Eqwin Review: I Invest €150 in Racehorses

Summary

An innovative project supported by the major players in the horse racing world, whether they are the media, key personalities, or the jockeys and drivers themselves. Its ambition is no longer to enable investment in racehorses but to revolutionize horse racing betting.

✅ Pros :

1. Accessible for all budgets. I’ve seen horses available for purchase for less than 1 euro.
2. The app is very well-designed. It already has many features and valuable data for comparing horses.
3. Tailored for beginners. There is a lot of well-illustrated information on the app, FAQ, newsletter, and even on YouTube to learn and understand the world of horse racing better.
4. Experienced founders who are very knowledgeable about the industry and have an extensive network.

❌ Cons :

1. A lack of liquidity despite a growing community. It takes time before you can successfully resell a horse.
2. Imbalance between supply and demand. There are far more horses than users, leaving many without owners.
3. Ambiguity regarding ownership which will deter major investors.
4. A young project that may encounter many unforeseen issues and significant challenges.

Context

Always curious about new ways to invest and diversify, I was drawn to a targeted ad from this company whose promise was "Your own racing stable from 1$."

I then imagined myself as the owner of a share of a real racehorse competing at the Longchamp racecourse. On paper, it all seems possible. The world of horse racing has long been the delight of many wealthy investors. It's already monetized through betting and racing. I then allow myself to think that tokenization has come to evolve the sector, and Eqwin is the initiator of this change. Let's take a look.

Eqwin, what is it?

The Concept of the App

Launched in June 2023 by Nina Caput (CEO), Anaïs Izaac (CMO), and Charley Lauffer after nearly two years of development, the application offers a marketplace where you can buy and sell digital memorabilia. These are individual representations of some of the 30,000 horses participating in races (trot and gallop) across the 235 French racetracks.

The project's first major strength is its data management. For each of these equines, a personal record is associated, on which you can find all the information related to the mounts (Official name, sex, age, discipline, race results, trainer, pedigree).

Eqwin has even created its own indicators such as the Market Sporting Value (MSV), which allows tracking the transaction evolution of each mare, stallion, and gelding, similar to a stock market course, as well as their Indicative Sporting Value (ISV). The latter is calculated based on the horse's performance, its consistency, earnings, and the prestige of the races it participates in. These two indicators are perfect for understanding a horse's theoretical value and its market value. Information that will be important for us to detect opportunities.

It would seem that the original idea of the project was to be able to buy a share of a horse's ownership (similar to stocks in a company), but this no longer seems to be the case. Indeed, Eqwin clearly states that holding a digital memorabilia does not give you ownership of a horse.

My analysis: Unfortunately, this is for me the major limitation of the project. This difference is significant because it removes all the benefits that ownership offers in legal and financial terms. With this setup, it's impossible to hope to receive a portion of the horse's earnings. However, the app does not lose all its interest because it is still possible to make money with Eqwin.

Analysis of the Founders

As with an investment in Private Equity, I delved into the fundamentals of the company before even considering if the concept could be profitable for me. Even if I managed to make money buying and selling horses, things could quickly become complicated if the company were to fall into poor health. Here is a brief analysis of the publicly available information about our three founders.

Nina Caput (CEO) :

• A first entrepreneurial experience of over two years that already merged the equine world with technology (EquineLedger), attracting interest from companies like IBM.
• A vast network (riders, personalities, investors, industry professionals) built over time through her career as a professional rider and various entrepreneurial projects.
• Outside of entrepreneurship, only brief experiences (<1 year) as a business developer in small structures (<300 employees).

Anaïs Izaac (CMO) :

• Extensive and varied professional experiences (journalist, salesperson, marketing/communications, innovation, data, AI) in large companies (Orange, Socomec, Sofrecom).
• She has been deeply involved in the equestrian world for many years.

I am impressed by the marketing work at Eqwin. Everything is coherent and very well executed, from the graphic charter to the contents. Marketing being my specialty, I am normally very demanding about this aspect.

Charley Lauffer:

• Owner, breeder, and trainer of racehorses since 2010.

Others:

• Two very experienced full-stack developers.
• Networks of influential investors (Alexandre de Rothschild, Xavier Niel, Thibaud Elziere, Anthony Bourbon).

Business Model

Regarding funding, the startup has secured a capital investment of 1.5 million euros to fuel its growth. As for revenue sources, Eqwin appears to have three streams:

1. Primary Market: This includes all the racehorse memorabilia sold for the first time at prices set by their algorithm (ISV). Each piece of memorabilia is initially offered in ten copies. Eqwin reserves the right to issue new copies at any time depending on demand, up to a limit of 100 copies per equine.
2. Secondary Market: This refers to user-to-user sales. On these transactions, the startup takes a 10% commission. To give you an idea of the volume, 7,400 transactions were recorded in February 2024.
3. Eqwin Store: An e-commerce platform for Eqwin-branded clothing priced between 20 and 100 euros.

