Who Are We? · The “Other” Options PE/hedge funds – 2 & 20 model – Substantial minimum investment size ($250k ++) – Limited or no liquidity for up to 10 years – “Drawdown”

Who Are We?

Chris Tell

Mark Wallace

What Do We Do?

● http://www.capitalistexploits.at● Host meet-ups in emerging/frontier markets● Manage an exclusive private equity deal service for

accredited/qualified investors – CPAN

What is CPAN?

● Virtual angel group (Accredited/Qualified) investors● Pre-vetted deal flow● Subscriber-supported● Self-directed private equity - Your own “hedge fund”

(minus the friction)

What is Private Equity (PE)?Equity (ownership in a business) that is not publicly listed or traded on a stock exchange. In it's simplest form, it is the buying and selling of private businesses.

Most private equity is placed in companies that have a potentially high rate of growth.

Why Private Equity?

A Quick Story...

On Boiler Rooms and Sleazy Sex Shops

Seeking Growth

● Where does exponential growth come from?

● What made America great?

● What led to China becoming a global powerhouse?

Why Private Businesses?

● Over half of GDP in developed nations● This number is higher in emerging markets● The public markets are crowded – individual

investors, day traders, hedge funds, ETF's, pension funds, mutual funds, brokers, black box trading and of course central banks

What are the Advantages of PE?

● Potential for above average returns

One of the most incredible historical examples of this was Iain McGlinn's 4,000 British pound investment in 50% of the Body Shop. McGlinn realized a return of 10,500x! This means that his 4,000 pound investment became worth 42,000,000 pounds.

Thomas Alberg, the angel who backed Amazon.com turned a $100,000 investment into $26,000,000.

Typical? No. Likely? No. Possible? Yes.

Advantages (cont.)

● Exclusive and “Exotic” High-Growth Opportunities

We are currently looking, or have looked at opportunities in Cambodia, Nepal, Thailand, Indonesia, Malaysia, Viet Nam, Brasil, New Zealand, Fiji, South Africa and the ever so exotic US of A.

- Gold explorer in Myanmar- US-based Copyright infringement software developer- Israel-based gesture recognition technology developer- Australian-based secure, encrypted cloud storage provider- Iraqi mobile telecommunications company- Mongolian fire security and safety firm- Oil explorer in north Africa- Singapore-based specialty foods marketing/distribution company- Bio-medical genetic marker company- MENA-focused fund investing in Libya and Mozambique- US-based social music sharing venture- Thai-based coconut water wholesaler...

Advantages (cont.)

● Increased Transparency

When was the last time a regulator PREVENTED a fraud?

The corruption in the public markets and the “alliances” between many public companies and the regulators means that the wolf is in charge of the hen house, and private investors are the hens!

Additional Considerations

Giving something back. Angels are often entrepreneurs themselves. Getting involved in early-stage deals gives them the chance to mentor other entrepreneurs.

Involvement without immersion. Participate without the ultimate responsibility for the company. Most Angels do not want to be full time VCs. They want the flexibility of investing without the pressures of raising funds, managing investors’ expectations and otherwise dealing with the day-to-day.

Be part of an exclusive “group”. Some people like to golf, others travel. Angels enjoy maintaining or building their personal networks with like-minded, intelligent people.

Keep up and stay active. Investing in early-stage private equity is sure to keep you abreast of the latest and greatest. It's a way to stay active in the business community, avoid “retirement” and otherwise contribute positively.

The “Other” Options

● PE/hedge funds

– 2 & 20 model

– Substantial minimum investment size ($250k ++)

– Limited or no liquidity for up to 10 years

– “Drawdown” period – additional capital calls

– NO control - Most private equity investments are limited partnership interests. Once your money has been invested in a private equity fund it can be difficult to access it. The limited partners of a private equity fund (you) usually don't have the power to insist that a sale takes place with any of the investments.

Analyzing CPAN Deals

This is perhaps the MOST important aspect of CPAN and why you should be involved.

● Anyone can find private equity deals, right? Just go to LinkedIn, create a profile and join a few of the PE groups listed on the site.

