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The reaction was straightforward: why not here and why there.
We are talking about the current presentation by Israel-based Trendlines Group to some number of clients from the Horwood Team, which is a part of Richardson GMP.
In 2014 that company C a seed-stage incubator that concentrates on medical and agricultural technology C tried to go public in Canada, but couldn’t find enough curiosity about the deal, that was slated to raise $10-million. Instead it decamped towards the Singapore Stock market where it completed its dpo late last year.
But it did round up some investors in Canada and Trendlines – started by two transplanted Americans, Todd Dollinger and Steve Rhodes – raised about $1.5 million by way of an offering of convertible debentures with clients of the Horwood Team to be the biggest buyers. “I first viewed it as a fantastic and incredibly efficient incubator model. I had been hoping that people would be able to incubate these [companies] in Toronto after which access the follow-on financings and the initial public offerings for the companies as they matured,” said John Horwood.
In Harwood’s view, the ultimate plan ended up being to get Trendlines on the TSX, and “then have another incubator in Toronto.” Instead, Trendlines C that is still small having a portfolio worth around US$90 million C listed in Singapore where it intends to produce a local incubator. (More specifically, Trendlines is listed on Singapore’s Catalist, a “sponsor-supervised listing platform for fast growing local and international companies,” launched in late 2007.)
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Part of the company’s plan, according to Rhodes the presenter, is also to build up an incubator in Germany. That call largely flowed from an investment from Braun Melsungen, – a privately-held medical and pharmaceutical device company, which has been around since 1839 and which posted revenues of 5.43 billion euros in 2014 – which was made at the time of its IPO.
“That could have been Toronto had we been able to raise the main city for them and get them right here. We would have had an incubator here with the same model,” noted Horwood, whose plan for Trendlines also included a link-up with the MaRS discovery district. While there wasn’t any local share listing, Horwood has obtained liquidity for his clients by converting the debenture into shares on the Singapore Exchange. Given the time differential it isn’t always easy to trade with that market.
Trendlines, which “invents, discovers, invests in and incubates life science companies,” was formed in 2007. After 2015 it had stakes in 46 portfolio companies, not every one of which generate revenue. (Not every one of its investments work: Cohen said it has written off about a quarter from the 62 it’s invested in.)
Rhodes said its typical cash investment is incorporated in the order of US$100,000. (However it does provide “in-kind” investments of US$450,000, cash that is used to hire staff, to rent space and supply guidance.) That investment is supplemented by a grant in the Israeli government (from the order of US$600,000.) All up, the startup has US$1.A million to US$1.2 million to utilize C in addition to the ideas and brainpower of its founders. The government cash has few strings: it has no equity stake, and no to ip (though its gets special payment if the IP is sold for an overseas buyer.
And Trendlines has had some big exits: Rhodes said a five to ten bagger is “good” while “we are looking for 20 to 50 times.”
Financial Post
bcritchley@nationalpost.com
