05.24.17 sfe annual shareholder meeting -...
TRANSCRIPT
1 www.safeguard.com © 2017 Safeguard Scien2fics, Inc. All rights reserved.
Annual Mee4ng of Shareholders May 24, 2017
2 www.safeguard.com © 2017 Safeguard Scien2fics, Inc. All rights reserved.
Introduc4ons
§ Safeguard’s Officers • Jeffrey McGroarty
• John Shave
• Brian Sisko
• Stephen Zarrilli
§ Safeguard’s Board of Directors • Julie Dobson
• Stephen Fisher
• George MacKenzie
• John Roberts
• Robert Rosenthal
• Stephen Zarrilli
3 www.safeguard.com © 2017 Safeguard Scien2fics, Inc. All rights reserved.
Items of Business
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§ VOTE on the elec2on of six directors;
§ VOTE on a non-‐binding, advisory resolu2on to approve the compensa2on of our named execu2ve officers;
§ VOTE on a non-‐binding, advisory resolu2on concerning the frequency of future non-‐binding advisory votes concerning execu2ve compensa2on; and
§ VOTE on the ra2fica2on of the appointment of KPMG LLP as our independent registered public accoun2ng firm for 2017.
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Preliminary Report on Shareholder Vote
§ The Board’s six director nominees have all been ELECTED.
§ The non-‐binding, advisory resolu2on concerning the compensa2on of our named execu2ve officers has been APPROVED.
§ The non-‐binding, advisory resolu2on concerning the frequency of future non-‐binding advisory votes concerning execu2ve compensa2on has been APPROVED to occur on an annual basis.
§ KPMG’s appointment as Safeguard’s independent registered public accoun2ng firm for 2017 has been RATIFIED.
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Corporate Presenta4on May 24, 2017
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The Safeguard Advantages
§ Strong PorWolio of tech-‐enabled companies across several ver2cals with full value much higher than reflected in current share price
§ Talented Team with deep domain exper2se and opera2ng experience
§ Flexible, Mul4-‐Stage Capital Deployment Approach that is not constrained by the typical Limited Partner fund structure
§ Scalable Opera4ng Model to accommodate a larger porQolio of companies
§ Extensive Network with access to early-‐ and growth-‐stage technology opportuni2es including Enterprises, Advisors, Accelerators and Universi2es
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Leadership Team
Stephen T. Zarrilli President and CEO
Jeffrey B. McGroarty SVP and CFO
Brian J. Sisko EVP, Managing Director and COO
Mar4na F. Aufiero SVP and Managing Director
Gary J. Kurtzman, MD SVP and Managing Director
Erik B. Rasmussen SVP and Managing Director
Steven J. Grenfell, CPA SVP and Managing Director, Opera2ons
John E. Shave III, IRC SVP, Investor Rela2ons and Corporate Communica2ons
Sco^ A. Snyder, PhD SVP, Managing Director and CTIO
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Capital Deployment Objec4ves
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Target Markets
§ eCommerce will be $523B in U.S. and $4T worldwide by 2020 [Source: eMarketer]
§ Web-‐influenced retail sales will be $1.6T by 2020 [Source: EY]
§ Digital ad spend will be $333B by 2020 [Source: eMarketer]
§ Personaliza2on economy will be $97B by 2020 [Source: Accenture]
§ FinTech to capture 10% to 40% of banking revenue by 2025 [Source: McKinsey]
§ $12B invested globally in FinTech, approx. 50% of that in U.S. [Source: CBInsights]
§ Corporate Venture Arms of Financial Service Companies con2nue to be strong investors
§ $3T U.S. market (18% of GDP), approx. 1/3 to be waste [Source: CMS]
