A technology firm dedicated to providing risk and compliance tools for municipal bond and other fixed-income market participants on Tuesday received $2.5 million in financing.
The infusion will help Stamford, Conn.-based Lumesis Inc. with product development and enhancement, as well as sales, marketing, and expanding its customer base, said Tim Stevens, co-founder, president, and chief operating officer of Lumesis.
Safeguard Scientifics Inc., a holding company that backs growth-stage life sciences and technology companies, delivered $2.2 million of the Series A capital. Other participating financiers included NextStage Capital LP, an early stage investor in Mid-Atlantic-based technology companies, and angel investor Jim Ashton, managing partner of JA3Partners, LLC.
Safeguard identifies Lumesis as a firm in its initial revenue stage. Lumesis develops analytical, visualization, and notification tools for credit analysts, portfolio managers, registered investment advisors, issuers, and underwriters. Currently, their two main tools are Diver and CDM.
Lumesis combines more than 130 data sets to deliver to customers economic and demographic data to help them identify risks in their portfolios, recognize opportunities in the market, and improve decision-making.
With Diver, which stands for demographic information visualization for economic research, and CDM, or continuing disclosure management service, Lumesis developed interactive, Web-based research tools that offers visualization, analytics, and notifications.
The technology lets users evaluate their portfolios or a single security identified by a CUSIP number against an aggregated database of demographic and economic indicators that give clients insights into the underlying financial health of an issuer.
The new financing will let Lumesis make significant enhancements to its Diver product, both in terms of data and features, Stevens said. Changes to the data side should entail giving customers expanded and more granular data sets. On the feature side, he added, the firm is developing more robust data analysis and notification tools.
The financiers note that Lumesis occupies a strong position to develop products suitable for the new environment for muni bond investors, issuers, and underwriters who have new demands for information.
Furthermore, they recognize that the muni marketplace has undergone a dramatic transformation over the past several years. Lumesis products, they say, can help in a landscape with declining tax bases, large pension obligations, changing bond-rating criteria, and far fewer insured bonds.
Going forward, Stevens wants Lumesis products to reach more market participants. Diver appeals mostly to buy-side financial institutions, such as asset managers, insurance companies, and mutual funds. But it has also found an audience among some banks, financial guarantors, and investment advisors.
Stevens wants the firm to expand further into its client base. The firm has 20 institutional clients.
In addition to enhancing its current offerings, Lumesis has an eye on the next frontier for the muni market, Stevens said.
“We see an opportunity related to changes in the regulatory environment, related to munis, and compliance with those requirements,” he said. “So, the market will be hearing from us, with respect to a product that addresses those needs.”
