8 million in 2015 to $15.5 million in 2016.  For the nine months of last year revenues rose 57% to $17.2 million. Full year 2017 performance is due to come out on February 20th and something over $24 million is the target.

The benefits of the Shotspotter SaaS business model is generous gross profit margins and excellent cash flow it provides.  Gross margins are exploding at 49% for the nine month period of 2017 from just 36% a year earlier.  Even so there is considerable room for improvement.

Slow Adoption Process

A clue to the future may be the $16 million in deferred revenues on the company balance sheet as of September 30, 2017.  Presumably these relate to existing SaaS contracts that call for specific monthly payments over the course of the upcoming 12-month period.

Shotspotter is losing money as you might expect from any young technology company.  But this condition is the result of the heavy cost of sales and marketing of a service as unusual as gunshot location detection.  If revenue growth is a fair measure of the effectiveness of its marketing approach, things are on track for future profits.  In the meantime, like any other tech company, investors will most likely focus on top line performance.  

Featured image courtesy of Shutterstock. 

Important: Never invest (trade with) money you can't afford to comfortably lose. Always do your own research and due diligence before placing a trade. Read our Terms & Conditions here. Trade recommendations and analysis are written by our analysts which might have different opinions. Read my 6 Golden Steps to Financial Freedom here. Best regards, Jonas Borchgrevink.

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4.4 stars on average, based on 75 rated postsJames Waggoner is a veteran Wall Street analyst and hedge fund manager who has spent the past few years researching the fintech possibilities of cryptocurrencies. He has a special passion for writing about the future of crypto.




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Walmart’s Flipkart Deal: The Dawn of a New Day in India

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It’s the dawn of a new day in India, particularly cross-border investment, thanks to Walmart’s groundbreaking controlling stake in Bengaluru-based e-commerce darling Flipkart. Walmart has tried for years to no avail to enter the South Asian country, until now.

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As a result of the deal, Walmart now has five seats on the online retailer’s board and is poised to play an influential role on the direction of the company — including a possible Flipkart IPO — setting the tone for further investments into the region in the interim.

It’s $16 billion deal values Flipkart at a whopping $21 billion and helps the Arkansas-based big-box retailer to compete more fiercely with Amazon, considering that the integration goes smoothly. Walmart has chosen a controversial target company to kick things off. Flipkart has been at the center of a saga ironically surrounding a previous cross-border investment.

Amazon is fighting back, however, as evidenced by it reaching into the belly of western India including Gujarat’s Bhuj, where some residents don’t even have online access. Amazon is taking an Etsy-like approach there with a focus on handmake craft items that are unique to this corner of the world.

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No doubt corporations around the world have it on their radar as a possible harbinger of more cross-border investment activity to unfold in the region.

Gopal Jain of Mumbai-based private equity firm Gaja Capital told The Financial Times: “India continues to be perceived in global boardrooms as a tough place to do business in.” But he also said that as a result of this deal, global executives have gone from “being on the heels to being on the toes.”

India’s Cross-Border Investment

The overhaul of India’s international investment has been two decades in the making. And while India Prime Minister Narendra Modi says his administration has opened the doors to foreign investment, there still hasn’t been much evidence of that. For instance, cross-border M&A into India totaled $14.5 billion last year, lagging the performance of other developing countries including Brazil and China by as much as 50%, as per Dealogic data cited in the FT.

Indeed, the last time that a deal of anything close to the size of Walmart’s Flipkart acquisition was more than a decade ago in the telecom space when Vodafone took a majority position in Hutchison Essar. That deal left a sour taste in the mouths of would-be pursuers given hostile tax environment in which Vodafone was forced to operate.

Prime Minister Modi has the opportunity to prove to the rest of the world that India indeed is open for investment. If the Walmart deal can somehow help to shake the stigma that is attached to foreign investment into India, as evidenced by the “tax terrorism” that’s been attached with the region, it, in fact, could reflect the dawn of a new day for cross-border M&A in India.

Feature image courtesy of Shutterstock.

Important: Never invest (trade with) money you can't afford to comfortably lose. Always do your own research and due diligence before placing a trade. Read our Terms & Conditions here. Trade recommendations and analysis are written by our analysts which might have different opinions. Read my 6 Golden Steps to Financial Freedom here. Best regards, Jonas Borchgrevink.

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4.5 stars on average, based on 6 rated postsGerelyn has been covering ICOs and the cryptocurrency market since mid-2017. She's also reported on fintech more broadly in addition to asset management, having previously specialized in institutional investing. Full disclosure, she's invested in bitcoin.




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R3’s Blockchain Corda Used By HSBC and ING For The First Time

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HSBC

UK-based HSBC Holdings Plc. along with Dutch ING Bank NV, completed the first transaction based on the blockchain.

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The transaction was credited to Cargill Inc. and was performed during last Monday. It was based on a shipment containing soybeans and transported from Argentina to Malaysia. The transaction relied on a distributed ledger technology or commonly known as blockchain platform named Corda, developed by the R3 consortium.

R3 Blockchain Network

R3’s own blockchain network is currently supported by 12 banks, including Bangkok Bank, ING, SEB & U.S. Bank, and of course HSBC among other international banking institutions, which could help the DLT technology broaden its borders and make it accessible to the mainstream public.

