High La(tude Capital Forma(on How to A7ract or Mobilize Capital in the Arc(c Legal Disclaimer These materials are proprietary and are intended solely for the informa@on of the person(s) to whom they have been delivered or presented. Recipients may not reproduce these materials or transmit them to third par@es in any form without the express wriGen consent of Venture North Group, LLC. These materials are not intended for presenta@on or distribu@on to, or use by, any person or en@ty in any jurisdic@on or country where such distribu@on or use would be contrary to applicable law or regula@ons. [remainder of page inten@onally leL blank] [email protected] Proprietary The Venture North Group, Anchorage, Alaska Page 2 How to A7ract or Mobilize Capital in the Arc(c ① Exhibit General Acquisi@on Metrics ② Understand Economic-­‐Environmental Dis@nc@ons ③ Understand Capital Deployment Routes and Capacity ④ Leverage Successful Par@cipants & Risk Abatement En@@es ⑤ Engage Successful Financial Frameworks [email protected] Proprietary The Venture North Group, Anchorage, Alaska Page 3 How to A7ract or Mobilize Capital in the Arc(c ① Exhibit General Acquisi(on Metrics ② Understand Economic-­‐Environmental Dis@nc@ons ③ Understand Capital Deployment Routes and Capacity ④ Leverage Successful Par@cipants & Risk Abatement En@@es ⑤ Engage Successful Financial Frameworks [email protected] Proprietary The Venture North Group, Anchorage, Alaska Page 4 Adver(se General Acquisi(on Metrics Opera(ng businesses thriving at the high la(tudes generally exhibit: Ø  Excep(onal barriers to entry
Ø  Substan(al specialized skill sets, capabili(es, and exper(se
Ø  High EBITDA margins of low 20% to low 50% range
Ø  Sales mul(ples averaging between 4X to 5X EBITDA with tremendous growth opportuni(es Ø  Eventual exits possible through public lis(ng [email protected] Proprietary The Venture North Group, Anchorage, Alaska Page 5 Adver(se General Acquisi(on Metrics Projects at the high la(tudes generally exhibit: Ø  Familiar governance systems and methods
Ø  Good access to specialized skill sets, capabili(es, and exper(se
Ø  Low valua(ons due to perceived risks and unfamiliarity with loca(ons
Ø  Broad opportunity for ver(cal and horizontal integra(on [email protected] Proprietary The Venture North Group, Anchorage, Alaska Page 6 How to A7ract or Mobilize Capital in the Arc(c ① Exhibit General Acquisi@on Metrics ② Understand Economic-­‐Environmental Dis(nc(ons ③ Understand Capital Deployment Routes and Capacity ④ Leverage Successful Par@cipants & Risk Abatement En@@es ⑤ Engage Successful Financial Frameworks [email protected] Proprietary The Venture North Group, Anchorage, Alaska Page 7 Understand Economic-­‐Environmental Dis(nc(ons A dichotomy of Less Developed Areas (LDA) in contrast to More Developed Areas (MDA) However, with the dichotomy there is significant opportunity for economic regionaliza(on [email protected] Proprietary The Venture North Group, Anchorage, Alaska Page 8 Understand Economic-­‐Environmental Dis(nc(ons An explana(on for this development dichotomy: Yet ingenuity solved for this where, and when, proximity to capital existed . . . Credit: Arc(c Council, Conser-­‐ va(on Arc(c Flora & Fauna [email protected] Proprietary The Venture North Group, Anchorage, Alaska Page 9 Understand Economic-­‐Environmental Dis(nc(ons Necessary Sectors for a Complete Economy Resource Extrac(on Research & Development Resource Value Add Service & Support [email protected] Proprietary The Venture North Group, Anchorage, Alaska Stakeholder and Capital Coordina(on Page 10 Understand Economic-­‐Environmental Dis(nc(ons In Summary: Spheres of Opportunity Ø  Iceland and Greenland are more similar to MDAs than LDAs Ø  Scandinavia & far western Russia exhibit complete economies Ø  High La@tude areas of Canada, Alaska and far east Russia are incrementally challenged Ø  Capital and @me are likely to bridge these dis@nc@ons [email protected] LDAs MDAs Proprietary The Venture North Group, Anchorage, Alaska Page 11 How to A7ract or Mobilize Capital in the Arc(c ① Exhibit General Acquisi@on Metrics ② Understand Economic-­‐Environmental Dis@nc@ons ③ Understand Capital Deployment Routes and Capacity ④ Leverage Successful Par@cipants & Risk Abatement En@@es ⑤ Engage Successful Financial Frameworks [email protected] Proprietary The Venture North Group, Anchorage, Alaska Page 12 Understand Capital Deployment Routes and Capacity Regardless of strategy, collabora(on and partnering is culturally expected and cri(cal to mobilizing capital in the high la(tude LDAs CAPITAL SOURCES Fund Foreign Family Pension or En@ty Direct Office Insurance Resource CAPITAL USES Merger or Project Joint Acquisi@on Venture Extrac@on Resource Value Add Service & Support Research & Dev. [email protected] Proprietary The Venture North Group, Anchorage, Alaska Page 13 Understand Capital Deployment Routes and Capacity Selected Fund En((es Present in Iceland and Greenland; Another Dozen Ac(ve in Alaska Early Stage
Venture Capital
Late Stage Growth Capital
SIA(II(
2013(
~62MM!
