Mr. Friedli: I am a venture capitalist and I invest in hi-tech companies, mostly in the States some in Europe, in the biotech, telecommunications, technology and the Interne sector. I have about USD 800 million from institutional investors under management. That's what I have been doing for the past 17 years.
TWST: What is your investment strategy?
Mr. Friedli: It is very entrepreneurial. I don't manage the portfolio companies, but I play a very active role at the board level in helping to finalize strategy and control the execution and change management if needed. I am not a passive investor. Most of the companies I control and I can therefore make changes if I have to, and that takes a very long-term view; 10 years. I want to build companies. I don't believe in buying and selling, I believe that value or wealth is being created in quality and holding companies in the long term.
TWST: What criteria do you use to select a company for your portfolio?
Mr. Friedli: To me its people, people and people. I would weight people management about 80% to 90%. Most people are not good managers, they don't control the costs, they don't estimate the markets correctly, they are not tough enough and demanding enough of their own people. Only the toughest and the best will succeed. I therefore have the right people, and obviously when it comes down to people integrity, the number one thing is being straight, honest, pro-shareholder, pro-investors, pro-client. A CEO has two groups that he always needs to worry about and focus on, they are the clients and the shareholders and then after that it's the product and the market.A lot of nice things are being built, but most never find their way to the market. You need to have a product that will give the customer a return on investment within a very reasonable amount of time. It has to increase the efficiency in the client's organization and it has to be a clearly defined need, because the market we are building products for is shrinking and there is more competition, which means that you have to be very good. I am a pure business guy, I am not a dreamer in technology and the belief in this and that, I don't invest in trends, I only invest in quality and entrepreneurs who have their hearts in the right place.
TWST: What methods do you use to try and spread the risk within your portfolio?
Mr. Friedli: I take a case by case approach. I don't take the academic approach of the risk in that sense. I take my time until I make the decision and try to invest little money at the beginning and then increase the investment in good companies and sell out, or not increase the ones I don't believe are doing a good job. I take a rather unusually big risk, as I invest up to 50 million in one single company, but so far so good.
TWST: Could you outline the companies in your portfolio in greater detail?
Mr. Friedli: One of the first companies I invested in was Myriad Genetics in Salt Lake City. It's a genomic company and today, 11 years later, I am still one of the largest shareholders and I remain invested another five to ten years. The company was attractive to me because of the concept of having the database at the university in Salt Lake from the Mormons, who have a very clear defined history because of their families, so that they could actually discover the genes and have the relevant information. So far they have discovered quite a few genes and their functionality and they have products in the diagnostic market and are well on track in the therapeutic market.Another company is Osiris Therapeutics in Baltimore, which was founded in 1992 out of Case Western University in Cleveland. It's a leader in adult stem cell technology, not embryonic, so called mesenchymal Stem Cells. We have products in Phase I and II. I think we are not far away from bringing very interesting products to the market. Products in the field of CardioCel, Chondrogen, Allogen and OsteoCel are from universal cells, not patient designated and in the field of CardioCell, Chondrogen, Allogen and OsteoCell it's a leading edge company, and what attracted me is the concept of using the cells for different kind of applications and diseases.Another company, which I co-founded a year ago together with Myriad, Oracle and Hitachi, is Myriad Proteomics, with the objective of mapping the entire human protein within three years. That's well on the way. That's a very fascinating project, which would be a milestone in medicine. It's basically bio-informatics and that's why we have Hitachi and Oracle as partners Another company is called ioWave in Washington DC. They are in the fixed wireless broadband business and are doing quite well even in this tough market.
TWST: Are most of the companies that you currently have in the portfolio based in the US?
Mr. Friedli: That's correct, with one exception it's Basilea pharmaceuticals, Switzerland, a spin-off of Hofmann-La Roche, Switzerland.
TWST: Would you consider entering countries outside of the United States?
Mr. Friedli: No, I like the US because it's a big market.
TWST: Do you have any preference about the geographic locations of companies within the US?