§ Healthcare IT market to surpass $230B by 2023 [Source: Global Market Insights]
§ Chronic diseases will affect 164M Americans (49%) of popula2on by 2025 [Source: RAND CorporaCon]
HEALTHCARE DIGITAL MEDIA
FINANCIAL SERVICES
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Market Opportunity in Emerging Technologies
§ IoT will have poten2al economic impact of $3.9T to $11.1T by 2025 [Source: McKinsey]
§ IoT devices will reach +46B in 2021 [Source: Juniper]
§ B2B spending on IoT technologies will reach $267B by 2020 [Source: Boston ConsulCng Group]
§ Big Data/Analy2cs market will be $203B by 2020 (11.7% CAGR) [Source: IDC]
§ AI-‐based systems market will grow from $8B in 2016 to $47B in 2020 [Source: IDC]
§ All major tech giants are inves2ng heavily (i.e. Google, IBM, Microsol, Amazon, Facebook, Apple, Baidu)
§ Cyber-‐security market will grow from $105B in 2015 to $182B in 2021 (9.5% CAGR) [Source: Zion Market Research]
§ Global cyber-‐security spending will exceed $1T from 2017 to 2021 [Source: Cybersecurity Ventures]
§ Blockchain for Enterprise Applica2ons Market to reach $19.9B by 2025 [Source: TracCca]
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Pipeline Overview (FY’16)
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Partner Companies: Overview
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Partner Companies: By Revenue Stage
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Aggregate Partner Company Revenue
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Partner Company: Trice Medical
Ini4al Capital Deployed July 2014
Total Capital Deployed $8.1M
SFE Primary Ownership 28%
Headquarters King of Prussia, PA
Revenue Stage Ini4al Revenue
Elevator Pitch Pioneered and evolved a fully integrated camera-‐enabled technology that provides a clinical solu2on op2mized for the physician’s office.
Partnerships/ Customers OpenClinica Enterprise, TikaMobile
Market Opportunity
Addressable market opportunity is approximately $10B, including 32M office visits for related knee and shoulder pain and 8M+ MRIs annually in the U.S. alone.
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Partner Company: Transac4s
Ini4al Capital Deployed August 2014
Total Capital Deployed $14.5M
SFE Primary Ownership 24%
Headquarters New York, NY
Revenue Stage Expansion
Elevator Pitch Leading provider of electronic billing and payment solu2ons.
Partnerships/ Customers
Capital One Financial Corpora2on (NYSE:COF), Filh Third Bancorp (NASDAQ:FITB), PNC Financial Services Group (NYSE:PNC), TD Bank Group, Walletron, Wells Fargo & Company (NYSE:WFC).
Market Opportunity
Fewer than 25% of bills are presented electronically in the U.S. The channel-‐oriented Transac2s model features up-‐to-‐date SaaS infrastructure and is posi2oned to grow with an EBPP market that is expanding at a compound annual rate of 16%, according to a 2013 report by marke2ng consultant Latente Group.
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Partner Company: MediaMath
Ini4al Capital Deployed July 2009
Total Capital Deployed $25.5M
SFE Primary Ownership 21%
Headquarters New York, NY
Revenue Stage High Trac4on
Elevator Pitch Global technology company that is leading the movement to revolu2onize tradi2onal marke2ng and drive transforma2ve results for marketers.
Partnerships/ Customers Facebook, IBM, iSocket, Microsol, Oracle, Time Inc. and Yahoo!
Market Opportunity
Digital ad spending is expected to grow at a CAGR of 14% between 2015 and 2018 according to eMarketer.
