Download - Tiny 102013
TRANSFORMING THE FUTURE
NASDAQ : TINY
FIRST. TRANSFORMATIVE. PROVEN.
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This presentation may contain statements of a forward-looking nature relating to future events. Statements contained in this presentation that are forward-looking statements are intended to be made pursuant to the Safe Harbor Provisions of the Private Securities Litigation Reform Act of 1995. These forward-looking statements are subject to the inherent uncertainties in predicting future results and conditions. These statements reflect the Company’s current beliefs, and a number of important factors could cause actual results to differ materially from those expressed herein. Please see the Company’s Annual Report on Form 10-K, as well as subsequent filings, filed with the Securities and Exchange Commission for a more detailed discussion of the risks and uncertainties associated with the Company’s business, including but not limited to the risks and uncertainties associated with venture capital investing and other significant factors that could affect the Company’s actual results. Except as otherwise required by Federal securities laws, Harris & Harris Group, Inc. undertakes no obligation to update or revise these forward-looking statements to reflect new events or uncertainties.
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SAFE HARBOR STATEMENT
History
- 1983: Completed IPO
- 1992: Became an investment company
- 1995: Became a BDC
- 2002: Focused on nanotechnology
- Today: Leading investor in transformative companies
Stock Highlights1
- Symbol: NASDAQ:TINY
- Shares Outstanding: 31.2 million
- ADTV: 87,000 shares
- Stock Price: $3.06
- Market Capitalization: $95.7 million
Financial Highlights2
- Net Assets: $132.0 million
- Total Liquidity: $49.2 million3
- Net Asset Value Per Share: $4.24
Portfolio Highlights
- Recent liquidity events generated net gains on invested capital.
- 26 current portfolio companies, a portion of which could drive near-term growth.
- Robust pipeline of new investment opportunities to drive long-term growth.
CORPORATE HIGHLIGHTS
1) Data as of September 10, 2013. 2) Data as of June 30, 2013. 3) Total liquidity is amount as of June 30, 2013, plus $12.8 million in cash received in July 2013, from the sale of Xradia to Carl Zeiss. 3
HIGHLIGHTS
$13.5
$36.4
$-
$10
$20
$30
$40
12/31/01 6/30/13
Mill
ion
s
Total Liquidity
$24.3
$135.3
$-
$50
$100
$150
12/31/01 6/30/13
Mill
ion
s
Net Assets
$2.75
$4.24
$-
$1.00
$2.00
$3.00
$4.00
$5.00
12/31/01 6/30/13
NAV / Share
0
5
10
15
20
25 TINY Stock Price History
HARRIS & HARRIS GROUP
Harris & Harris Group builds transformative companies
from disruptive science.
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HARRIS & HARRIS GROUP HIGHLIGHTS
• We have significant equity stakes in companies bringing transformative products to the market.
• The value in our portfolio has not yet been realized.
• We have refined our strategy.
• We have a strong interdisciplinary team.
• We have the resources necessary to execute.
Invest
Build Value Return
BUSINESS MODEL
Our evergreen structure facilitates growth and is a competitive advantage.
• NAV Growth • Deemed Dividends
and Dividends
• Company Building • Board Involvement • Partnerships
• Early Stage • BIOLOGY+
HARRIS & HARRIS GROUP
Our Four-Part Plan
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Realize Invest
Partner
Return
HARRIS & HARRIS GROUP
Our Four-Part Plan
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Realize Invest
Partner Return
BIOVEX (ACQ. BY AMGEN)
• Initial investment: At first signs of clinical efficacy (Series E)
• Initial Market: Melanoma with plans for other solid tumors
• Initial involvement: Board Observer
Acquired by Amgen in 2011
$1 Billion in total payouts
Acquired at Start of Phase 3 Trials
MARKET: Solid Tumor Cancer Therapy
Melanoma Therapeutics: $1.4Billion by 2017 Head & Neck Therapeutics: $1.7Billion by 2016
* Market size estimates by GlobalData
TINY recognized that BioVex would be the first to commercialize oncolyNc virus cancer therapy
BioVex engineered oncolytic viruses to preferentially attack tumor cells, leaving healthy cells unharmed
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Solazyme harnesses the power of microalgae to transform low-cost sugars into high-value renewable oils.