My Analysis: Another major strength of Eqwin’s model is its ability to adjust its offer based on demand, with the possibility of creating up to 100 units for a single horse from a potential catalog of 30,000 trotters and gallopers. This means potentially over 3 million marketable products for France alone, with zero production cost, excluding operational expenses.

It's worth noting that the startup redistributes a portion of its turnover to the industry in exchange for usage rights.

Pros and Cons of the Business Model:

Pros:

• Exceptional margins on newly marketed products
• Comfortable commissions (10%) on the secondary market
• A model that can be replicated in other countries
• Inevitable support from the industry to rejuvenate an aging audience
• A sport still obscure to the general public but has the potential to become the next big trend like Formula 1 or MMA.

Cons

• Revenue dependent on platform activity and user retention. No MRR (Monthly Recurring Revenue)
• Ambiguity regarding the ownership of the animals
• The limited long-term interest in owning digital collectibles which can quickly lead to selling and thus drive prices down and cause dissatisfaction (see Royaltiz case)

Competitors and Alternatives

While the concept proposed by Eqwin may seem novel, at least to a horse racing neophyte, there are a few alternatives. Digging around, I quickly came across Stables. The concept seems very similar, and also capitalizes on the ambiguity of owning part of a real racehorse.

This project is also widely supported by the industry, notably including endorsements from organizations such as LeTrot and France Galop. This is unsurprising since the project is backed by the company with the most influence in this industry due to its monopoly on horse race betting, PMU.

However, since Stables is developed on Web3, it is significantly less user-friendly. From the moment you sign up, you are asked to connect your wallet, which is likely to deter the majority of casual enthusiasts.

One year earlier, another project emerged called Ohrac. Its ambition was quite similar.

"Buy and sell cards of real racehorses. The value of these cards will fluctuate based on the horses' performance in races." - Ohrac

Today, according to Paris Turf, the project is no longer active due to "a set of constraints (regulatory, financial shortages, emerging competition...)."

Making Money with Eqwin

If memorabilia are considered as collectibles, then this asset can be categorized among super exotic investments, just like Pokémon cards and NFTs.

I reserve this asset class for all new investments or those riding on a trend. They should be considered experimental investments or games that you can try out once you already have a solid investment base. You should only allocate the crumbs ($) that you're willing to lose because there's a high likelihood that you will.

Buying and Selling

Of course, the simplest way to profit from the platform is to find good deals and resell them at a higher price. This might not be obvious if you're not familiar with horse racing sports.

The first major advantage of the platform is that it encourages the trading of memorabilia. As soon as you buy one, you must set a selling price (cap at $3000). You can change it at any time, up to three times per day.

The first goal, then, is to be the one who offers the lowest resale price while still being above the purchase price (including the 10% commission).

My 10 Tips for Choosing the Right Horses

Ranked by importance:

1. Those registered in the Trot category are more frequently traded (68% of transactions).
2. There is more demand for those aged 3 and 4 years (64% of transactions).
3. Check their current news online to ensure they are not injured, retired, sold abroad, etc.
4. Prefer those with a VSI and VSM that progress globally over time.
5. Aim for those with performances including at least 25% first places or 50% Top 5 finishes.
6. Look for significant gaps between the cheapest price and the second cheapest. This will allow you to set a higher selling price while remaining the most attractive.
7. Choose those priced lower than their last MSV.
8. Target those with more than 15 favorites.
9. Opt for horses that have competed recently.
10. Check the performance of other horses from the same trainer.

Almost all of this information is directly accessible on each horse's profile.

The Ranking

Beyond buying and selling, there are a few other ways to monetize your new horses, particularly through monthly prizes for top positions in the overall rankings.

Every month, $1,500 is distributed among the top 30 in the rankings, with $450 for the winner, $300 for second place, and $150 for the third spot. The prizes continue to decrease incrementally down to the 30th place, which earns $7.50.

Points are awarded based on your horses' real-life performances. They are calculated as follows: Number of points = Horse’s earnings in $ / 100.

For example: if your horse finishes among the top 5 in a race and wins $7,500, you receive 75 points.

However, to hope to compete with other stables in this ranking, you will need to have many highly performing horses. Indeed, I've noted that many of them already own over a hundred horses.

Missions

Eqwin is progressively adding new ways to monetize your stable with the introduction of two types of missions.

Monthly Missions

To try to enrich your Eqwin portfolio, you can participate in the monthly missions. To do this, you must complete 3 small missions to be eligible for a raffle that will reward 5 winners who will share $500 in vouchers.

For example, to be selected for the draw of the last monthly operation, you had to succeed in these 3 challenges:

1. Sponsor at least one referral.
2. Have your horses win at least 3 races in the month.
3. Make at least 5 purchases and/or sales of a minimum of $10 each.