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Partner Company Holdings at 3/31/17
Stage Category Acquisition Year
Primary Ownership%
Carrying Value Cost
Partner Companies: (in millions) (in millions)AdvantEdge Healthcare Solutions High Traction Healthcare 2006 40% $5.2 $16.3Aktana Initial Revenue Healthcare 2016 31% 6.7 8.3Apprenda Expansion Other 2013 29% 9.8 22.1Brickwork Initial Revenue Digital Media 2016 20% 4.0 4.2Cask Data Initial Revenue Other 2015 31% 7.4 11.0CloudMine Initial Revenue Healthcare 2015 47% 4.9 7.5Clutch Holdings Expansion Digital Media 2013 43% 10.2 16.3Full Measure Education Initial Revenue Digital Media 2015 42% 7.7 11.0Good Start Genetics High Traction Healthcare 2010 30% - 17.1Hoopla Software Initial Revenue Digital Media 2011 26% - 4.8InfoBionic Initial Revenue Healthcare 2014 40% 4.5 18.5Lumesis Initial Revenue Financial Services 2012 44% 2.0 6.3MediaMath High Traction Digital Media 2009 21% 5.0 25.5meQuilibrium Initial Revenue Healthcare 2015 32% 4.7 8.0Moxe Health Initial Revenue Healthcare 2016 32% 4.3 4.5NovaSom High Traction Healthcare 2011 32% 2.6 22.6Pneuron Initial Revenue Financial Services 2013 35% 2.5 8.5Prognos (fka Medivo) Expansion Healthcare 2011 35% 5.4 11.6Propeller Health Initial Revenue Healthcare 2014 24% 8.8 14.0QuanticMind Initial Revenue Digital Media 2015 23% 7.3 9.8Sonobi Expansion Digital Media 2015 22% 3.5 5.4Spongecell Expansion Digital Media 2012 23% 11.8 18.0Syapse Initial Revenue Healthcare 2014 26% 5.3 13.3T-REX Initial Revenue Financial Services 2016 24% 5.8 6.0Transactis Expansion Financial Services 2014 24% 10.5 14.5Trice Medical Initial Revenue Healthcare 2014 28% 3.0 8.1WebLinc Expansion Digital Media 2014 38% 8.6 13.0Zipnosis Initial Revenue Healthcare 2015 25% 5.3 7.0Total TOTAL: $156.8 $333.2
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Success Stories
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NOLs and Capital Loss Carryforwards
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Equity Incen4ve Compensa4on
§ Key Asributes • Structured to align with shareholder interest
• Consistent with carried interest methodology
• Two-‐thirds of ves4ng based on performance criteria
§ Performance Ves2ng • Upon achievement of cash-‐on-‐cash return thresholds (2.0x-‐3.0x)
on pools of capital deployed
§ Insider Ownership • Ownership requirements of 2x-‐4x base salary for senior management
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Why Own Safeguard (NYSE:SFE)?
§ Access to early-‐ and growth-‐stage technology companies
§ SFE currently trades at significant discount to net asset value
§ Full value of partner companies not reflected in share price
§ Team has deep domain exper2se and opera2ng experience
§ Balance sheet demonstrates financial strength, flexibility and liquidity
§ Strong alignment of interests with shareholders
23 www.safeguard.com © 2017 Safeguard Scien2fics, Inc. All rights reserved. 23
John E. Shave III SENIOR VICE PRESIDENT, INVESTOR RELATIONS & CORPORATE COMMUNICATIONS
P 610.975.4952 E [email protected] Request a Mee4ng: www.safeguard.com/RequestAMee2ng
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Statements contained in this presenta2on that are not historical facts are forward-‐looking statements which involve certain risks and uncertain2es including, but not limited to, risks associated with our ability to make good decisions about the deployment of capital, the fact that our partner companies may vary from period to period, our substan2al capital requirements and absence of liquidity from our partner company holdings, fluctua2ons in the market prices of our publicly traded partner company holdings, compe22on, our inability to obtain maximum value for our partner company holdings, our ability to asract and retain qualified employees, market valua2ons in sectors in which our partner companies operate may decline, our inability to control our partner companies, our need to manage our assets to avoid registra2on under the Investment Company Act of 1940, and risks associated with our partner companies, including the fact that most of our partner companies have a limited history and a history of opera2ng losses, face intense compe22on and may never be profitable, the effect of economic condi2ons in the business sectors in which our partner companies operate, and other uncertain2es as described in our filings with the Securi2es and Exchange Commission, including our Annual Report on Form 10-‐K. As a result of these and other factors, the Company’s past financial performance should not be relied on as an indica2on of future performance.
Safeguard does not assume any obliga2on to update any forward-‐looking statements or other informa2on contained in this presenta2on.
All data current as of March 31, 2017.
Forward-‐Looking Statements