SOLAZYME (IPO IN 2011; NASDAQ:SZYM)
• Initial investment: Seed round
• Employees @ initial investment: 2
• Initial involvement: Board seat
Investors / Corporate Partners Since Our Initial Investment
Roda Group Braemar Energy Ventures
Morgan Stanley Lightspeed
VantagePoint
Chevron Unilever Mitsui Sephora Bunge
San-‐Ei Gen
MARKET: Tailored Oils
Chemicals and Fuels: $1 Trillion* Nutrition: $100 Billion*
Skin & Personal Care: $50 Billion*
* Market size estimates by Solazyme
TINY identified impact potential, invested, and grew the company from the earliest stage
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Xradia’s proprietary technology enables high-resolution, 3D imaging of samples of interest to multiple high-growth industries.
As 1st institutional investor, TINY helped position Xradia for future growth in new markets
XRADIA (ACQ. BY CARL ZEISS IN 2013)
• Initial investment: Series D; First Institutional round of investment
• Revenue @ initial investment: $7 million
• Initial market focus: Electronics
• Involvement: Board seat
Harris & Harris Group Contributions
• Recruited new management team and members of board of directors.
• Helped build business strategy for expansion into new growth markets.
• Active involvement in sale process.
MARKET: X-Ray Microscopy
$1.2B in 2013*
Growth driven by Life sciences, materials, oil/gas, mining
Proprietary X-Ray Lenses
3D High Resolution Imaging Tools
Materials Science Life Sciences
Electronics Natural Resources
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Energy Life Sciences Electronics
Early Stage
ABSMaterials (2010) Contour Energy (2007)
Produced Water Absorbents (2011) Ultora (2010)
AgBiome (2012) Ancora (2007)
EchoPixel (2013) Enumeral (2009)
Senova (2011)
Mid Stage Cobalt (2008)
Laser Light Engines (2008) Mersana (2002) OpGen (2012)
Cambrios (2004) HzO (2011)
Kovio (2005) Nantero (2001) SiOnyx (2006)
Late Stage Bridgelux (2005) Nanosys (2003)
Champions Oncology (OTC:CSBR; 2011) Ensemble (2007)
Metabolon (2006)
Adesto (2007) D-Wave Systems (2006)
Molecular Imprints (2004)
WE HAVE A PIPELINE THAT INCLUDES HIGH-QUALITY INVESTMENTS
Note: Equity-focused portfolio companies, year of first investment and stage classifications as of June 30, 2013, not including 1) our publicly traded shares of Solazyme, 2) the recently acquired portfolio company Xradia; and 3) our rights to milestone payments from Amgen, Inc. associated with the acquisition of BioVex Group, Inc. and Laird Technologies, Inc. associated with the acquisition of Nextreme Thermal Solutions, Inc.
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OVER THE NEXT THREE YEARS WE EXPECT TO REALIZE PROCEEDS FROM THE MAJORITY OF OUR MID STAGE AND LATE STAGE COMPANIES.
METABOLON INITIAL INVESTMENT: Q1 2006
• Initial investment: Series B, lead investor
• Initial market focus: Testing & service
• Involvement: Board observer
• Current Milestones: 2 Diagnostic tests released
Investors / Corporate Partners
Aurora
Syngenta Ventures
Fletcher Spaght
Sevin Rosen Funds
Charles River Discovery Services
Top 10 Pharma companies
DHMRI
Health Diagnostics Laboratory
TINY recognized metabolomics as the future of biological understanding
Metabolon is the leader in measuring biological pathways and is positioned to disrupt billion dollar diagnostic markets with its novel solutions.
