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Startup PFITR Offers A ‘Blue Book’ in Bond Deals

4 min read

Financial technology startup PFITR has moved into the Little Rock Technology Park and hopes locals will invest in its one-of-a-kind online tool.

That tool, which the company calls the “Kelly Blue Book” of the bond market, is designed to better inform those buying and selling bonds for institutions — cities, school districts, hospitals, banks, etc. — about how much they should pay or be paid for bonds, risk and when the time is right to buy or sell based on trends.

The accelerator that brought PFITR and its tool here was a 12-week boot camp held in Little Rock by the nonprofit Venture Center and global technology provider FIS. The center is also a tenant of the Tech Park.

The boot camp’s purpose was to help PFITR and nine others validate, develop and scale business ideas into real ventures, and reach $1 million in annual recurring revenue.

Each startup received an initial $50,000 investment for a 6 percent equity position.

The accelerator has been extended until 2018 for $2 million and is being funded with $500,000 each from FIS and the state’s discretionary funds. The second round is set to start May 8.

As for PFITR, it’s not profitable yet but had revenue of $40,000 in its best single month, founder and CEO Jim Koetting said.

The company he started in 2013 also has offices in Chesterfield, Missouri, and in India.

“I’ve come [to Little Rock] with the hope and expectation that we’re going to find good investment down here … We’ve got a great community” plus access to highly successful entrepreneurs like FIS; Arkansas Systems Inc.’s founder, James Hendren; and Acxiom, Koetting said. Hendren is now chairman of Little Rock’s Broadband Development Group LLC, which sells HyperLeap internet service.

The Arkansas Economic Development Commission and the Venture Center have been good resources too, Koetting added.

Koetting also warned that bringing in good companies will be short-lived if people continue to invest in larger entities outside the state that they consider to be less risky.

The CEO said PFITR is risky only because it’s small, but its tool is unique. Koetting added that the startup has met with State Treasurer Dennis Milligan, and his office has access to the tool.

What sets this tool apart is its affordability and flexible pricing. The startup buys information for it from FIS-owned SunGard of Wayne, Pennsylvania.

Koetting said PFITR’s goal is to keep the cost under $1,000 a month per institution. The cheapest comparable tool costs about $1,500 a month per person, he said.

The tool is also user friendly. Users type in the CUSIP number that identifies every bond. (The acronym stands for the Committee on Uniform Security Identification Procedures.)

Once users provide that number, PFITR’s tool shows them the fair market value price at the close of business on the previous day, what type of bond it is, the interest it would earn and when it matures.

Koetting said this helps users negotiate with their brokers. “Your broker that was calling you up, saying, ‘I’ve got this one for 96,’ you go up to and say, ‘I’m seeing it for 94.8.’ You know what the broker does? They stutter; they literally stutter … This is leveling the playing field.”

The broker may then offer the bond at a lower price. The tool will show and record how much the user saved.

The tool shows the history of a bond’s price over time, too, and determines based on trends whether it’s a good day to buy or sell.

Everyone wants to buy low and sell high, including brokers, Koetting said. He said brokers may pressure clients to buy the bonds that are most lucrative for the broker, but this tool can help clients avoid that pitfall.

The tool also shows users what would happen to the price of a bond if interest rates go up or down, Koetting said, meaning it calculates risk.

The CEO’s background is in education, and he trained treasurers in the public sector throughout the United States using a book he wrote, “Public Fund Investing for Dummies.”

But Koetting said that was like teaching someone how to play a guitar with just a book and no hands-on instruction.

PFITR’s tool lets him do what he is driven to do.

“My passion is really taking complicated bond issues, making them very simple and easy to understand, and then helping [government officials] be better stewards of our tax dollars. And then I work with banks, nonprofits, corporations to help everyone become a better steward.”

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