I
NVESTINGIN
N
ANOTECHNOLOGY
NASDAQ : TINY
FIRST. TRANSFORMATIVE. PROVEN.
This presentation may contain statements of a forward-looking nature relating to future events. Statements contained in this presentation that are forward-looking statements are intended to be made pursuant to the Safe Harbor Provisions of the Private Securities Litigation Reform Act of 1995. These forward-looking statements are subject to the inherent uncertainties in predicting future results and conditions. These statements reflect the Company’s current beliefs, and a number of important factors could cause actual results to differ materially from those expressed herein.
Please see the Company’s Annual Report on Form 10-K, as well as subsequent filings, filed with the Securities and Exchange Commission for a more detailed discussion of the risks and uncertainties associated with the Company’s business, including but not limited to the risks and uncertainties associated with venture capital investing and other significant factors that could affect the Company’s actual results. Except as otherwise required by Federal securities laws, Harris & Harris Group, Inc. undertakes no obligation to update or revise these forward-looking statements to reflect new events or uncertainties.
2
H
ARRIS
& H
ARRIS
G
ROUP
Harris & Harris Group
is an Early-Stage,
Active Investor
in Transformative
Nanotechnology Companies.
N
ANOTECHNOLOGY
A
DDRESSES
M
EGATRENDS
•
Governments,
corpora/ons, and
investors increasingly
organize their R&D, new
business, and funding
efforts around addressing
megatrends.
•
Nanotechnology is
fundamentally
posi/oned to address
the needs created by
the most important
megatrends.
Global health and ageing population
Ubiquitous data and connectivity
Nanotechnology
Impact
Global energy
needs
• Compound Annual Growth Rate of:
• 21.5% for total funding from 2000 to 2010
• 35.0% for corporate R&D funding from 2000 to $9 Billion in 2010
• 19.5% for global publica/ons from 2000 to 2010
TOTAL GLOBAL
REVENUE
2004
2009
2015
Nanomaterials
$0.29 B
$1 B
$2.9 B
Nanointermediates
$2.5 B
$27 B
$474 B
Nano-‐enabled products
$16 B
$223 B
$1960 B
2015 numbers are projected Source: Lux Research Inc.
By 2015, $2 trillion in products projected to incorporate nanotechnology.
N
ANOTECHNOLOGY
C
OMMERCIALIZATION
IS
N
OW
Note: There is no guarantee that 2015 projec/ons will be achieved. Do not place undue reliance on such projec/ons.
Harris & Harris Group does not warrant the accuracy, completeness or /meliness of informa/on cited from third-‐party sources.
N
ANOTECHNOLOGY
IS
P
OSITIONED
FOR
R
APID
A
DVANCEMENT
1980 1990 2020
1974 2001 2010 2011 2020
6
CommercializaCon GestaCon
1990 2020
• Carbon Nanotubes
Discovered
• First liquidity events
• PorLolio Company
Revenue Growth of 42%
• Assembled Team
• First Investments
• Term “Nanotechnology”
Coined
Basic and Applied Research
Early
AdopCon Advancement Rapid Market Mass
• Five Liquidity Events
Low
Op po rt un ity
High
1991
We believe we are the leaders invesCng in nanotechnology,
and its growth is allowing us potenCally to deploy more funds profitably.
Note: There is no guarantee that the projec/ons on this slide will be achieved. Do not place undue reliance on these projec/ons.
First Decade
Our interdisciplinary team has the ability
to idenCfy and diligence cross-‐discipline deals.
O
UR
E
XPERTISE
IS
I
NTERDISCIPLINARY
Physics
Biology Materials
Science
Engineering
Medicine
Nanotechnology
Chemistry
Biofuels
LighCng Energy HarvesCng
Ba`eries
Renewable Chemicals Water Molecular DiagnosCcs
Touch Screens
Drug Discovery 3D Biology Cancer TherapeuCcs
???
Disposable Electronics Image Sensors Quantum CompuCng
Solid State Memory
Vaccines
These discoveries cross-‐ferClize mulCple billion-‐dollar end markets
resulCng in a diverse porLolio.