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TINY Impact: Exit at 8-‐12% ownership
L-threonine
N H 2
O H O
O H
glucose
O H
O H
O H
O H
O
O H
cholesterol
MARKET: Diagnostics & Drug Discovery
Diabetes Diagnostics: $3 Billion & Growing
PSA Diagnostics: $12 Billion & Growing
$20 Million revenue in services
D-WAVE SYSTEMS INITIAL INVESTMENT: Q2 2006
• Initial investment: Lead Series B
• Target Market: High Performance Computing
• Business Model: Quantum Cloud Computing
• Initial involvement: Board Member
Investors / Corporate Partners
Bezos ExpediNons In-‐Q-‐Tel
Draper Fisher Jurvetson Goldman Sachs
Google NASA Ames
Lockheed MarNn
MARKET: High Performance Computing
High Performance Computing: $44 Billion by 2020 Cloud Computing: $33 Billion by 2016
* Market size estimates by Gartner and Market Research Media
TINY recognized the criNcal importance of increased compuNng power to the Internet-‐age
D-Wave harnesses quantum mechanical phenomena to solve some of the most computationally intensive problems known to humankind
TINY Impact: Exit at 2.5-5% ownership
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• Initial investment: Seed, 1st Institutional Investor
• Initial market focus: Unknown – TINY helped develop the first focus
• Involvement: Board Seat
• Current Milestones: 2 Diagnostic tests released
SiOnyx Solu;on: Compe;;on:
Comparable Companies:
Image Sensors Omnivision (NASDAQ:OVTI)
Aptina, Pixim (Private)
Cameras & Camera Modules
FLIR Systems (NASDAQ:FLIR), Ambarella (NASDAQ:AMBA), Pelco (Sub. of Scheinder Elec.), Axis (STO:AXIS), Mobotix (ETR:MBQ)
Everfocus (TPE:5484)
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TINY Impact: Exit at 10-‐20% ownership
* Sources: SiOnyx estimates and IMS Research.
SIONYX INITIAL INVESTMENT: Q2 2006
TINY idenNfied the potenNal of the technology & helped found SiOnyx
SiOnyx is bringing disruptive performance and silicon economics to the multi-billion dollar night vision, security & surveillance, and gesture user interface markets
MARKET: Infrared Cameras
$7B in 2013 è $25B in 2017*
Growth driven by Security/Surveillance (Night Vision) and
Gesture User Interface (ex: Microsoft Kinect™)
HZO, INC. INITIAL INVESTMENT: Q3 2011
• Initial investment: Lead Series A
• Initial Market: Water protection for electronic devices
• Initial involvement: Board Member
TINY’s Contribution
• Established an experienced management team • Seeded company with outside experNse • Connected company to strategic partners and
customers
MARKET: Electronic Device Market
Consumer Electronics: $3.3 Billion Life Sciences: $3.1 Billion
Industrial Electronics: $0.7 Billion
* Market size estimates by HzO, Inc.
TINY idenNfied submersion water protecNon as a criNcal feature in future electronic devices
HzO combines high-volume manufacturing with innovative coating technology to add critical submersion protection to electronic devices
TINY Impact: Exit at 15-‐20% ownership
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ADESTO INITIAL INVESTMENT: Q1 2007
• Initial investment: Lead Series A
• Target Market: Non-volatile memory
• Initial involvement: Board Member
• Acquisition: Atmel’s flash memory business
Investors / Corporate Partners
Arch Ventures Applied Ventures (Applied Materials)
ATA Ventures
AlNs Semiconductor Microchip Altera
MARKET: Nonvolatile Memory (NVM)
NVM: $80 Billion/year in 2013
* Market size estimates by Adesto
TINY idenNfied major scaling challenges in front of tradiNonal NVM computer memory
Adesto is addressing the need for ultra low-power, low-cost, high-speed, scalable non-volatile memory (NVM) for stand-alone and embedded applications
TINY Impact: Exit at 8-12% ownership
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GROWTH IN AVERAGE OWNERSHIP
5%
9%
14%
0.00%
2.00%
4.00%
6.00%
8.00%
10.00%
12.00%
14.00%
16.00%
2001-2004 2005-2008 2009-2013
Notes: Average ownership data includes investment-weighted ownership percentages on a fully diluted basis as of June 30, 2013, for unrealized investments. Many of our current portfolio companies may raise additional capital, and depending on many factors our ownership could increase or decrease in these companies as a result of these financings. The data for 2005-2008 does not include ownership in Ancora Pharmaceuticals Inc. If this investment was included, the investment-weighted average ownership would be 15 percent.
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Sources of Recent Returns
Sources of Future Returns
HARRIS & HARRIS GROUP
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Our Four-Part Plan
Realize
Invest Partner Return
(1) Includes initial investments made prior to 2002. The first member of the current investment team joined Harris & Harris Group in 2002.