The use of blockchain technology eliminated the need for paper and/or other physical documents, while it drastically fastened the transaction process.

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Under traditional circumstances, the same transaction would require from five up to ten days to be filled, exchanged and verified by the respective parties involved in the transaction. Using next generation DLT technology, the process was smooth and instant without the need for mortal interference.

Vivek Ramachandran, HSBC’s global head of innovation and growth for commercial banking, issued the following statement when asked about the transaction:

“This is an inflection point for how trade is conducted. With blockchain, the need for paper reconciliation is removed because all parties are linked on the platform and updates are instantaneous.”

“The reason why letters of credit have persisted is because of two real challenges — the absence of digital infrastructure and the challenge of coordinating multiple parties. This platform helps us overcome the first and I think the technology and everyone focussed on it gives us the impetus to go after the second now with hopefully much better results than we have seen in the past”

The use of blockchain technology in the IT sector seeks to make transactions of crucial data more reliable, secure and faster. With DLT technologies, companies are able to reduce the risk of fraud in letters of credit and other types of transaction with the use of smart contracts, as well as severely reduce the number of steps required for the transaction to happen.

Major Partnerships

Letters of Credit (LoCs) are the main way for vendors (importers and exporters) to trade with each other, as it eliminates problems such as the great distance between them, the different language and the different laws.

LoCs guarantee more than $2 trillion worth of transactions annually, but the process creates a great deal of paperwork and it is extremely time-consuming.

R3, while a silent player in this disrupting scene, has managed to establish some astonishing partnerships with major international central banks, including the Bank Of America.

The company uses a slightly different approach when it comes to blockchain technology, which is relatively close to IBM’s approach with Hyperledger. Corda is not a token, and you won’t find it or its mixed market cap used by projects using R3’s network in CoinMarketCap or similar cryptocurrency trackers.

While many banks attempted to join the blockchain train with Ripple and other similar transfer unions using blockchain technology as their basis, HSBC and ING are not your average banks, and they’re definitely on the verge of something that might revolutionize the scene and bring banking institutions closer to the future.

Featured image courtesy of Shutterstock.

 

Important: Never invest (trade with) money you can't afford to comfortably lose. Always do your own research and due diligence before placing a trade. Read our Terms & Conditions here. Trade recommendations and analysis are written by our analysts which might have different opinions. Read my 6 Golden Steps to Financial Freedom here. Best regards, Jonas Borchgrevink.

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Goldman Sachs Plans On Joining The Blockchain Revolution

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While blockchain-powered monetary systems are considered extremely volatile by the majority of traditional investing firms and banking professionals, some of them might have found their way onto the scene. Take Goldman Sachs for an example.

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Goldman Sachs carries an interesting log of achievements throughout its history in the banking and venture capital fields respectively.

Being an American “Bulge Bracket” investment bank and financial services company, GS managed to get involved with major Wall Street banks, governmental agencies and Academic Institutions, as well as large industrial corporations, establishing a series of long-term relationships with their partners, clients and associates.

Goldman Sachs is considered a primary dealer in the United States Treasury market, and it is one of the few banks that suffered but endured the subprime mortgage crisis in 2008, receiving a $10 billion investment from the United States Department of the Treasury as part of the Troubled Asset Relief Program.

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Ten years later, Goldman Sachs is again on the main scene of the global economy, this time taking its chances by investing in the disrupting high-tech sector and specifically in distributed ledger technologies, commonly known as blockchain.

Goldman reported last week that they would soon open a trading desk for bitcoin (BTC) futures contracts after a series of requests generated by the bank’s clients and partners.

At the same time, the Goldman-backed Circle company recently purchased cryptocurrency exchange Poloniex and it is planning to transform it into a leading exchange.

Most of these banks have heard about the numbers or seen the numbers that companies like Coinbase and Binance are putting up. There’s a real risk that some of those companies could overtake some of Wall Street’s biggest banks if they don’t get in the market.

…says Spencer Bogard, a Goldman Sachs partner at Blockchain Capital, who thinks that although it is an important step towards the legislation of cryptocurrencies and/or other token-based systems, it might cause further confusion as we still can’t say with absolute accuracy which token is actually legit and which is not.

Rana Yared, an executive officer responsible for creating the “silk road” between the GS customers and cryptocurrencies as an investable asset class, quotes that “Bitcoin is not a fraud” as previously described by various other Wall Street major bankers, including Jamie Dimon from JP Morgan, as well as important figures in the scene such as Waren Buffet and Bill Gates.

Whether Goldman’s adoption is a move towards mass adoption of this innovative technology or just a short-term opportunity to make fast profit for the major banking institution, we can say with greater certainty that cryptocurrencies and blockchain technology are here to stay.

Featured image courtesy of Shutterstock. 

Important: Never invest (trade with) money you can't afford to comfortably lose. Always do your own research and due diligence before placing a trade. Read our Terms & Conditions here. Trade recommendations and analysis are written by our analysts which might have different opinions. Read my 6 Golden Steps to Financial Freedom here. Best regards, Jonas Borchgrevink.

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