investing in public venture capital - mdb capital group | … public... · 2016. 3. 10. ·...
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S e e i n g V a l u e O t h e r S D O n O t . C r e a t i n g V a l u e O t h e r S C a n n O t .
I N V E S T I N G I N P U B L I C V E N T U R E C A P I TA L
A n U n d i s c o v e r e d A s s e t C l a s s
The IP Investment Bank
2S e e i n g V a l u e O t h e r S D O n O t . C r e a t i n g V a l u e O t h e r S C a n n O t .
A Unique Asset Class
Digital Camera
Smartphone
E-Commerce
Feb 2012: Announced it will no longer make cameras
Nov 2012: Announced it intended to discontinue wireline service
Sep 2011: Closed final brick & mortar locations
Disruptive technologies are powerful forces that unseat entrenched incumbents.
Disruptive Technology Disrupted Incumbent
3S e e i n g V a l u e O t h e r S D O n O t . C r e a t i n g V a l u e O t h e r S C a n n O t .
Key Investment Criteria
Target markets provide > $1 billion opportunities
Can create a dominant IP strategy around the technology
Industry thought leaders believe the technology is feasible
Commercialization timeline is short and credible
Provides good risk / reward for investors and company
We rigorously screen disruptive technologies to determine which ones will make the best investments.
We have launched six companies into the public markets. Four of these have traded at market values over $1 billion.
Large Market Potential
Unique Technology
Early Validation
Visible Inflection Point
Fair Valuation
4S e e i n g V a l u e O t h e r S D O n O t . C r e a t i n g V a l u e O t h e r S C a n n O t .
Our End-To-End Process
We start from the end and work backwards: Can this be a $1 billion company? How can we help it get there?
Perform Rigorous Screening Process
Conduct Expert Technical Diligence
Develop Effective Business Strategy
Align IP Strategy to Business
Design Financing Strategy
Select Investors & Execute Transaction
Proactively Connect Company & Investors
Bolster InvestorCommunications
We transform disruptive technology ideasinto strong public businesses.
Evaluate Disruptive Technologies
Build Leadership Position
Launch Companyinto Public Markets
Support Post-Transaction
5S e e i n g V a l u e O t h e r S D O n O t . C r e a t i n g V a l u e O t h e r S C a n n O t .
Benefits of Our Approach for Our Client Companies
Our approach has unique benefits that enable our companies to succeed.
MDB Public Venture Banking Traditional Venture Capital (VC)
Deep: IP Development Services (IPDS) teamprovides expert patent portfolio strategy
Broad: Positions platform technologies to dominate multiple vertical markets
Fair: Takes companies public early to align all parties with goal of maximizing valuation
Limited: Just beginning to understand nuances and impact of patent strategies
Narrow: Pushes companies to productize and choose target markets early
Expensive: Controls cap table with anti-dilution rights in follow-on rounds
Controlling: Installs own board members to move company in a specific direction
Collaborative: Finds leadership best suited to maximize technology value
StrategicFocus
Long-TermCost of Capital
Board / Management
Understanding of IP
6S e e i n g V a l u e O t h e r S D O n O t . C r e a t i n g V a l u e O t h e r S C a n n O t .
MDB Public Venture Banking Traditional Venture Capital (VC)
High: Direct public company ownership; enables position building and profit taking
Complete: Investors can choose (and even source) deals based on their expertise
Diverse: “Community of Experts” brings deep technical knowledge to bear
Low: Investor money locked up for several years; hard to mitigate risk
Limited: Investors cannot exercise own judgment on which deals to choose
Narrow: Vertical-specific and do not look outside their comfort zone
Near Zero: Without strong IP, portfolio companies have low asset value
Supported: IPDS creates strategic IP portfolios for future licensing and/or sale
Autonomy
Expertise
FloorValuation
Liquidity
Benefits of Our Approach for Our Investors
We enable investors to manage disruptive technology investments like the other asset classes in their portfolios.
7S e e i n g V a l u e O t h e r S D O n O t . C r e a t i n g V a l u e O t h e r S C a n n O t .
