WILL PRICE NFC FUND PRESENTATION January 2016
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WILL PRICE
NFC FUND PRESENTATIONJanuary 2016
NEXT FRONTIER CAPITAL
Build MT companies of impact, utility, and meaning
$21.125m in committed capital
3 MT investments to date
MISSION & OVERVIEW
PAGE 2
LACK OF VENTURE FUNDING IN MONTANAMAJOR ISSUE AND OPPORTUNITY
• <$1M per quarter invested
• Founders without access to start-up capital
• Coastal VC firms little appetite for early stage risk in MT, usually cherry pick late stage “winners”
• Material ramifications for company formation, job growth, and ecosystem development
PAGE 3 Source: NVCA
STATE PER CAPITA RESEARCH FUNDING PER CAPITA GDP PER CAPITA VC
FUNDING
COLORADO $200 $56,142 $164
UTAH $180 $49,079 $278
MONTANA $170 $41,629 $2.89
MT/CO 85% 74% 1.76%
MT/UT 94% 85% 1.04%
Despite comparable research and GDP dollars, MT receives 57x and 96x less VC$ than CO and UT, respectively
CO and UT data indicate MT can support $36-68m/qtr. in VC funding vs. the ~$1m/qtr. today
INVESTMENT OPPORTUNITYRELATIVE TO CO AND UT, MT IS SIGNIFICANTLY UNDERSERVED CAPITALIZED
PAGE 4 NVCACenter for Measuring University Performance BEA.gov Census.gov
UT AND CO: FOUNDER FRIENDLY VC DYNAMICS
PAGE 5
THE VALUE OF ADVANCED INDUSTRIES
PAGE 6
THE VALUE OF ADVANCED INDUSTRIES
PAGE 7
THE VALUE OF ADVANCED INDUSTRIES
PAGE 8
INVESTMENT OPPORTUNITYBUSINESS CLIMATE SCORECARD
PAGE 9 Source: Choose MontanaBozeman Chronicle
Top Parameters for Acquisitions in MT
Ability to hire and retain a quality engineering team
Degree to which company is stand-alone vs. to be integrated
Strength of core team
Ease of travel – direct flight
TOP PARAMETERS
Top Parameters for Investing in MT
Ability to build and recruit team in Montana
Quality of local syndicate partner
Probability of finding another deal in MT
Ease of travel – direct flights
FOR VCS AND M&A
PAGE 10Source: Fund research
MONTANA STATE UNIVERSITY OF MONTANA
ANNUAL FUNDING $128M $62M
RATINGVERY HIGH RESEARCH UNIVERSITY: 1 OF 108 HIGH RESEARCH UNIVERSITY
AREAS OF EXPERTISE
• Optics• Photonics• Biotechnology• Energy/renewables• Medical
devices/pharmaceutical• Computer Science• Agriculture
• Biological sciences• Chemistry and
biochemistry• Computer science• Biomedical and
pharmaceutical• Neuroscience
Top professors serve as NFC advisory board members
INVESTMENT OPPORTUNITYHIGH RESEARCH INTENSITY
PAGE 11
INDUSTRY FOCUSAreas Where MT Research and Entrepreneurs Excel1
Software Healthcare Photonics Bio-Sciences Agriculture Sciences
CONTEMPLATED PORTFOLIO CONSTRUCTION
Target 12-14 Portfolio Companies, target number will vary with final size of Fund
Expect up to $1M in initial investment with $1-2M total/deal
Work to syndicate with quality firms and/or invest with leading industry execs
Strive for initial ownership of 10-15%
LP co-investment may exist on per deal basis
Will consider secondary share purchases via founder shares buyout
PAGE 12
NEXT FRONTIER CAPITALSTRATEGY
1: Illustrative list
FIRST INVESTMENT – SiteOne Therapeutics
• Deal– July, 2015 NFC led SiteOne’s $1.2m Series A-1 and joined the board.
– Invested $400,000 NFC capital
– Syndicated $800,000: insiders and co-investment by others
• Summary Overview– SiteOne is a biotech company developing novel therapeutics to treat acute
and chronic pain without the limitations and side effects of existing therapies, such as NSAIDs and opioids.
– With the success of its drug platform, SiteOne will serve as a needed substitute to OxyContin, Vicodin, and other habit forming chronic pain analgesics. Founded and staffed by Stanford faculty in chemistry and pain management, SiteOne is based in Bozeman and led by Stan Abel, with a chemistry lab in SF.
PAGE 14
SECOND INVESTMENT – Submittable
• Deal
– November, 2015 NFC led Submittable’s $1.34m Series A and joined the board.
• Summary Overview
– Submittable is a Missoula-based, SaaS company with a general purpose,
highly efficient and easy to use platform to manage submissions of creative
content, foundation grant requests, job prospects, etc. Their prospective
client base is any organization soliciting multiple submissions for specific
assignments.
– Submittable has strong customer metrics, a history of profitable, capital efficient revenue growth, and a horizontal application with over 2,700 clients and 1.2 million submitters across multiple industries.
PAGE 15
THIRD INVESTMENT – CLEARAS
• Deal
March, 2016 NFC joins Clearas $4m Series B, investing $750,000 capital. Lead investor – Cowles Company, numerous co-investors including Goodworks Ventures.
• Summary Overview
– Clearas, a Missoula, MT company developed advanced technology for reducing nutrient levels – phosphorus and nitrogen – in industrial and municipal sewage effluent.
– Reducing phosphorus to near zero, at scale, with no sludge or toxic by-products is hard to do. The company’s patented, modular technology is cheaper and environmentally/functionally superior to the existing state of the art. It is the only such technology able to exceed EPA’s newly tightened standards for lowered nutrients in effluent.
– Profitable by-products include fish food, fertilizer and bio-degradable plastics.
– Huge, dynamic nutrient reduction market of $9.5b growing at 10% CAGR
PAGE 16
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