Identifying, Backing, and Profiting with the Entrepreneurs in Your Midst

Whats In Store in The New Decade for Private Equity?

December 31, 2009 10:00 am PST / 1:00 pm EST

Overview
Webinar Protocol Purpose of this Webinar The 00s - Worst Decade Ever Where Do We Go From Here Three Best Practices Who Is It For? The Growthink Investment Vehicle

Conference Call Protocol

1. 30 Minute Conference Call 2. Questions/comments as we go:
Type in utilizing GoToWebinar toolbar

3. After Call:
Survey feedback Within 2 hours after the call, you will receive, via email, copies of the reviewed slides and a recording of the presentation

Purpose of this Web Conference

1. To share with you best practices of investing in entrepreneurial, privately-held companies
Because it is good for you Because it is good for America and the world

2. To introduce the Growthink investment vehicle

Tactical application of our core investment principles

The 00s Worst Investing Decade Ever

Stocks have returned a miserly 0.5% / year from 1/1/2000 to today Compare this to:
The 90s, where stocks returned 17.6%/year The 1930s, stocks actually did better, returning 0.2%/year

Taking into account inflation, results are even worse

On inflation-adjusted basis, stocks have returned MINUS 3.3% this last decade

What Does This Mean?

Trillions lost Both in $$$ and opportunity costs Retirement and wealth building plans delayed / deferred Heartache and heartbreak

Where Do We Go From Here?

1. May venture capital rise again 2. May, on December 31, 2019:
The NASDAQ and Dow be trading at, respectively, above 10,000 and above 30,000 Less than 5% annual 20-year return

3. May the nation's entrepreneurs lead the way

3 Best Practices For The Decade To Come

1. Exploit the Pricing Inefficiency Gap 2. Focus on Technology Companies 3. Embrace The Black Swan

#1: Exploit The Pricing Inefficiency Gap

Pricing efficiency is the insurmountable obstacle to alpha public market returns
NOONE consistently beats the public markets Those that claim that they do are simply data-mining

Early-stage private company investing still provides significant opportunity to advantageously price deals
HUGE information gaps between market participants

#2: Focus On Technology Companies

Only 1/3 of early-stage equity investment goes into technology businesses*
Clean Tech, Healthcare, Computer Hardware and Software

Likelihood of high technology companies having successful exits for their investors is more than 20x greater than non-technology companies ONLY invest in technology businesses
*Source: Scott Shane, Fools Gold: The Truth Behind Angel Investing in America

#3: Embrace The Black Swan

Early-stage private company investing is driven and dependent on outliers:
93% of all early-stage private company investments have a negative or break-even return 7% of investments have returns greater than 10x
*Sources: The PricewaterhouseCoopers/National Venture Capital Association MoneyTree Report, Thomson Reuters, The Wiltbank Angel Report

The Black Swan

Popularized by the great Lebanese thinker and writer Nicholas Taleb:
Comes from the Enlightenment in Europe to describe logical fallacy Europeans assumed that all swans must be white because they had never seen a black swan Then in the 18th century black swans were discovered in Australia Logicians associated the term Black Swan to the concept that a previously perceived impossibility may actually come to pass.

3 Attributes of A Black Swan

1. It is an outlier outside the realm of regular expectations 2. It carries an extreme impact 3. Human nature makes us concoct explanations for its occurrence after the fact

How Does One Make Money With The Black Swan?

Bet on the unexpected
The big outlier events - the 10 to 1 shots and beyond - are always UNDER-PRICED in the marketplace

3 Best Practices
1. Exploit the Pricing Inefficiency Gap 2. Focus on Technology Companies 3. Embrace The Black Swan

Who Is Private Company Investing For?

1. Long term investment horizon 5 years+ 2. Fundamental Investors Believe in the connection between value creation and investment return 3. Risk-takers

The Growthink Investment Vehicle

1. Managed access to a portfolio of entrepreneurial, technology-biased private companies
Cleantech, Healthcare, Software Select, alternative investments
Digital media, entertainment

2. Less concerned about investment amount than working with the RIGHT investors
Long-term, fundamental investors

To Learn More
Return our survey Contact:
Jay Turo: 310-846-5004 Email: jay.turo@growthink.com