Horn(II(
2013(
~70MM!
Cash Flow Stage
Greenland(
Holdings(
~1994(
~23MM!
Akur(
~35MM!
ARION/(
LANDS!
NSA!
BRU(II!
FrumDTak!
1998
~13MM
2006
~13MM
2009
~13MM
Kjolfesta(
2012(
~33MM!
ITFD1(
~21MM!
SIA(I(
2011(
~28MM! Audur(I(
2008(
~26MM!
FSI([Crisis(Response(Fund]((
2009(
~445MM!
Unless noted, funds launched between 2008 - 2013
Private Equity Stage
[email protected] Edda(
2013(
~41MM!
Eyrir(
~29MM!
Greenland(
Ventures(
~1994(
~20MM!
RANNÍS!
Straumer(
~40MM!
SA(
Framtac(
2014%
~40MM!
IPO Stage
No foreign capital involved in USD ~1B of
deployments
Seed
Proprietary The Venture North Group, Anchorage, Alaska All amounts are in USD
Page 14 How to A7ract or Mobilize Capital in the Arc(c ① Exhibit General Acquisi@on Metrics ② Understand Economic-­‐Environmental Dis@nc@ons ③ Understand Capital Deployment Routes and Capacity ④ Leverage Successful Par(cipants & Risk Abatement En((es ⑤ Engage Successful Financial Frameworks [email protected] Proprietary The Venture North Group, Anchorage, Alaska Page 15 Leverage Successful Par(cipants & Risk Abatement En((es Knowledge Selec@on Ø  Iceland o  Invest Iceland: www.invest.is/ Ø  Greenland o  Naalakkersuisut Government of Greenland: hGp://naalakkersuisut.gl/ o  Isaaffik Arc@c Gateway: hGp://www.isaaffik.org/ Ø  Alaska o  Ins@tute of the North: hGp://[email protected]/ o  Ins@tute of Social and Economic Research: hGp://www.iser.uaa.alaska.edu/ o  Alaska Industrial Development & Export Authority: hGp://www.aidea.org/ Ø  Other – Embassy Commercial Officers Developed Business Opportuni@es Ø  Larger Regional EPCMs (Engineering, Procurement, Construc@on and Management) o  Iceland Based: Mannvit, EFLA o  Greenland & Denmark Based: Inuplan, Ramboll, Niras, Golder Developing Finance Structures Ø  No size financing coverage, except pension presence Ø  Governmental Organiza@ons [email protected] Proprietary The Venture North Group, Anchorage, Alaska Page 16 How to A7ract or Mobilize Capital in the Arc(c ① Exhibit General Acquisi@on Metrics ② Understand Economic-­‐Environmental Dis@nc@ons ③ Understand Capital Deployment Routes and Capacity ④ Leverage Successful Par@cipants & Risk Abatement En@@es ⑤ Engage Successful Financial Frameworks [email protected] Proprietary The Venture North Group, Anchorage, Alaska Page 17 Engage Successful Financial Frameworks Cornerstones Ø  Stakeholder Involvement Ø  Profitable Opportuni@es Ø  Diversifica@on (the basket approach) o  Geography o  Resource o  Industry o  Cycles (liquidity and @me) Ø  Socioeconomic Suitability [email protected] Proprietary The Venture North Group, Anchorage, Alaska Page 18 How to A7ract or Mobilize Capital in the Arc(c In Summary: ① Exhibit General Acquisi@on Metrics ② Understand Economic-­‐Environmental Dis@nc@ons ③ Understand Capital Deployment Routes and Capacity ④ Leverage Successful Par@cipants & Risk Abatement En@@es ⑤ Engage Successful Financial Frameworks [email protected] Proprietary The Venture North Group, Anchorage, Alaska Page 19 Thank You Robert Sheldon Director, Business Development Venture North Group [email protected] [email protected] Proprietary The Venture North Group, Anchorage, Alaska Page 20