Balancing risk and reward is the essence of investing, but in an increasingly complex world keeping tabs on where the potential banana skins lie is becoming ever harder.
Set up and run by IT veteran Keith Todd, the business does not yet consist of anything more than a prospectus but on the back of that he has raised £10mln.
The plans is to buy software businesses and build a global risk platform that will flag in real-time where a problem is arising.
A 'hammer to costs'
At present, financial businesses solve their risk problems by throwing money at them, he says.
Just get it done has been the attitude and that has resulted in huge costs and a spaghetti junction of systems.
Businesses need to stand back, take stock and integrate their risk monitoring.
Imagine a pilot’s cockpit, where the job, in the air at least, is primarily to monitor all the systems and react when a light starts flashing.
Todd wants a real-time ‘risk cockpit’ for finance and investment companies where up to 500 defined risks are flagged by red, amber or green indicators.
Legacy systems involve finding who is responsible, the line manager and sending an email in a process that can take weeks, he says.
Real-time risk monitoring
Using the system Todd wants to build, notification would happen instantaneously.
Businesses acquired would plug-in applications to broaden the range of the platform across four types of risk: capital; regulatory; technical and market.
A beta cockpit product taking feeds from underlying systems and accessible by mobile app or tablet is expected by the end of 2018 with a full launch in the first quarter of next year.
Todd will use his lengthy experience of building businesses in the financial services industry to find suitable acquisitions.
Track record bodes well
FFastfill, a software service provider to the derivatives industry where he was executive chairman for 15 years was sold to Ion Group in 2013 after an increase of about seven times in value.
Currently, Todd is non-executive chairman of digital TV group Amino Technologies, but KRM22 will be a full-time executive role.
Todd makes it clear that the recent cash raise is the just the start and more funds will be raised as the platform’s development gathers momentum.
“Accessing capital markets is key for us and that is why we joined AIM so early.”
KRM22 shares started trading 30 April at 100p and currently trade at 148.5p, valuing the company at £18.7mln.
Initially, the focus is likely to be hedge funds and derivatives businesses but after the scope will widen.
“People have been approaching us to say they would like to work for something bigger.
“Being part of KRM22 will enable them to fulfil their objectives and advance our business.”
Todd says it will be aggressive on acquisitions and investors should expect to see a steady deal flow throughout 2018 and 2019
There are a lot of risk tools in places such as London, Chicago and New York that are potential targets.
So far, his team have looked at fifty possible opportunities in the UK and US with talks with two said to be at an advanced stage.
It is a clear opportunity, he adds.
“There is too much cost and too much complexity currently.”