keating capital 4q 2011 newsletter

8/3/2019 Keating Capital 4Q 2011 Newsletter

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News le t te r 4th Quarter 2011

Keating Capital, Inc. is a business development company that specializes in making pre-IPO investments in innovative, high growthcompanies that are committed to and capable o becoming public. We provide individual investors with the ability to participate in aunique und that invests in a companys later stage, pre-IPO fnancing roundan opportunity that has historically been reserved or

institutional investors.

Keating Capitals Nasdaq Listing

Equity Partners or Companies Primed to Become Public

On December 12, 2011,Keating Capital completedthe listing o its common stock on

the Nasdaq Capital Market and

became publicly traded under the

ticker symbol KIPO.

Capitalization o the FundKeating Capital is a unique

closed-end und that is exclusively

dedicated to pre-IPO investing. As

o September 30, 2011, the Company

had net assets o approximately

$77 million, consisting o:

F Approximately $32 million

invested in 13 portolio

companies; and

F Approximately $45 million

in cash.

As o September 30, 2011, Keating Capitals Net Asset Value

per share was $8.27, based on 9,283,604 shares o common

stock issued and outstanding. The Companys capital structure

consists entirely o common stock, with no options, warrants

or other types o dilutive securities issued or outstanding.

Moreover, the Company does not use leverage or borrowed

money to und its portolio company investments.

Portolio Company InvestmentsAs o December 31, 2011, the Companys 14 portolio

companies were categorized into three groups by stage:

F Completed IPO (2 portolio companies)

F Filed or IPO (2 portolio

companies)

F Private (10 portolio companies

As o December 31, 2011, theCompanys 14 portolio companies

were in three industry groups:

F Technology (4 portolio

companies)

F Internet & Sotware (4 portolio

companies)

F Clean Technology (6 portolio

companies)

Typically, Keating Capital seeks to

invest in portolio companies thathave private enterprise values o

between $100 million and $1 billion

at the time o its investment.

Unique Public Access VehicleThe listing o Keating Capitals shares on Nasdaq is the

fnal step in what has been a three-year process but is only

one milestone in our Companys growth strategy, said

Timothy J. Keating, Keating Capitals CEO. To the best o

our knowledge, Keating Capital is the frst and only und

o its kind exclusively dedicated to pre-IPO investing inthe U.S. We have created a unique public access vehicle or

investors seeking to invest in later-stage private companies

prior to their expected public oerings. We seek to primarily

provide growth equity capital to companies that are

committed to and capable o completing an IPO, added

Mr. Keating.


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4th Quarter 2011 Page 2

Portfolio Company Investments

Agilyx Corporation

On December 16, 2011, Keating Capital made a $4 millioninvestment as the lead investor in the $25 millionSeries C Convertible Preerred Stock round o Agilyx

Corporation (www.agilyx.com) (Agilyx). Other investorsin the Series C round include existing investors Kleiner Perkins

Caufeld & Byers, Saron Hill Ventures, Chrysalix Energy

Venture Capital, Waste Management, Total Energy Ventures

International (an afliate o Total S.A.) and Reerence Capital.

Founded in 2004 and based in Beaverton, Oregon, Agilyx is

an alternative energy company that economically converts

difcult-to-recycle waste plastics into high value synthetic

oil. Agilyxs patent-protected, proprietary systems are sold

to industrial and municipal waste plastic generators and

aggregators looking to reduce disposal-related costs and

increase plastics-associated revenuesall while meetingchallenging environmental standards, curbing the need or

new landflls, and extracting the oten unused and untapped

energy contained within waste plastic.

In 2010, Agilyx opened a demonstration acility in Tigard,

Oregon, capable o processing and converting 10 tons o plastic

waste into approximately 55 barrels o oil (~2,300 gallons)

per day. The resulting synthetic oila drop-in replacement or

ossil crudeis currently shipped to a refnery in the Pacifc

Northwest. Agilyx entered into a fve-year agreement in 2008

to sell its synthetic oil to an oil refnery, which Agilyx believes

is the frst otake agreement o its kind in the industry.

Our investment in Agilyx exemplifes the role that we canplay as a lead investor in a new round o fnancing where

existing investors seek to add to their positions but also want

an independent, new fnancial investor to set terms, said

Timothy J. Keating, CEO o Keating Capital. Moreover,

because we do not seek or take board seats, our role as a lead

investor results in no change to the composition o a portolio

companys board o directors or strategic direction, he added.