These objectives are quite achievable for those who enjoy spending time on the app.

Flash Missions

Flash missions take the form of a mission to be completed on the same day and can earn a $50 voucher to use on the platform.

To illustrate this type of mission, here is an example of the last one that was offered: Register at least 1 win on any given day, at any meeting.

In this case, if one of your mounts finishes first in any race, then you are automatically added to the list of participants in the draw.

The Weekend Lineup

This event need to register 5 of your trotters and gallopers competing on the upcoming Saturday and Sunday. You are allowed one substitute whose performance will only be counted in case of an unexpected issue with one of your starting horses.

The stable achieving the best performance over the weekend then wins a $100 voucher to spend on Eqwin.

The Daily SWEEPs

Before this feature, it was challenging to seek rewards without having many horses in one's stable, which required spending a lot of money to hope to compete with the leaders in the rankings.

Now, thanks to the Daily SWEEPs, you can compete against them every day by aligning or renting horses that perform on the day itself.

How does it work?

To participate in a SWEEP on Eqwin, each player must compose their "Daily SWEEP" of 5 horses. That is, select your 5 favorites participating in the day's races.

If you do not have five participants or if you have confidence in other equines, it is also possible to "rent" starters, which increases the communal pot and therefore the final rewards for the winners. The number of winners sharing the pot is proportional to the number of participants.

Registration costs €5, and renting each memorabilia that you do not own costs between €1 and €3.

Note that I have not yet had the opportunity to test this feature.

My analysis: Daily SWEEPs seem to me to be a very good thing for Eqwin's user retention and interest. As well as providing a new source of revenue for the company, it offers a new way of betting for all horse betting enthusiasts.

My Performances

My Horses

To put things into context, I knew nothing about these equestrian disciplines but was curious to learn more. After thoroughly exploring the app, its reliability, and all the elements previously discussed, I was tempted to buy 2 horses that were highlighted. My thought was that if they were featured, they would be traded more quickly. Unfortunately, I had just bought 2 high-performing memorabilia but at the end of their careers (+8 years old) so they were difficult to resell (see section "My 10 Tips for Choosing the Right Horses"). These were Bilo Jepson ($35) and Gaspar d'Angis ($60).

First mistake: buying too hastily.

It is well known: "only invest in what you know." However, I see this app more as a game than an investment. I'm not counting on it to make a lot of money.

In the end, Bilo Jepson was resold less than 2 weeks later for almost double his purchase price.

As for Gaspar d'Angis, he is still in my stable with a selling price of €53 (-11.67%). I wish to part with him quickly to invest in more liquid horses.

Note: In investing, liquidity refers to the ease of reselling an asset (stocks, collectibles, cryptocurrencies). The more trading there is, the more liquid an investment is considered.

Thanks to a promotional offer, I was able to get Zigotto (Male, 4 years, Flat racing) for free. Currently, there isn't much interest in this horse, but the future may hold some surprises.

Finally, I purchased Lady (Female, 3 years, Trot) for $60. I was drawn to this horse because it is trained by T. Duvaldestin (6668 races, 24% wins, 41% placed). This trainer is notably known for handling Idao de Tillard (40 races, 30 wins). Also, her Market Sporting Value (MSV) has been consistently increasing since it was listed.

My Races

Since joining the app, my horses have participated in 3 races and have finished in the top 5 five times. No victories yet that could boost the visibility of my proteges, but the performances are still relatively good.

For me, the important thing is to avoid any injuries to any of them, as this would harm their chances of resale. The same goes for any potential retirement announcement for Gaspar d'Angis, which could be declared in the coming years.

Risks

As with any investment, it is important to consider the associated risks, especially in the case of super exotic products like these. We have previously explored risks related to the company itself, such as the possibility of bankruptcy, some flaws in the business model, or the potential for the hype to be temporary.

It is also possible that you may not be able to resell the memorabilia you purchase. Even for the most renowned mounts, transactions do not occur every week. There may even be months without any transactions for many equines.

Moreover, in the event of an injury or retirement of the animal in real life, you will no longer be able to sell it. It remains in your stable, of course, but can only be traded again once it returns to competition. The same applies if the horse is sold abroad. It remains available for exchange for 6 months after its last race on French soil. However, Eqwin plans to soon integrate results from other racetracks around the world.

My Analysis: On this point, Eqwin is somewhat contradictory. If memorabilia are considered collectibles with sentimental value, then they should be able to be traded regardless of their situation. There is nothing stopping us from selling first-generation Pokémon cards or a damaged art painting. The digital aspect should not be a constraint.

Taxation

According to the National Gaming Authority and the Financial Markets Authority, Eqwin is not considered a gaming or investment platform. This means it is not regulated as such.