(2) A portion of our shares of Solazyme remained unrealized as of June 30, 2013.
EXPERIENCED EARLY-STAGE INVESTORS
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First Institutional Investor or Part of First Institutional Syndicate(1)
• ABSMaterials • Adesto • AgBiome
• Ancora • Bridgelux
• Contour Energy • Enumeral • HzO
• Laser Light Eng. • Mersana • Nantero
• PWA • Senova
• SiOnyx • Ultora
Adaptive Web Tech. (Exited Position in 2001) Ag Services of America (Exited Position in 1993) Agile Materials (Exited Position in 2005) Alliance Pharmaceutical (Exited Position in 1990) American Equine Prod. (Exited Position in 1990) Chlorogen (Exited Position in 2008) CMA Group (Exited Position in 1995) CORDEX Petroleums (Exited Position in 1998) Crystal IS (Exited Position in 2011) Cswitch (Exited Position in 2009) Dynecology (Exited Position in 1997) Evolved Nanomater. Sci. (Exited Position in 2008) Experion Systems (Exited Position in 2005) Exponential (Exited Position in 2009) Genomica (Exited Position in 2001) Harber Brothers (Exited Position in 1997) Harris Newco (Exited Position in 2001) Highline Capital (Exited Position in 1997) Informio (Exited Position in 2002) Molten Metal Tech. (Exited Position in 1993) MultiTarget (Exited Position in 1998) NanoGram (Exited Position in 2010) NanoGram Devices (Exited Position in 2005)
Nassim & Nicolovius (Exited Position in 1994) NBX (Exited Position in 1999) NeoPhotonics (Exited Position in 2012) NeuroMetrix (Exited Position in 2005) Nextreme (Exited Position in 2013) nFX (Exited Position in 1997) Pharm. Peptides (Exited Position in 1993) Phoenix Molecular (Exited Position in 2008) PHZ Capital Partners (Exited Position in 2003) Princeton Video Image (Exited Position in 1999) Questech (Exited Position in 2011) Re Capital (Exited Position in 1989) SciQuest (Exited Position in 2000) InSite Marketing (Exited Position in 2001) Siluria (Exited Position in 2011) Solazyme (IPO in 2011)(2)
Sonex (Exited Position in 1996) Starfire Systems (Exited Position in 2009) Sundial Marketplace (Exited Position in 2001) Voice Control Systems (Exited Position in 1999) Xradia (Exited Position in 2013) Zia Laser (Exited Position in 2008)
EVOLUTION OF OUR INVESTMENT FOCUS
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BIOLOGY
Electronics
Life Sciences
Energy
Nanotechnology Opportunity Space
BIOLOGY
Electronics
Life Sciences
Energy
BIOLOGY
Electronics
Life Sciences
Energy
2002-2007 2008-2013 Future
We are Positioned to take Advantage of Many of the Exciting Trends in Growing Life Science Markets
Our interdisciplinary team has the ability to iden;fy and diligence cross-‐discipline deals.
OUR EXPERTISE IS INTERDISCIPLINARY
Physics
Biology
Materials Science
Engineering
Medicine
Chemistry
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5 Ph.D. level investment professionals: Chemistry, Physics, Biochemical Engineering, Gene;cs and Materials Science
Single Cell Analysis
Structural Varia;on
Molecular Engineering
Omics
Microbiome
Water
Molecular Diagnos;cs
Synthe;c Biology
Drug Delivery
3D Biology
Cancer Therapeu;cs
???
Separa;ons Solid-‐State Sensors
Quantum Compu;ng
Imaging and Visualiza;on
Vaccines
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This yields a unique and diversified life science porZolio at the intersec;on of biology and other disciplines.
H&H APPROACH YIELDS A UNIQUE PORTFOLIO
OUR DISTINCTIVE APPROACH
Interdisciplinary innovation is required to address these life science challenges.