The VC Valuation Paradigm
Mass media hype begins
Negative press begins
Second/third rounds of venture capital funding
InnovationTrigger
Time >
Exp
ecta
tio
ns >
Peak Of InflatedExpectations
Trough OfDisillusionment
Slope OfEnlightenment
Plateau OfProductivity
High-growth adoption phase starts
Startup companies, first round of venture capital funding
Source: Gartner
8S e e i n g V a l u e O t h e r S D O n O t . C r e a t i n g V a l u e O t h e r S C a n n O t .
U.S. Venture Capital Returns
Apart from the dot-com bubble years, the VC industry has not generated alpha.
Average return of 13.2%, below public
equity indices
Average return of 60.3% during dot-com bubble
Average return of 7%, with many
vintages in the red
Source: Cambridge Associates
9S e e i n g V a l u e O t h e r S D O n O t . C r e a t i n g V a l u e O t h e r S C a n n O t .
Our Valuation Paradigm
BridgeFinancing
IPO
$10M
$25M
$50M
$100M
Validation(Inflection
Point)
Private Financing Phase
Private Markets
Pre-Validation Volatility Phase (Valley of Doubt)
Time >
Valu
atio
n >
Validation Phase
Public Markets
10S e e i n g V a l u e O t h e r S D O n O t . C r e a t i n g V a l u e O t h e r S C a n n O t .
Case Study: Uni-Pixel (NASDAQ: UNXL)
Uni-Pixel announced it made a deal with a major computer manufacturer for its disruptive touchscreen technology.
Uni-Pixel’s entry into the validation phase of its lifecycle has sent the stock up over 400%.
Source: Yahoo
Valley of Doubt
Validation
11S e e i n g V a l u e O t h e r S D O n O t . C r e a t i n g V a l u e O t h e r S C a n n O t .
Our “Community of Experts”
Experts ask tough, insightful questions in diligence process
For right opportunity, experts may join management or board
Experts provide validation by putting own capital on the line
Expert conference calls help maintain investor enthusiasm
A community of entrepreneurs, scientists, and other technical experts supports our process.
Evaluate Disruptive Technologies
Build Leadership Position
Complete Transaction
Support Post-Transaction
life sciences software cleantech
12S e e i n g V a l u e O t h e r S D O n O t . C r e a t i n g V a l u e O t h e r S C a n n O t .
Benefits of Joining Our Community of Experts
Our network provides our expertswith meaningful opportunities.
Early access to deal flow
Management & board opportunities
Networking Events
PatentVest
Qualified experts have access to all of our deals, including our private deals (which are typically done at lower valuations).
Our companies need leaders, and our expert network is a key pipeline to find those leaders.
Our exclusive “Bright Lights” conference connects forward-thinking investors, entrepreneurs and thought leaders
Access to proprietary IP research from our custom-built business intelligence patent database
13S e e i n g V a l u e O t h e r S D O n O t . C r e a t i n g V a l u e O t h e r S C a n n O t .
Our Post-Offering Support
Our Capital Markets team enhances liquidity on the path to $1 billion valuations.
Investor Communications
Equity Sales & Trading
Post Financing Marketing
With PatentVest, provide patent insights unavailable anywhere else; contextualize milestones for investors.
Act as a liaison between current and potential investors to maximize liquidity and minimize swings in stock price.
Partner with leading IR/PR firms to keep a client company’s message fresh in investors’ minds.
14S e e i n g V a l u e O t h e r S D O n O t . C r e a t i n g V a l u e O t h e r S C a n n O t .
Key Takeaways
Discover companies
with truly innovative
solutions to large
market problems
Develop business and
IP strategies to com-
mercialize and protect
those solutions
Partner with high-
quality investors who
believe in the compa-
ny’s long term vision
Provide post-financing
support by providing
the market with infor-
mation and liquidity
We understand how to maximize the value of disruptive technology companies.
“It takes a team… of insightful, experienced, and daring investment pros to come up with not just stock winners but great super-stock achievers… MDB has taken a number of
companies from conception valued at almost zero to a market value of $1 billion or more” Forbes Magazine
“An Inside Look Into Spotting and Nurturing Potentially Super Stock Achievers” July 20, 2012
Evaluate Disruptive Technologies
Build Leadership Position
Complete Transaction
Support Post-Transaction
15S e e i n g V a l u e O t h e r S D O n O t . C r e a t i n g V a l u e O t h e r S C a n n O t .
Appendix
MDB HistoryThe MDB Team
16S e e i n g V a l u e O t h e r S D O n O t . C r e a t i n g V a l u e O t h e r S C a n n O t .