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Page 3 4th Quarter 2011

U.S. IPO Market Update and Key Takeaways

Source: RenaissanceCapital.com. U.S. statistics include IPOs with a market cap of at least $50 million and exclude closed-end funds and SPACs

Recovery in U.S. IPO market since 2009 continued through H1 2011;Europe and U.S. debt crisis stalled the market in H2 2011

NumberofIPOs

Proceeds

($billion)

0

100

200

0

$20

$40

$10

$30

$50

150

250

50

2002 2003 2004 2005 2006 2007 2008 2009 2010 2011

$23.7

$15.4

$33.7

$42.2

$24.5

$38.7

$36.3

70 70

216

192196

214

31

63

154

125

$49.0Number of U.S. IPOs

U.S. IPO Proceeds Raised

2012

$21.9

$42.8U.S. IPOpipeline ofnearly 200companies iregistration highest leve

since 2000

Numberofcompaniesinregi

strationforIPOs

Sources: Global IPO Review, Renaissance Capital IPO Intelligence, December 21, 2011*U.S. statistics include IPOs with a market cap of at least $50 million and exclude closed-end funds and SPACs

Positives Negatives

Proceeds fell only 6% to $36.3 billion* 24 Internet companies went public,

most to do so in more than a decade

Proceeds raised by private equity-backed IPOs more than doubled

4 of 5 largest U.S. Internet IPOs everraised $2.4 billion

125 IPOs, down from 154 in 2010* Over 60% of the IPOs completed in

H1 11

2/3 of IPOs ended the year belowtheir IPO prices

51 VC-backed IPOs in 2011, still 41%below 2007 levels


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4th Quarter 2011

5251 DTC Parkway, Suite 1100

Greenwood Village, Colorado 80111

www.KeatingCapital.com

Keating Capital, Inc. (Keating Capital) is a Maryland corporation that has elected to be regulated as a business development company under the Investment Company Act o 1940. Keating Investments, LLC (KeatingInvestments) is an SEC registered investment adviser and acts as an investment adviser and receives base management and/or incentive ees rom Keating Capital. Keating Investments and Keating Capital operate underthe generic name o Keating. This newsletter is a general communication o Keating and is not intended to be a solicitation to purchase or sell any security. This newsletter may contain certain orward-looking statements,including statements with regard to the uture perormance o Keating Capital. These orward-looking statements are subject to the inherent uncertainties in predicting uture results and conditions. Certain actors that couldcause actual results to dier materially are included in Keating Capitals Form 10-K and Form 10-Q, and include uncertainties o economic, competitive, and market conditions, and uture business decisions all o whichare difcult or impossible to predict accurately, and many o which are beyond the control o Keating Capital. Although Keating Capital believes that the assumptions underlying the orward-looking statements includedherein are reasonable, any o the assumptions could be inaccurate and thereore there can be no assurance that the orward-looking statements included herein will prove to be accurate. Except as required by the ederal

securities laws, Keating Capital undertakes no obligation to revise or update this newsletter or any orward-looking statements contained herein, whether as a result o new inormation, uture events or otherwise. This is notan investment recommendation or a solicitation to become a client o Keating Investments.

Contact Keating Capital(720) 889-0139

Investment CommitteeTimothy J. KeatingKyle L. RogersFrederic M. Schweiger

CorporateMargie L. BlackwellStephen M. HillsChristine M. NeusenAmber L. Wilbers

OriginationJaran T. Burt

Rexord A. DarkoDaniel T. Morris

Independent DirectorsBrian P. AllemanLaurence W. BergerAndrew S. Miller

J. Taylor Simonton

Investment Criteria

Please submit an executive summary and investor presentationto [email protected].

Revenue:$10 million+ in trailing 12-month period

IPO Timing:

Within 18 months (rom our investment

date)

Return Potential:Expectation o 2x return once the company

is publicly traded over an anticipated3-year holding period

Quarterly Conference Call

Keating Capital hosts a conerence call eachquarter to update stockholders, prospectivestockholders, analysts and other interested parties on

the most recent quarters operational and fnancial

results. You may register or upcoming calls on Keatings

website at: http://ir.keatingcapital.com/events.cm.

The ollowing important investor documents can

also be ound on Keating Capitals website: FAQs,Quarterly Call Recording & Slides which include

detailed portolio company inormation and net asset

value calculation, and all SEC flings.

keating capital 4q 2011 newsletter

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