● The Internet has made everyone an expert on something, and there is certainly no shortage of private equity experts and deal jockeys that claim to have found the next Apple or Amazon.

● In stark contrast to this, we source CPAN deals via our global network of entrepreneurs, business associates and boots-on-the-ground experts in far-flung places like Myanmar, Thailand, Nepal, Chile, Mozambique, New Zealand and the Stans... oh yeah, and even the States.

Analyzing CPAN Deals (cont.)

● Consider the Source

Where did the deal come from? Who brought it to us?

Trusted networks – NO pay for play brokered deals whenever possible.

Analyzing CPAN Deals (cont.)

● Management, management, management...

Who is the driving force behind the Company? What is their educational background, employment background, unique industry qualifications, track record of success, etc.?

A company CANNOT succeed long-term without competent management – period!

Analyzing CPAN Deals (cont.)

● The “Plan”

Does management have a concise and understandable plan for growing and funding the business?

If a deal cannot be presented in a succinct and logical way we take a pass.

Analyzing CPAN Deals (cont.)

● The Market/Industry

Is the industry and the opportunity large enough to bother?

Analyzing CPAN Deals (cont.)

● Founder's vesting and management compensation

Does management have a reasonable amount of their own capital at stake?

Is management taking a salary before the company is profitable or cash flowing?

Is management's and owners future “wealth” directly tied to the success of the enterprise?

Analyzing CPAN Deals (cont.)

● The market● The mission● The product● The customers● The partners● The competition● Other investors● Exit plan

Risks of PE Investing (cont.)

The very obvious risks to consider are that with typical private equity investments, you:

● forgo the benefits of liquidity;

● lack broad diversification;

● lack access to daily pricing or valuation.

In regards to liquidity, let's be VERY CLEAR. Private equity deals can involve tying up your capital for long periods of time. We try to get involved where there is a clear exit and a realistic timeframe to an exit. However, a company's fortunes can change.

You can and will lose some or all of your investment when you participate in private equity. This is RISK capital.

Risks of PE Investing

Numerous studies, and extensive personal experience has shown us that out of every 10 deals invested in three or four are likely to fail, three are “zombie” deals which are not going anywhere, two will return between two and five times our initial investment, and one or two will be a ‘home-run’ returning five to 10 times or much more.

In general then, Angels therefore are usually looking for investments that return upwards of 25-30% IRR per annum to compensate for the inevitable, failed investments.

Examples - Past● Mongolia Growth Group

– .60 seed round to $6 in less than a year. A $25k investment would have been worth $250k.

● Rights Corp

– .125 cent cost basis, .25 cent warrants (30% coverage). Stock APO at .72 cents in less than a year. A $25k investment as of today is worth $183k. We invested in February. Caveat, 12-month lock up.

● Pebbles

– Convertible at a $4.7MM valuation, Series “A” just completed at a $13.5MM valuation with both Sandisk and Xiaomi coming in as strategic investors. Buyouts in this space for similar companies in the $20-$60MM range.

● Archetype

– $40k invested in 12 months. Sale to PE group of 80% for $250k. Believes a $50MM trade sale possible in 36 months.

Examples - Present

● Membrane company

– Massive global market, cheap valuation, exclusive seed round, strong key investors, obvious trade sale to major multi-national (3M, BASF, etc.)

● Waste to Energy company

– Locked in contract, massive market, paid to take their raw materials! Seed round and direct to “A” round at a 30% bump.

● Biosciences company

– Massive and growing market for genetic disease marking/research. Seeded and going into the “A” round at a bump from seed a few months ago.

What you get

● Pre-vetted, unique and exclusive early-stage deal flow.

● Access to our analysis.● Access to other members analysis and DD.● Conference call updates with management.● Meet ups and face-to-face meetings with founders● Direct line to the CEO/Founders● Self-direction and CONTROL!

Contact Us

[email protected]

Mark@

Chris@

CPAN is really a one-on-one, sit down, phone call discussion with you. This is NOT for everyone.