Carlis Collins asked:
According to Colin Wallace at Publex Ventures, over 5,000 public companies in the U.S can be classified as small-cap or micro-cap “orphans” that don’t benefit from a liquid market. While they have the obligations of being public, they don’t have effective access to the public capital markets. Publex introduced an interesting solution to this problem — the fund strategically engineers mergers between early-stage private companies and under-performing public companies, to accelerate liquidity while preserving the superior returns of early-stage investing.
Publex invests before, during, and after merging these companies into an operating public company that is under-performing or is in need of new technologies, business lines, or management to maximize its growth potential and attract market attention. “While there are many funds that invest in both public and private vehicles, Publex is unique in its business model of investing in private companies with the express purpose of combining them with an under-performing public company, then investing further in the combined public entity,” said Wallace.
Another interesting solution is offered by Silicon Valley start-up www.IdeaMamaClub.com, founded by a serial entrepreneur Olga Kostrova. IdeaMama’s unique virtual IP incubation platform offers a pre-assessed micro-cap deal flow, co-developed by its user community. IdeaMamaClub.com facilitates innovations in various industries including biotechnology, commerce, education, energy, entertainment, environment, finance, health, information technology, materials, space, transportation, and others.
The beauty of IdeaMamaâ€™s concept is in its transparency, reduced due-diligence time, and its pool of volunteering contributors from all over the world that help to quickly build effective startups. The most promising start-ups have great management teams with a solid track record, high barriers to entry (patented technologies), high profitability, decent market size, and the most importantly â€“ an easy access to all of the resources that incubated companies need, including the introductions to top accounts and strategic partners made by IdeaMamaâ€™s users.
Any fund that would decide to incorporate the Publex approach and integrate the Web-based platform offered by IdeaMamaClub.com, would be a winner in the contest for the best performing portfolio companies. Publex introduced a turnaround solution for under-performing public companies, while IdeaMama creates the ecosystem and framework for quickly building effective companies using the best resources from around the world. It is a new type of economy that will require worldwide synergy and cooperation across many different disciplines, markets, and cultures. As this project scales up, it can dramatically improve the positions of international public markets as well as offer thousands of jobs to talented people that are excited about working for entrepreneurial companies, worldwide.