Founders and basketball players have at least one thing in common: They both have to know how to pivot.
When Louisville-based Value Buddy launched its first minimum viable product (MVP) in 2020, its business valuation software was focused on helping entrepreneurs and small businesses gain a better idea of their overall worth through a seamless, digital process. It has since had two additional MVPs.
“The business, while we were generating revenue, because startups and small businesses … while they know they need evaluation, they’re not always in the market to purchase one,” Value Buddy CEO/Co-founder Ace McGill told me.
That changed, though, after McGill and Cameron Long — the company's chief product officer and other co-founder who joined 2021 after McGill founded the startup in 2019 — started attending valuation conferences and heard the collective complaints of underwriters: Namely high default rates, as well as issues with analyzing risk and performance.
According to information that the founders pulled from Forbes, there are approximately two million business acquisition loans carried out per year. Those loans are underwritten by third party business valuations, per a requirement by the U.S. Small Business Administration (SBA) and a majority of banks.
“That made it a lot more scalable,” McGill said. “That made it to where if we moved from [business-to-customer] to [business-to-business], it would not only be more economical for us, but the sales cycle would be would be shorter, and then we could develop some strategic partnerships, and be able to get contracts with some of these banks and lenders."
Value Buddy is now being marketed as a fintech AI-powered platform that can perform underwriting business valuation and risk assessments, specifically during the business acquisition loan process for banks and other SBA lenders.
And so far, that pivot has been a fruitful one — as Value Buddy has been able to sign contracts with four banks (including one with Stock Yards Bank & Trust) as of a recent date.
In fact, McGill said the potential monthly recurring revenue generated from those three partnerships alone — around $25,000 — would more than double what the company had made in six months — around $40,000 — before it pivoted. It charges $1,800 per valuation, which is about 30% to 40% less than what legacy firms charge, McGill said.
Furthermore, the company has also been able to enjoy newfound success when it comes to building its brand awareness in both the local and national entrepreneurial ecosystem.
Fresh off winning the latest 5 Across competition from Awesome Inc in late February, Value Buddy has been selected to take part in the spring cohort of Techstars Tulsa — after being named a winner of the Render Capital Competition in 2023.
The Oklahoma-based Techstars, which began on Monday, has a theme of supporting the growth of Black-founded startups. This is due to the historical significance of the city that once was the site of a thriving “Black Wall Street” in the 1910s (before being destroyed in 1921 by white supremacists). McGill added that his company is the first of its kind that is both Black-owned and certified to perform underwriting business valuations for SBA loans.
“I was super stoked, because I’ve been told that it's harder to get into Techstars than it is to get into Harvard,” McGill said. “Building Value Buddy in Tulsa with Techstars isn’t just about creating the next fintech unicorn; it’s about honoring the legacy of the Black Wall Street pioneers and fostering a new era of innovation and opportunity in Tulsa."
About seven months ago, McGill, a Louisville native, decided to leave a position at Brown-Forman (NYSE: BF.A, BF.B) in a corporate finance role to pursue Value Buddy in a full-time capacity. Before that, he had held similar roles at corporations such as Whirlpool and Procter & Gamble.
Value Buddy is in the middle of raising capital, $625,000 to be exact. As of recent date, it had raised approximately $250,000 (including funding from Techstars, Render Capital and Keyhorse Capital). The company looks to expand its headcount, and increase marketing and product development.