O
UR
A
PPROACH
Y
IELDS
A
D
IVERSE
P
ORTFOLIO
9
O
UR
P
ORTFOLIO
C
OMPANIES
A
DDRESS
N
EEDS
IN
M
ANY
I
NDUSTRIES
C
ORPORATE
I
NVOLVEMENT
IS
C
RITICAL
Corporate involvement is criCcal to providing scale and distribuCon. Understanding the opCmal transiCon point is quintessenCal to build capital efficient businesses.
EARLY-‐STAGE DEVELOPMENT
Characteriza/on, reproducibility, Base line processes,
Integra/on challenges, Specifica/on challenge
Correct cost model
SCALE AND MANUFACTURING
Manufacturing scale, Factory integra/on, pilot
facili/es, Clinical Trials
$$
TIME
REVENUE GROWTH
Introduc/on and access to the market & customers
Value CreaCon
CumulaCve Cost
Deal team
Strengths AcCve Corporate Involvement
O
UR
P
ARTNERS
- P
RESENT
Note: All numbers are as of June 30, 2012. The amounts listed are from portfolio companies in which Harris & Harris Group made its initial investment since 2002. This time period was chosen based on the year that the first of the current managing directors joined the firm.
Over $80 million
in federal funding
Over two thirds have significant corporate partnerships or investors
> $1 billion in capital from
other venture capital firms
Le ve ra ge o n O ur In ve stme nts $149 million Invested by H&H Alloy Ventures
ARCH Venture Partners
ATA Ventures
Battery Ventures
Braemar Energy Ventures
CMEA Capital
Crosslink Ventures
DCM – Doll Capital Management
Draper Fisher Jurvetson
Energy Ventures
Fidelity Biosciences
Globespan Capital Partners
Khosla Ventures
KPCB
Proquest
Polaris Venture Partners
Venrock
Bosch
Bristol Myers Squibb
Bunge Coherent Chevron Dow Hitachi Chemical IMAX Intel LG Innotek Lockheed Martin Mitsui Panasonic Pfizer Samsung Sephora Schlumberger Synaptics Syngenta Tyco Unilever Columbia University
California Institute of Technology
Harvard University
Lawrence Berkeley Laboratory
Massachusetts General Hospital
Massachusetts Institute of Technology
Research Triangle Institute
University of California
University College London
University of Illinois Urbana Champaign
University of Texas
Whitehead Institute
Advanced Defense Research Projects Agency
National Science Foundation
National Institute for Standards and Technology
Night Vision and Electronic Sensors Directorate
Office of Naval Research
National Institutes of Health
Department of Energy
O
UR
P
ARTNERS
- F
UTURE
Government
Agencies
Corporate
Partners
Venture Capital Firms
Le
ve
ra
ge
o
n O
ur
In
ve
stme
nts
Capital
from H&H Permanent capital of Harris & Harris Group invested alongside outside capital managed by
Harris & Harris Group.
Uncertain future for availability of government grants, contracts, loan guarantees.
Corporations have capital and need visibility and access to disruptive technologies in core and adjacent markets.
Number and size of venture capital firms investing in energy, healthcare and
electronics are decreasing, which reduces capital availability from these sources.
P
RIORITIES
FOR
2012
AND
B
EYOND
We currently believe Harris & Harris Group is well positioned to
grow its NAV and generate returns for shareholders through:
•
Liquidity Events:
• Between 2012 and 2014, we believe our late-stage companies could
reach liquidity through IPOs or sales.
• We believe more than 75 percent of our mid-stage companies could be
in a position to complete transactions that create liquidity for our investments in those companies.
•
Generating Predictable and Near-Term Income:
• We are investigating opportunities to increase our venture debt
investment opportunities.
• We are selling call options covered by our positions in publicly traded
portfolio companies.
•
Increasing Investable Assets Without Issuing Common Stock
13
Note: These projections are based on currently available information and the timelines for reaching and the percentages of our current portfolio companies that may reach liquidity events may differ materially in the future from these
T
HE
C
HANGING
D
IALOGUE
• Diminishing early-‐stage financings
creates opportuniCes:
o Outstanding pipeline of deals.
o Ability to nego/ate favorable
deal terms.
