Tell us about yourself
I’m Michael Kelly, founder of Investment Science, a consulting firm offering objective advice to banks. Investment Science Capital is a private equity infrastructure fund. I also created SageFusion, an AI treasury management platform for accredited investors, and Strategic Deal Space, which provides alternative financing. One case study involved a government client that secured $950 million in funding despite having $0 revenue. My lifelong interests include numbers, technology, and entrepreneurship.
How did you get started in investment management?
I began investing at 14, with many innovative products I’m developing now first conceived in childhood. Investment Science provides strategic guidance to financial institutions, government agencies, and educational entities. In partnership with a bank, we created an investment strategy that tokenized offerings, achieving 10x leverage on capital commitments and structuring a $200 million debt facility. The blend of human intuition and AI can enhance investment strategies, yet the human element is vital in complex financial landscapes. Our AI-driven focus has evolved through continuous learning; we achieved a 55% return on investment while I managed banking hours. Currently, we’re enhancing returns with leverage, insurance products, and tangible assets via Investment Science Capital.
Tell us about some of the deals you are currently working on
We manage a diverse portfolio across various sectors, including government initiatives, small businesses, start-ups, and established firms. Our projects encompass construction, infrastructure development, alternative energy solutions, smart city initiatives, and data centers. Additionally, we educate investors and entrepreneurs on risk mitigation through insurance products and partnerships with institutions like the EXIM Bank.
What has been your most successful deal to date?
Our most successful deal involved the Department of Commerce, where we structured a $500 million bond offering backed by their patent portfolio, despite an initial revenue of $0. Collaborating with a banking partner, we tokenized the offering, achieving 10x leverage on capital commitments and structuring a $200 million debt facility. Leveraging strong relationships with banking presidents, we secured an additional $250 million, totaling $950 million in structured capital for the client.
You work with high profile clients; how did you build your profile to attract HNWIs?
Breaking into the banking and the hedge fund industry in 2009 required a proactive approach. I built relationships with brokers and decision-makers, creating an academic-friendly environment focused on transparency and cooperation. This approach fostered trust and led to numerous referrals, as clients sought our expertise in structuring advanced financial models. We specialize in non-traditional financing methods, successfully securing debt and licensing data even without revenue, making us a valuable resource for high-profile clients seeking innovative solutions.
What are your views on AI based investment management?
I have a bullish view of AI-based investment management. At SageFusion, we’ve leveraged advanced financial models since 2009, well before AI became a buzzword, despite the underlying mathematics existing since the 1970s. A key challenge in financial modelling is model decay, where models can deteriorate due to changing market conditions. In this context, AI enhances decision-making by providing deeper insights and robust analyses. However, AI will never fully replace human judgment; the interplay between human intuition and AI can create smarter investment strategies, especially as tokenization emerges as a new trend in the financial industry.
What are the challenges presented by AI?
The rise of AI brings significant challenges, including copyright infringement, GDPR compliance, information privacy, and ethical concerns. As AI evolves, we must navigate these complexities, especially as it shows strategic growth year after year. A major concern is job displacement, which can reduce tax revenue for governments and communities. We need innovative solutions that enhance worker productivity without displacing the workforce. By leveraging AI as a collaborative tool that complements human efforts, we can create an environment where technology and human skills coexist, driving productivity while maintaining economic stability. Establishing frameworks to address these challenges is essential for promoting responsible AI development and implementation.
You initially founded SageFusion when you were 19, tell us more about this venture, how it started and how it has pivoted in response to the industry.
I founded SageFusion at 19 with Dr. Weinbach during a turbulent time in South Carolina, which sparked my desire to create mathematical models for automating investment recommendations, allowing $100 to be allocated into 100 different investments. In the early years, we faced challenges in developing the necessary frameworks, but the rise of no-code programming in the past five years transformed our product, removing barriers to entry.
As the industry evolved, SageFusion integrated its models with tangible assets, leading to the creation of Investment Science Capital, a private equity infrastructure fund. This pivot positioned SageFusion as a treasury management platform and a facilitator of repos, capital leverage, and debt issuance, enhancing our market engagement through mergers and acquisitions. My journey reflects continuous learning and adaptation, and I’m excited about future developments.
