|
| |
Investor Markets
 |
Capital markets are
robust and dynamic |
|
Prolonged historic
economic growth and projected low inflation |
|
Nominal returns at 30
year lows |
 |
Institutional
and individual investors continue to seek higher returns offered by the equity markets |
|
The
venture and private equity markets have outperformed the public markets over the past five
years |
Private vs. Public Markets: Annualized
Index Returns |
| |
|
|
|
| Indexes |
1 Year |
3 Year |
5 Year |
| Cambridge US Venture Capital Index |
31.1% |
40.4% |
31.1% |
| Cambridge US Private Equity Index |
24.3% |
22.4% |
21.3% |
| S&P 500 |
34.7% |
28.9% |
19.8% |
| Wilshire 5000 |
29.3% |
26.7% |
19.1% |
Source: 1998 Asset Alternatives, Inc.
|
There is substantial
liquidity and deal flow for venture/private equity investing |
| ($, millions) |
1996 |
1997 |
| Dollars Invested |
$ 9,500 |
$12,000E |
| # of Deals |
2,057 |
2,600E |
| Funds Raised |
$36,163 |
$50,933 |
Source: Price Waterhouse Venture Capital Survey and Asset Alternatives,
Inc.
Issuer Market
|
Economic growth and job
creation are driven by small business – 25% of which are new product/service areas |
|
Rapidly changing
technology and product cycle times create greater risk and opportunity for entrepreneurs |
|
Entrepreneurial firms
that can successfully navigate this environment will offer higher returns than public
equity and fixed income markets |
The Dilemma: Investors vs. Entrepreneurs
Investors
|
Seek high
quality private equity deals, but will face increasing competitive pressure and an
oversupply of available funds |
|
Have
highly sophisticated financial talent |
|
Must review a great
number of deals to find investments meeting their criteria |
Entrepreneurs
|
Frequently
are unfamiliar with the process of successfully raising money in capital markets |
|
Entrepreneurs
cannot effectively manage their business while going through a capital raising process |
|
Seek to
retain ownership, control and upside while investors seek to control and maximize returns |
Paradigm’s Role
|
Paradigm
identifies and becomes an advisor to firms preparing to seek private equity from the
institutional market |
|
Paradigm adds value by
becoming a trusted advisor to the issuer at a crucial stage of the issuer’s
development |
|
Paradigm prefers clients
that are beyond start-up with proven products and revenues |
|
The issuer will benefit
with the highest fair value for the firm when it goes to market |
|
Investors will see
higher quality deals and thereby reduce the time and effort of the "sifting"
process |
Paradigm’s Approach
|
Paradigm
brings highly experienced, financially sophisticated general management talent to the
emerging growth company |
|
The
principals have backgrounds/experience that justify their role as "trusted
advisor" |
|
Paradigm’s
involvement begins well in advance of approaching the market |
|
Additional
management talent is recruited, if necessary, to shore up the issuer’s team |
|
Paradigm’s
role continues beyond the first round to subsequent private and public financing
transactions |
|
Paradigm
will, in some cases, agree in part to be compensated in the form of equity of the issuer
reinforcing congruence of goals with the client |
|