19971997/032004 2005/08200820092010
MDB History
Founded 1997 by Christopher Marlett and Anthony DiGiandomenico (5 total employees), focused on public venture
Launched three technologies into the public markets via our public venture process that all reached $250MM in market value, with two reaching over $1B in market value
Began development of PatentVest
Launched two more public companies via our public venture process, one exceeded $3B in market value and one exceeded $2B
Started development of integrated platform to launch micro cap technology companies
MDB discovers that companies with certain IP metrics significantly outperform market averages leading to decision to focus on disruptive technology
2010 Firm transformed into “The IP Investment Bank” and launched 1st Annual Bright Lights Conference to focus on companies with disruptive technology
17S e e i n g V a l u e O t h e r S D O n O t . C r e a t i n g V a l u e O t h e r S C a n n O t .
Christopher MarlettChief Executive Officer & Co-Founder
Anthony DiGiandomenicoHead of Investment Banking & Co-Founder
Robert CliffordHead of Capital Markets
Gary SchumanChief Financial Officer & Chief Compliance Officer
Daniel Nagy, CFAHead of Fixed Income Research & Trading
Sarah BarneyGeneral Counsel
MDB Team: Executive Management
18S e e i n g V a l u e O t h e r S D O n O t . C r e a t i n g V a l u e O t h e r S C a n n O t .
MDB Team: Public Venture Banking
Anthony DiGiandomenicoHead of Investment Banking
Ankur DesaiManaging Director
Cameron Gray Managing Director
Cary HurwitzManaging Director
Daniel LandryManaging Director
Robert LevandeSr. Managing Director
Jeff SunManaging Director
Amy WangManaging Director
Ivonne BordasSenior Investment Banking Analyst
Carlos Herrera, Ph.Dc Senior Investment Banking Analyst
Edgardo RayoInvestment Banking Analyst
19S e e i n g V a l u e O t h e r S D O n O t . C r e a t i n g V a l u e O t h e r S C a n n O t .
Adam HoliberDirector of Business Dev, IPDS
Oscar ChowProject Supervisor
MDB Team: IP Development Services
Erin-Michael GillChief Intellectual Property Officer
Jose AlgabaProject Supervisor
David ByrneHead Programmer, PatentVest
Alejandro DelgadilloIntellectual Property Analyst
Ramon EyzaguirreIntellectual Property Analyst
Horacio LovoIntellectual Property Analyst
Ivan MonteroIntellectual Property Analyst
Yessica MoralesIntellectual Property Analyst
Apolinar Picado Ph.DcIntellectual Property Analyst
Karen PerezIntellectual Property Analyst
Maria Alejandra RamosIntellectual Property Analyst
Alenka BendanaIntellectual Property Analyst
Alejandro BorgeIntellectual Property Analyst
Marcos CajinaIntellectual Property Analyst
Manuel CastroIntellectual Property Analyst
20S e e i n g V a l u e O t h e r S D O n O t . C r e a t i n g V a l u e O t h e r S C a n n O t .
MDB Team: Capital Markets
Robert CliffordHead of Capital Markets
George BrandonManaging Director
Kevin CotterManaging Director
Michael CullenEquity Sales & Trading
Alex ZapantaEquity Sales & Trading
Donald MontenegroRoadshow Coordinator
Rodrigo PallaisRoadshow Coordinator
Scarlett Hooker UrrozResearch Analyst
21S e e i n g V a l u e O t h e r S D O n O t . C r e a t i n g V a l u e O t h e r S C a n n O t .S e e i n g V a l u e O t h e r S D O n O t . C r e a t i n g V a l u e O t h e r S C a n n O t .
Headquarters - Dallas
2425 Cedar Springs Road
Dallas, Texas 75201
310.526.5000
Santa Monica
401 Wilshire Boulevard
Suite 1020
Santa Monica, CA 90401
310.526.5000
New York
1350 Avenue of the Americas
2nd Floor
New York, NY 10019
310.526.5000
Managua
Embajada de Mexico,
una cuadra arriba,
a la esquina, casa #100
Managua, Nicaragua
310.526.5000
The IP Investment Bank
Member FINRA/SIPC
S e e i n g V a l u e O t h e r S D O n O t . C r e a t i n g V a l u e O t h e r S C a n n O t .