Trust Stamp Review: A High-Quality Startup for Investors

TrustStamp has a bright future as things like facial ID and fingerprinting become ubiquitous

Trust Stamp is one of the highest quality startups to invest in on SeedInvest, the world’s leading equity crowdfunding platform. Because startups are inherently high-risk, high-reward investments, you have to be very selective about choosing what startups to invest in. Let’s jump into our Trust Stamp review.

Trust Stamp Review: A High-Quality Startup for Investors
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Trust Stamp is a pioneer in biometric security, essentially providing advanced tools which help consumers and businesses protect things like your face ID from being stolen by cybercriminals.

The bull thesis is that biometrics are the future of security, and that as more and more consumers and businesses turn towards biometrics in lieu of passwords, all those consumers and businesses are going to need to upgrade their security methods to include biometric security. Trust Stamp is an early leader in this field, and consequently, has the potential to become a global leader in security over the next few years.

Regular InvestorPlace readers are no stranger to equity crowdfunding – the recent paradigm shift wherein retail investors like you and me can become our our venture capitalists, and directly invest in the world’s hottest startups through various online platforms. They also aren’t strangers to the idea that crowdfunding is something all investors should partake in today, since your average VC firm has double the annual returns of the stock market.

In considering your Trust Stamp review, you should know that the company is currently raising money at a $25 million pre-money valuation. I see this as a billion-dollar company one day. That implies 3,900% return potential.

Needless to say, Trust Stamp is – at the very least – worth your attention today.

Trust Stamp is a Pure Play on the Biometrics Boom

Benjamin Franklin once said that there were only two certainties in life: death and taxes.

Back in the 1700s when he coined that phrase, they didn’t have computers. Now that we do have computers, we can modify Franklin’s original statement to say that there are now three certainties in life: death, taxes and cyberattacks.

In 2018, nearly half a billion personal records were stolen by cybercriminals, equating to roughly 15 personal records being stolen every second of every day. In response to this huge swarm of cyberattacks, companies and consumers alike are pivoting to biometrics, which essentially just means using things like face ID and fingerprinting, in place of passwords.

Why? Because stealing someone’s face is a lot harder than stealing someone’s password. And, on that idea, biometrics are, over the next few years, expected to become nearly as ubiquitous as passwords are today, with biometrics authenticating $2 trillion worth of payments globally by 2023 and the biometrics service market expected to grow by nearly 200% from about $16 billion in 2018, to almost $50 billion by 2025.

Still, biometrics aren’t a “silver bullet.” Hackers can still steal biometric data. In the first half of 2019 alone, there were 3,800 biometric data breaches. And, when biometric data gets stolen, it’s a much bigger deal, because you can’t change your thumbprint or your face ID like you can change your password.

Insert Trust Stamp, who leverages a proprietary deep neural network algorithm to anonymize biometric data, so that it cannot be traced back to an identity unless done so with Trust Stamp’s probabilistic AI matching algorithm. It’s a genius — and arguably perfect — way for companies and individuals to store, secure and protect their biometric data.

Over the next five to 10 years, as the use of biometrics proliferates across the globe, the deployment of Trust Stamp’s biometric security solutions will similarly proliferate everywhere, paving the path for this to one day be a billion-dollar company.

A Billion-Dollar Valuation?

The numbers indicate that by 2025, Trust Stamp could hit that valuation.

The global biometrics service market is expected to measure nearly $50 billion by 2025. Trust Stamp indicates in their offering documents that they expect to snag about 0.5% of that market. That seems totally reasonably, given that Trust Stamp is the global leader in biometric security with flagship customers that include Mastercard International and Synchrony Financial.

Assuming so, you’re talking about $250 million in 2025 revenues for Trust Stamp.

Meanwhile, the margin profile at that time should be quite attractive. Yes, the company is going to have spend an arm and a leg for the foreseeable future on research and product development, since their security solutions will forever have to remain ahead of cyber criminals’ hacking efforts. But, this is also essentially a software-as-a-service (SaaS) business model with exceptionally high gross margins around 70%, while a lack of competition in the biometric security space will drive down sales and marketing spend.

Net net, you’re probably talking a 70% gross margin company at scale, with a 50% operating expense rate, for 20% overall operating margins.

That implies $50 million in operating profits for Trust Stamp. Take out 20% for taxes. You’re left with $40 million in 2025 net profits.

Application software companies like Trust Stamp normally trade with a forward price-earnings ratio of 35. Applying that multiple to $40 million in profits equates to a potential $1.4 billion valuation.

That implies 5,500% return potential in Trust Stamp over the next four to five years.

Bottom Line on the Trust Stamp Review

For investors in the equity crowdfunding space, biometric security leader Trust Stamp is one of the best crowdfunding startups to invest in today.

Not only does this company operate in the booming biometrics market with huge potential, but they are also a leader in that market, with minimal competition, visible runway to enormous revenue growth, and a strong gross margin profile.

Given all that, I think it’s worth at least checking out Trust Stamp’s crowdfunding campaign on SeedInvest.

Luke Lango is a Markets Analyst for InvestorPlace. He has been professionally analyzing stocks for several years, previously working at various hedge funds and currently running his own investment fund in San Diego. A Caltech graduate, Luke has consistently been rated one of the world’s top stock pickers by various other analysts and platforms, and has developed a reputation for leveraging his technology background to identify growth stocks that deliver outstanding returns. Luke is also the founder of Fantastic, a social discovery company backed by an LA-based internet venture firm. As of this writing, he did not hold a position in any of the aforementioned securities. 

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