• Early stage nanotech deals require
our specific skills and involvement:
o Technology development.
o IP landscape development.
o Management team
development.
o Venture syndica/on.
o Product and market
defini/on.
o Need for corporate partners.
F
OCUS
ON
E
ARLY
S
TAGE
First InsCtuConal Investor or Part of First InsCtuConal Syndicate
• ABSMaterials
• Adesto
• Ancora
• Bridgelux
• Contour Energy
• Enumeral
• HzO
• Laser Light Eng.
• Mersana
• Nantero(1)
• Nextreme
• Senova
• SiOnyx
• Ultora
• Xradia
• Adap/ve Web (Exited in 2001)(1)
• Ag Services of America (Exited in 1993)(1)
• Agile (Exited in 2005)
• Alliance Pharma. (Exited in 1990, 1997 and 2000)(1)
• American Equine Products (Exited in 1990)(1)
• Chlorogen (Exited in 2008)
• CORDEX Petroleums (Exited in 1998)(1)
• Crystal IS (Exited in 2011)
• Cswitch (Exited in 2009)
• Evolved Nanomaterial Sciences (Exited in 2008)(1)
• Experion Systems (Exited in 2005)(1)
• Genomica (Exited in 2001)(1)
• Molten Metal Technology (Exited in 1993)(1)
• NanoGram (Exited in 2010)
• NanoGram Devices (Exited in 2005)
• NBX (Exited in 1999)(1)
• NeoPhotonics (IPO in 2011)(2)
• NeuroMetrix (Exited in 2005)(1)
• Phoenix Molecular (Exited in 2008)
• Questech (Exited in 2011)(1)
• Re Capital (Exited in 1989)(1)
• SciQuest (Exited in 2000)(1)
• Silknet Sofware (Exited in 2001)(1)
• Siluria (Exited in 2011)
• Solazyme (IPO in 2011)(2)
• Starfire (Exited in 2009)
• Sundial (Exited in 2001)(1)
• Voice Control Sys. (Exited in 1999)(1)
• Zia Laser (Exited in 2008)
(1) IniCal investment made prior to 2002. The first member of the current investment team joined Harris & Harris Group in 2002.
(2) NeoPhotonics and Solazyme remain as unrealized porLolio holdings as of June 30, 2012.
W
E
ARE
EARLY-STAGE
A
CTIVE
I
NVESTORS
H&H TECHNOLOGY
DOMAINS BIOTECHNOLOGY CHEMICAL ELECTRONICS
Precision Chemistry Novel Medicines Novel Chemical Synthesis Nanoscale, molecular,
macromolecular modeling.
Nano-Fluidics & Fabrication
Novel, multiplexed, small-volume sample handling.
Novel materials for low cost analysis.
Nanofluidic control systems and macroscale integration.
Separations Efficiently purify water and
proteins.
Novel resins and membranes.
Modeling and optimization of separation systems.
Sensing
Nano-scale sensors for molecular analysis and bioprocess
monitoring.
Novel materials and chemistry for low cost
remote sensing.
Dispersed sensor systems, mesh/adaptive networks, multi and
hyper-spectral imaging.
Semiconductors & Molecular Analysis
Semiconductor based technology for genetic and biochemical
analysis.
Novel circuit board substrate materials &
chemistry.
High-density, high-speed memory and data storage.
Big Data Biomarker discovery and better
decision making for patient care.
Algorithms for novel chemical and materials
design.
High-speed memory and interconnects, multi-variable
processing, unstructured to structured data sets.
3D Biology 3D cell printing and propagation
for diagnostics and discovery.
Advanced materials for 3D tissue regeneration and
growth.
Protein and tissue modeling.
17
H
ARRIS
& H
ARRIS
G
ROUP
T
ECHNOLOGY
D
OMAINS
FROM DIGITAL TO QUANTUM COMPUTING
Harness the ability of quantum mechanics to solve some of the
most computaConally intensive problems in seconds or
minutes rather than years.
18
D-W
AVE
S
YSTEMS
SuperconducCng
Josephson JuncCons Integrated SuperconducCng Circuits AdiabaCc quantum computer