Do you have a successful case study of AI-based investment management that you can share?
We achieved a 55% return on investment while I managed banking hours with limited time dedicated to it. Currently, we’re enhancing these returns through leverage, insurance products, and the tangible assets underlying the software via Investment Science Capital.
Tell us about your company, Investment Science.
Investment Science is a management consulting practice that stays on top of the latest trends in banking and technology. Our main clients are financial institutions, government agencies, educational institutions, and technology firms.
What led to you founding Investment Science?
Investment Science began as a spinoff from SageFusion, leveraging advanced mathematical modeling to provide valuable insights to corporations. While it has gained recognition, it often overshadows initiatives like SageFusion, Strategic Deal Space, and Investment Science Capital. Our original concept was to illustrate how a $100 investment could diversify into over 100 assets, minimizing risk and maximizing returns.
Today, Investment Science is a management consulting practice dedicated to offering objective advice to financial institutions, government agencies, and academic institutions. We specialize in solutions across financial services, strategic growth, and automation techniques, while also teaching clients to create effective pitch decks, develop AI models, and automate the capital-raising process.
As a firm, what makes you unique in the marketplace?
What sets us apart is the seamless integration of our platforms, creating a holistic investment ecosystem. SageFusion employs advanced mathematical models on real-world assets for sophisticated treasury management, while Investment Science delivers objective advice to navigate complex financial landscapes. Strategic Deal Space enhances our positioning by connecting clients with the right opportunities, accelerating deal flow. Investment Science Capital warehouses real-world assets, aligning with our vision of diversifying a $100 investment into over 100 products. This multi-faceted approach maximizes returns and mitigates risk, making us a distinctive player in financial services.
Who do you serve through Investment Science?
1. Banks and Financial Institutions: We provide consulting services to enhance operational efficiency, risk management, and strategic growth.
2. Government Agencies: Our expertise helps government entities improve their financial models and investment strategies, ensuring better resource allocation and project financing.
3. Academic Institutions: We collaborate with educational organizations to develop financial curricula and training programs that empower the next generation of finance professionals.
4. Family Offices: We assist family offices in structuring their investment portfolios, ensuring effective risk management and alignment with their long-term financial goals.
5. Private Equity Firms: We provide insights and strategies for capital raising, mergers and acquisitions, and overall portfolio management.
6. Startups and Small Businesses: We offer guidance on fundraising, financial modeling, and market entry strategies to help them achieve sustainable growth.
7. Nonprofits and Foundations: We help these organizations optimize their investments and manage their resources effectively to further their missions.
What has been your biggest achievement as a company?
Investment Science has achieved significant milestones that demonstrate our value in the financial landscape. Notably, we secured $1 billion in savings for a major client, leading to a 30% increase in net income and boosting client productivity by over 40%. Our Strategic DealSpace generates over $2 billion in annual deal flow, effectively matching clients with high-potential opportunities for strategic investments.
SageFusion enhances our operations by enabling us to secure debt through data analytics, optimizing financing options, and advanced treasury management techniques. Investment Science Capital further solidifies our market position by warehousing real-world assets, providing tangible value that adds security and trust to our offerings. Together, these elements empower clients to navigate the complexities of modern finance successfully.
What are your goals with Investment Science?
My goal is to create innovative lending products that eliminate reliance on credit scores, allowing individuals to learn from failures rather than be punished. I aim to develop financial solutions that prevent panic while reducing risk and enhancing morale and capital for all, including the wealthy, middle class, and especially the underprivileged.
You are focusing on government contracting and building financial models for international trade agreements. Tell us more about this.
Currently, I focus on government contracting and developing financial models for international trade agreements. Our Strategic DealSpace initiative is backed by the Department of Commerce, facilitating international deal flow between countries.
The EXIM Bank plays a critical role by offering programs that mitigate risks in international transactions, ensuring that both parties are compensated if deadlines are missed. By leveraging these resources, we create robust financial models that provide a safety net for investors and businesses in global trade, enhancing the reliability of international deals and encouraging more organizations to explore global opportunities.