Mr. Friedli: No, I have companies on the East Coast, West Coast, Florida, Salt Lake, Mid West, everywhere.
TWST: Can you outline your revenue streams?
Mr. Friedli: My revenue stream is that I have consulting agreements with the companies and my business model is more driven by ownership than by commission. I have a very lean organization, with only five people. When I started I wanted to have ownership in the companies, because my appreciation, or my gain, comes from well-selected companies that create value. I want to be aligned with the investors. If they do well, I do well, if they don't do well, I don't do well either.
TWST: Can you outline the structure of the company?
Mr. Friedli: I have a management company called Friedli Corporate Finance and I have several investment companies, public and private. My clients can invest either in the publicly traded investment company, or in the private investment companies, or directly in the portfolio company. As they prefer, they can do one, or all of them.
TWST: What level of control do you have over the companies in your portfolio?
Mr. Friedli: I control about 80% of the companies I invest in. Currently my portfolio consists of about 27 companies. I don't want to manage, but I want to know that I can make changes if I have to.
TWST: Who would you identify as your main competitors within the space?
Mr. Friedli: There are a lot of good VCs, especially in the States, who do a very good job and I think I come from a very different angle. I don't have the network those guys have. I have a slightly different approach. I consider myself as a small guy with a very, I think, unique approach. It's not better or worse, you have to be very patient, be very active and have good knowledge to start with.
TWST: Can you identify some highlights on your balance sheet?
Mr. Friedli: We have no debt and have been profitable since year one and every year we have been a little better, so I would consider it very healthy, especially these days.
TWST: What is on the company's agenda for the next 12-24 months?
Mr. Friedli: Managing the current portfolio very well, helping the companies to manage through this time, building value, keeping the costs under control and wherever possible, increase sales. I just founded two new companies, two new startups, one in Boston and one is Salt Lake. I want to make sure they take off very well and then if the market opens up to have new IPO's and just go on building value in the company with a hands-on approach.
TWST: Is there any future activity anticipated within the companies in the portfolio?
Mr. Friedli: I think there are several things, especially in the biotech area, where we are making good progress, whether it's Stem Cells or Proteomics, that's certainly very interesting. I am also in negotiations to sell a few companies. Furthermore we have quite a few bids out for government contracts in the defense area.
TWST: Do you expect that acquisitions, mergers or joint ventures might play a part in your future growth strategy?
Mr. Friedli: Yes, I always look at that, but it's obviously on the lower value for both sides, the acquirer and the seller, so it makes sense in many situations to find synergies, to cut costs and to be stronger together.
TWST: Do you think that the financial community has a clear conception of New Venturetec?
Mr. Friedli: That's a good question and it's something I would like to know myself.I think there is quite a number of investors who know me and who believe, understand and who go along with venture investing through the ups and downs and I think there are also a number who maybe don't know too well, who are learning and my advice is to be patient and don't give up.
TWST: What is the ideal long-term position you would like to see the company in?
Mr. Friedli: To have a much greater market cap and to have the portfolio companies much more mature and to have many more products on the market. My goal is to build companies who have successfully penetrated large markets with their products.
TWST: What's the essential message of the company that you would like to communicate to potential investors?
Mr. Friedli: I would like to tell the investors that we have a pretty healthy portfolio in New Venturetec. They have suffered, but not to the extent that it will blow up, and I would recommend for them to just keep it and go through this valley, as I am convinced that we will be fine and meet an acceptable return at some point. I don't know when exactly, but I can also assure that we do our best to manage it, to the best of our knowledge.
TWST: Thank-you (SM).
NEW VENTURETEC (909499.DE) PETER FRIEDLI President and CEO New Venturetec Freigutstrasse 5, 8002 Zurich Switzerland Phone +41.1.283.29.00Home Page http://www.newventuretec.com/Each Executive who is the featured subject of a TWST Interview is offered the opportunity to include a Corporate Profile or other highlight material to be provided and sponsored by and for the company.
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