Substrate AI is worth €31.2m or €1.35 per share according to analysts at Checkpoint Partners, which launches its first coverage with a buy recommendation
Checkpoint Partners, the Spanish investment bank specializing in technology, has initiated research coverage of Substrate AI, the Spanish artificial intelligence company listed on BME Growth, with a Buy recommendation.
For the investment firm, the company's valuation should be around €31.2m or €1.35 per share trading at 5.5 times expected sales in 2023. According to the research firm's report, these numbers are supported by the company's strong growth of close to 100% in total revenues in both 2022 and 2023, in line with its business plan and moderating to around 40% in 2024.
With this data the company would comply with the famous rule of 40 used by Venture Capital and Private Equity to value excellent Saas (Software as a Service) companies whose growth must exceed 40% if ebitda is negative as in the case of Substrate AI.
The report further highlights Substrate AI's business strategy, which is shaped as a Venture builder around artificial intelligence, creating companies either from scratch, as in the case of its subsidiaries in the field of agritech or energy, or based on the purchase of a business on which new solutions related to software and artificial intelligence are built, as in the case of its projects in the health or human resources sector.
The business is completed with the consulting services offered by the parent company Substrate AI to third party companies in the field of artificial intelligence, which in 2022 will generate revenues of 350,000 euros for the company.
With this business model that we can find in companies such as the German company Merantix, Substrate AI explores the full potential of the technology developed by its CTO Bren Worth together with the Rensselaer Polytechnic Institute in New York, which has its foundation in the reinforced learning and that allows the application of artificial intelligence in environments where it was not possible to do so before.
Substrate AI is framed within the AI Saas (Software as a Service) sector for companies and has presence in Spain, France and USA in sectors such as fintech, energy, human resources, agritech or health.
The SaaS industry has grown by more than 500% in the last 7 years and, according to the consulting firm Gartner, is worth some $172 billion annually. These systems represent 70% of all software systems used by organizations. Within this industry, SaaS services associated with AI, such as those developed by Substrate AI, will be the fastest growing, with figures close to 30% per year over the next few years.
About Checkpoint Partners
Checkpoint Partners is a Spanish investment bank specialized in technology and focused on M&A, capital increases and small company analysis. It is led by Guillermo Serrano and Adolfo Bohmer, two professionals with more than 25 years of investment banking experience in firms such as Baring, Santander or BBVA.