Where do you see the future of investment management heading?
The future of investment management is set for transformation, marked by consolidation and lower fees. While the 1980s were a golden era of innovation in banking, the landscape has shifted dramatically, with banking increasingly functioning as an AI-driven data center and middleman.
This evolution will likely lead to more consolidation as firms optimize operations and cut costs. The impending wealth transfer will also change how individuals engage with their finances, with a growing preference for self-management over third-party reliance.
This shift creates opportunities for technology-driven solutions that empower individuals to manage their investments effectively. As investors become more informed and equipped with advanced tools, the role of traditional investment managers may diminish, leading to a democratized investment landscape. Ultimately, those who adapt and leverage technology to meet evolving investor demands will thrive in this new era.
Can you share case studies of structuring/creating bonds/loans offerings when you have no revenue?
Client: A tech startup with proprietary data analytics capabilities but no revenue.
Challenge: Difficulty in securing traditional financing due to lack of revenue streams.
Solution: We valued the company’s data assets and identified revenue-generating opportunities through licensing agreements. By structuring a debt offering backed by the data, we secured a $2 million loan with a non-recourse clause, limiting liability to the data itself.
Outcome: The funding allowed the client to continue product development and expand market presence.
Case Study 2: Patent-Based Bond Offering
Client: A military contracting firm with a strong patent portfolio but no current revenue.
Challenge: Attracting investors and funding research and development initiatives.
Solution: We analyzed the firm’s patent assets and structured a bond offering backed by them, attracting investors interested in the firm’s innovations.
Outcome: The firm is issuing $500 million in bonds to finance ongoing research, supported by a prominent investment bank for $250 million, and exploring a $200 million tokenized convertible debt offering.
Case Study 3: Licensing Data for Debt Financing
Client: A data-centric company with an innovative algorithm for predictive analytics but lacking revenue.
Challenge: Traditional lenders hesitated to provide funding due to no cash flow.
Solution: We recognized the proprietary algorithm as a valuable asset and proposed a financing structure that included licensing the data. By placing debt on anticipated revenue from these agreements, we created a viable financing solution.
Outcome: The company raised $1.5 million through a structured loan agreement, enabling them to scale operations and explore further growth opportunities.
How can strategic partnerships be leveraged to raise capital?
Strategic partnerships can be leveraged to raise capital through alliances where companies share resources without shouldering each other’s financial risks. These collaborations enhance market presence and combine strengths to access new opportunities.
Additionally, utilizing institutions like the EXIM Bank can significantly strengthen this process. Through the EXIM Bank, capital can flow in a structured manner, ensuring timely compensation for both parties, even if one side fails to meet its obligations. Such mechanisms mitigate risks for individual companies while promoting economic growth by ensuring effective use of funding and resources, leading to more robust and resilient business operations.
You are based primarily in the US, if any of our readers are interested in relocating to the US as an investor, what do you advise?
If you’re considering relocating to the U.S. as an investor, we can assist you throughout the process. We help you navigate obtaining a Green Card through investment programs and introduce you to U.S. businesses that align with your goals.
Additionally, we support your acclimation to American culture, ensuring a smoother transition into your new environment. By leveraging our network and expertise, we enable you to make informed decisions, establish connections, and thrive as an investor in the United States.
Tell us about your upcoming book, ‘The Wealth Almanac: Historical Insights for Contemporary Fortune’
The Wealth Almanac: Historical Insights for Contemporary Fortune will be available on Amazon in the next 90 days. This book explores financial history, economic financing, and the essential skills needed to excel in today’s evolving financial landscape.
What are your personal goals for the next 5 years?
Over the next five years, I aim to own a bank and develop advanced financial products that serve both consumers and businesses, ensuring opportunities for success regardless of financial status. I also consider pursuing law school and completing an EMBA.
How can our readers find out more about you?
http://linktr.ee/michael_kelly
To learn more about the book launch, readers can visit: https://www.investmentscy.com
To learn about Sagefusion visit: https://www.sagefusion.co