LIFE SCIENCE SOLUTIONS BIOLOGY
Electronics
Physics
Materials Science
Chemistry
IT
Engineering
Mathematics
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EXAMPLES OF BIOLOGY
SEMICONDUCTORS
PHYSICS
INFORMATION TECHNOLOGY
3D NON-INVASIVE IMAGING AND DIAGNOSTICS
PERSONALIZED GENOMICS
NOVEL THERAPEUTIC TARGETS
DNA SEQUENCING
PROTEIN BIOCHEMISTRY
ONCOLOGY
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BIOLOGY ENABLES H&H PORTFOLIO COMPANY
Engineering Single Cell Analysis
Physics Non-Invasive, High-Resolution Imaging
Electronics Personal Genomics
IT Protein Structure Analysis
Mathematics High-Quality
Molecular Diagnostics
Material Science Targeted
Bio-Compatible Drug Delivery
A DECADE OF BIOLOGY INVESTMENTS
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OUR COMPETITIVE POSITION – EARLY STAGE AND DISRUPTIVE SCIENCE
Disrup
Nve
Science
Early-‐Stage, AcNve Involvement
Late-‐Stage Passive Involvement
Internet /
Social M
edia
GSVC
SFE
Harris & Harris Group Uniquely Addresses an Underserved Market Amongst Publicly Traded Equity-Focused Investment Companies
KIPO
SVVC
Liqu
id
Early-‐Stage, AcNve Involvement
Late-‐Stage Passive Involvement
Illiquid
Harris & Harris Group is a Liquid Vehicle for Early-Stage Investing
OUR COMPETITIVE POSITION – EARLY STAGE AND LIQUIDITY
GSVC
SFE
KIPO SVVC
Venrock
Polaris
Khosla
ARCH Ventures
KPCB
HARRIS & HARRIS GROUP
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Our Four-Part Plan
Realize Invest
Partner Return
R&D Seed Stage Early-‐Stage VC
Later-‐stage VC
Time
Return
Return
Cost
R&D Seed Stage Early-‐Stage VC
Later-‐stage VC
Time
Return
Return
Cost
PARTNERING TO INCREASE RETURNS
Corporate involvement is critical to providing scale and distribution. Understanding the optimal transition point is quintessential to build capital efficient businesses.
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EARLY-STAGE DEVELOPMENT
Company formation, Management Team
Identification, University IP Negotiation, Initial Funding
and Performance Metrics
SCALE AND MANUFACTURING
Manufacturing Scale, Factory Integration,
Pilot Facilities, Clinical Trials
$$
TIME
REVENUE GROWTH Introduction and Access to the
Market and Customers
Value Creation
Cumulative Cost
EARLY-STAGE EXPERTISE AND CORPORATE EXPERTISE IS CRITICAL FOR BRINGING NEW TECHNOLOGY TO MARKET
Technology Plaeorms
Company Building
Market Access
Scale & Manufacturing
Corporate Partner(s)
Opportunity Space
PARTNERING EARLY IS BENEFICIAL
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We believe the skillsets of Harris & Harris Group and corporate partners are highly complementary.
Technology Plaeorms
Company Building
Market Access
Scale & Manufacturing
Corporate Partner(s)
OUR PARTNERING STRATEGY
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Corporations are an important part of Harris & Harris Group’s current and future strategies.
H&H Portfolio Companies
• Investment • Development Programs • Commercialization/
Purchase Agreements • Licensing • Expertise
• Investment • Strategic Insights • Management Fees and
Carried Interest
Corporate Partner(s)
Our two paths to working with corporations.
CURRENT EXAMPLE OF OUR PARTNERING STRATEGY
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Corporations currently add value to Harris & Harris Group and our portfolio companies in multiple ways.
Three Large Corporate Partners
Investment in Initial Round of Funding +
Development Programs
HARRIS & HARRIS GROUP
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Our Four-Part Plan
Realize Invest
Partner
Return
RETURNING VALUE FOR SHAREHOLDERS
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We seek to create value for shareholders by:
• Increasing net asset value per share (NAV) through: - Gains on our investments
- Reduction of number of shares outstanding
• Distributing a portion of net capital gains on investments to shareholders through:
- Present: deemed dividends
- Future: deemed and actual dividends
We believe execution on our four-part plan will generate meaningful returns to shareholders.
HARRIS & HARRIS GROUP
Harris & Harris Group builds transformative companies
from disruptive science.
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