Overview
Synthetica Capital Partners I, L.P. is a new seed and early-stage private venture capital fund that invests primarily in companies with original, proven science-based technologies or expertise that seeks to transition to product driven licensing and/or manufacturing activities and to commercially viable business enterprises. Initial investment amounts will typically range from $3 million to $5 million per transaction. Synthetica Capital Partners seeks investments in new companies originating from the research and development of large corporate or government sponsored scientific endeavors, that address mature markets of at least $500 million per year or more, that can reach at least $10 to $30 million or higher annual revenues within three years, and that have the potential to create future “enterprise value” in excess of $50 million in the same time frame.
According to the US Department of Commerce, the Government spent $70 Billion in R&D in 2005, (excluding defense). Primarily this effort was channeled through a system of National Laboratories and certain agencies such as NASA. National Laboratories include Los Alamos, Lawrence Livermore, Sandia, and others as well as certain agencies such as NASA and NIH. Similar organizations exist outside the US, specifically in Europe where the European Union is sponsoring significant pan-European entities, such as CERN and the European Space Agency, and in China. Additionally significant portfolio of disruptive innovation is emerging from corporate laboratories connected with large Companies. Despite this investment over 50% of the resulting IP are generally not exploited by the sponsoring organization for various internal reasons.
Synthetica Capital Partners is partnering with these types of sponsoring research institutions on a global basis to commercialize some of their disruptive discoveries. We have developed a global network of science research partners leveraging our multi-year relationships with these research institutions. Because of our multi-decade role as leading management consultants to many of these institutions, we are uniquely qualified, as the fund’s general partner to provide close working relationships with these entities. We are uniquely positioned to tap into the pipeline of innovation being generated from these institutions.
The advantage for our investors is that an investment in commercial spin-outs from such entities is likely to be less risky from a technology development stand-point. Generally entities that could be spun out of these institutions are characterized by more mature technology, stronger IPs and more disciplined management teams than traditional early stage companies. Additionally the fund expects to be the first institutional money in these ventures, effectively gaining a “series A” valuation for a “series B” stage company. This “value gap” is a critical investment advantage for the fund and its investors.
The advantage for sponsoring R&D organizations is that we provide a combination of capital and know-how to successfully monetize their R&D investment through spin-outs.
Our approach involves focusing on those companies whose stage allows for rapid development of EBITDA and Sales fundamentals. Our strategy locks in the value differential from pre-revenue to revenue stage companies. To accomplish this goal our approach as a fund will be to provide hands on, active management to each venture. We expect to leverage our members’ and partner’s expertise in early stage corporate formation and growth to create a comprehensive system of controls, manufacturing, sales and distribution channels.
Because National Laboratories’ research focuses on Material Sciences & Nano-materials, Energy Technology and Biotechnology the fund’s primary focus is in those sectors.
We have developed a unique approach to investing, designed to maximize returns and lower risk. The approach starts with our pipeline, jointly developed and qualified with our research partners. As part of our pipeline efforts we may be exposed to dozens of incubating ventures inside the partner research institutions before we qualify a venture as a candidate for investment. Secondly we carefully time our investment to occur only immediately prior to commercialization, to minimize research and development risks. After investment we inject management under the supervision of the General Partner’s members and place a strong operational emphasis on controlled costs and revenue traction. We believe that M&A valuations rewards strong IPs and market leadership. We think that rapidly growing our venture’s revenues will maximize the chances for an early exit through M&A. Finally we endeavor to match exit partners with our ventures early in the process. Often the best M&A exit opportunities are found with strategic partners involved in distribution, manufacturing or OEM relationships, and we look to establish those relationships for our ventures early in the process.
Synthetic/A/ (America) Ltd., (an affiliate of Synthetica Holdings
LLC) is licensed under California Financial Lender Law license no.603D700
by the Department of Corporations of the State of California.
FOR INFORMATION CONTACT THE DEPARTMENT OF CORPORATIONS, STATE OF CALIFORNIA.
Loans are made pursuant to the California Finance Lender Law, Division 9 (commencing with
Section 22000)
of the Financial Code.
©2007 Synthetica Holdings, LLC.
