Beyond the Arches #33: While the economic waters continue to fluctuate, finance-related startups may offer steadier seas for investors.

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The economy continues to capture our attention as another week of earnings and interest data shapes the outlook at home and abroad. The Dow and S&P enjoyed better performance this week after a tumultuous start to last week, seeing the Dow close more than 600 points lower to kick off the month, while the S&P 500 suffered a 2% slide. The most recent performance shows a rebound of 200 points for the Dow and a four-day win streak for the S&P.

Chip stocks like Nvidia played heavily into the larger economic outlook, with the AI-leading chipmaker taking a 7% dip last week on the heels of a less-than-expected Q2 earnings report. While the dip is sudden, the chip manufacturer still hangs on to its stratospheric gains from last year. 

Mortgage rates continue to trend downward – a boon to prospective homeowners and investors. The 30-year fixed rate loan dipped to 6.46% last week, a 0.07% decline over the previous. Inflation cooling and adjustments in the labor market are giving the Fed more confidence to cut rates, though details on the timing or severity of cuts are still forthcoming. 

The auto industry is similarly looking for relief from a rate cut. The potential for a September cut would boost an industry that’s heavily dependent on affordable rates to move inventory and customers eager for new vehicles without the added price pressure of high-interest loans. 

How to invest in finance startups

With the potential boost in business to inflation-sensitive industries, investing in these sectors ahead of planned cuts could benefit a well-diversified portfolio. Here are several trending investments to consider:

• BraveHart: FranShares is pleased to present an opportunity for accredited investors to participate in a raise for a 10-location franchise expansion of the fast-casual food brand, Hawaiian Bros. The operators for this offering, BraveHart Development, currently manage another franchise for this award-winning restaurant in Iowa. Hawaiian Bros has been recognized for its strong systems and popular product offerings, earning spots on the Technomic Top 500 list and QSR Magazine’s 40/40 list. 
• Payroll4free.com: Payroll administration can be an expensive and complex part of owning and operating a small business. Payroll4Free aims to alleviate that burden with a competitor to larger payroll services like ADP or Paychex that gives very small businesses access to basic services free of charge. The company serves businesses with fewer than ten employees, helping fledgling and family brands streamline payroll and avoid the pitfalls of IRS penalties for improper payroll administration.
• SaberTrade: Retail trading has blossomed in the last decade, but access to trading information still lags behind – which has left new traders struggling to find reliable investment content. Enter SaberTrade, an AI-enabled trading companion that uses a browser plugin to deliver quality investment news in a condensed format for digestibility and actionable trading info. The platform offers real-time trading insights, automated summaries of content, and integrations with some brokerages for streamlined trades.

On Our Radar This Week

• With tensions mounting over the ongoing conflict between Russia and Ukraine, and emerging evidence of Russia’s continued interference in U.S. elections, much focus has been placed on the actions and movements of President Vladimir Putin. Despite the 2023 International Criminal Court (ICC) warrant for Putin’s arrest, Mongolia welcomed the leader for a state visit – ignoring the international warrant stemming from alleged war crimes.
• Elsewhere on the war front, World Health Organization officials last week rushed to administer the polio vaccine to over 640,000 children in Gaza during a short humanitarian ceasefire. The 10-day operation was reportedly successful, with the WHO surpassing its goal of vaccinating 150,000 children in the first phase of the operation.
• The United States has seized an airplane belonging to Venezuela’s Nicolás Maduro, citing the plane’s illegal export via a shell company purchase. After seizing the Dassault Falcom 900EX, which was owned and operated by Maduro, the U.S. Department of Justice returned it to a holding facility in Florida. The plane’s purchase violated U.S. sanctions that were put in place as a response to the alleged election interference in Venezuela by Maduro and those who support the dictator’s continued rule.  

Macro Bites

• More than 10,000 U.S. hotel workers strike during Labor Day weekend. Workers for 24 Hilton, Hyatt, and Marriott hotel locations walked out last in protest of poor working conditions, health care, and compensation. That initial action has since expanded to more locations and workers.
• Nvidia’s future relies on chips that push the limits of technology. The manufacturing obstacles, delays, and higher costs create challenges as the chip maker strives for bigger AI capabilities and shareholder value. 
• Costco’s first membership price hike in seven years is now in effect. In another sign that economic pressures continue despite improving conditions, Costco just increased three of its membership plans.

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With its patented waste compaction service, Smash My Trash is disrupting the $1.6 trillion waste management sector. By compacting waste in open-top dumpsters to reduce waste volume, customers save money (up to 20% of waste removal costs) and reduce their CO2 emissions by up to 65%.

Teriyaki Madness stands out with its fresh, made-from-scratch meals and a lively, inviting ambiance, revolutionizing the fast-casual Asian dining scene. Its surging popularity is evident on platforms like Yelp, Facebook, and Google, where an increasing community of enthusiasts sing its praises.

Highlights:

• Target locations: Up to 55
• Smash My Trash per-location economics: $885K in revenue with 28% EBITDA after 16 months of operation
• Teriyaki Madness per-location economics: $1.16M in revenue with 20% operating profit

As the Smash My Trash and Teriyaki Madness locations come to fruition, investors in TNT Franchise Fund Inc. can expect to receive excess cash flows from the business operations of the locations on a quarterly basis.

For more information on the offering, contact our team.