2. SAFE HARBOR STATEMENT
This presentation may contain statements of a forward-looking nature relating to
future events. Statements contained in this presentation that are forwardlooking 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 forwardlooking statements to reflect new events or uncertainties.
2
3. CORPORATE HIGHLIGHTS
History
- 1983: Completed IPO
- 1992: Became an investment company
- 1995: Became a BDC
- 2002: Focused on nanotechnology
- Today: Leading investor in transformative
companies
Financial Highlights2
- Net Assets: $132.0 million
- Total Liquidity: $49.2 million3
- Net Asset Value Per Share: $4.24
Stock Highlights1
- Symbol: NASDAQ:TINY
- Shares Outstanding: 31.2 million
- ADTV: 87,000 shares
- Stock Price: $3.06
- Market Capitalization: $95.7 million
Portfolio Highlights
- Recent liquidity events generated net
gains on invested capital.
- 26 current portfolio companies, a portion
of which could drive near-term growth.
- Robust pipeline of new investment
opportunities to drive long-term growth.
1) Data as of September 10, 2013. 2) Data as of June 30, 2013. 3) Total liquidity is amount as of
June 30, 2013, plus $12.8 million in cash received in July 2013, from the sale of Xradia to Carl Zeiss.
3
4. HIGHLIGHTS
NAV / Share
$135.3
$150
$100
$50
$24.3
$-
12/31/01
25
20
15
10
5
0
6/30/13
$5.00
$4.00
$3.00
$2.00
$1.00
$-
Total Liquidity
$4.24
$2.75
Millions
Millions
Net Assets
$36.4
$40
$30
$20
$13.5
$10
$-
12/31/01
6/30/13
TINY Stock Price History
12/31/01
6/30/13
5. HARRIS & HARRIS GROUP
Harris & Harris Group
builds transformative companies
from disruptive science.
5
6. HARRIS & HARRIS GROUP HIGHLIGHTS
• We have significant equity stakes in companies
bringing transformative products to the market.
• The value in our portfolio has not yet been
realized.
• We have refined our strategy.
• We have a strong interdisciplinary team.
• We have the resources necessary to execute.
7. BUSINESS MODEL
Invest
• NAV
Growth
• Deemed
Dividends
and
Dividends
Return
• Early
Stage
• BIOLOGY+
Build
Value
• Company
Building
• Board
Involvement
• Partnerships
Our evergreen structure facilitates growth
and is a competitive advantage.
8. HARRIS & HARRIS GROUP
Our Four-Part Plan
Realize
Invest
Partner
Return
8
9. HARRIS & HARRIS GROUP
Our Four-Part Plan
Realize
Invest
Partner
Return
9
10. BIOVEX (ACQ. BY AMGEN)
TINY
recognized
that
BioVex
would
be
the
first
to
commercialize
oncolyNc
virus
cancer
therapy
• Initial investment: At first signs of
clinical efficacy (Series E)
• Initial Market: Melanoma with plans
for other solid tumors
• Initial involvement: Board Observer
Acquired by Amgen in 2011
$1
Billion
in
total
payouts
Acquired
at
Start
of
Phase
3
Trials
MARKET: Solid Tumor Cancer Therapy
Melanoma Therapeutics: $1.4Billion by 2017
Head & Neck Therapeutics: $1.7Billion by 2016
BioVex engineered oncolytic viruses to preferentially attack tumor cells,
leaving healthy cells unharmed
* Market size estimates by GlobalData
10
11. SOLAZYME (IPO IN 2011; NASDAQ:SZYM)
TINY identified impact potential, invested, and grew the company from the earliest stage
• Initial investment: Seed round
• Employees @ initial investment: 2
• Initial involvement: Board seat
Investors / Corporate Partners
Since Our Initial Investment
Roda
Group
Braemar
Energy
Ventures
Morgan
Stanley
Lightspeed
VantagePoint
Chevron
Unilever
Mitsui
Sephora
Bunge
San-‐Ei
Gen
MARKET: Tailored Oils
Chemicals and Fuels: $1 Trillion*
Nutrition: $100 Billion*
Skin & Personal Care: $50 Billion*
Solazyme harnesses the power of microalgae to transform
low-cost sugars into high-value renewable oils.
* Market size estimates by Solazyme
11
12. XRADIA (ACQ. BY CARL ZEISS IN 2013)
As 1st institutional investor, TINY helped position Xradia for future growth in new markets
•
Initial investment: Series D; First Institutional
round of investment
•
Revenue @ initial investment: $7 million
•
Initial market focus: Electronics
•
Involvement: Board seat
•
Recruited new management team and members of
board of directors.
•
Helped build business strategy for expansion into
new growth markets.
•
Active involvement in sale process.
Proprietary
X-Ray Lenses
Life Sciences
Electronics
Harris & Harris Group Contributions
Materials Science
Natural Resources
3D High Resolution
Imaging Tools
MARKET: X-Ray Microscopy
$1.2B in 2013*
Growth driven by
Life sciences, materials, oil/gas, mining
Xradia’s proprietary technology enables high-resolution, 3D imaging
of samples of interest to multiple high-growth industries.
12
13. WE HAVE A PIPELINE THAT
INCLUDES HIGH-QUALITY INVESTMENTS
OVER THE NEXT THREE YEARS WE EXPECT TO REALIZE PROCEEDS FROM
THE MAJORITY OF OUR MID STAGE AND LATE STAGE COMPANIES.
Energy
Early Stage
Mid Stage
Late Stage
Life Sciences
ABSMaterials (2010)
Contour Energy (2007)
Produced Water Absorbents (2011)
Ultora (2010)
Electronics
AgBiome (2012)
Ancora (2007)
EchoPixel (2013)
Enumeral (2009)
Senova (2011)
Cobalt (2008)
Laser Light Engines (2008)
Mersana (2002)
OpGen (2012)
Cambrios (2004)
HzO (2011)
Kovio (2005)
Nantero (2001)
SiOnyx (2006)
Bridgelux (2005)
Nanosys (2003)
Champions Oncology
(OTC:CSBR; 2011)
Ensemble (2007)
Metabolon (2006)
Adesto (2007)
D-Wave Systems (2006)
Molecular Imprints (2004)
Note:
Equity-focused portfolio companies, year of first investment and stage classifications as of June 30, 2013, not including 1) our publicly traded shares
of Solazyme, 2) the recently acquired portfolio company Xradia; and 3) our rights to milestone payments from Amgen, Inc. associated with the acquisition of
BioVex Group, Inc. and Laird Technologies, Inc. associated with the acquisition of Nextreme Thermal Solutions, Inc.
13
14. METABOLON
INITIAL INVESTMENT: Q1 2006
TINY
recognized
metabolomics
as
the
future
of
biological
understanding
• Initial investment: Series B, lead investor
O
H
O
• Current Milestones: 2 Diagnostic tests
released
Investors / Corporate Partners
Aurora
Charles River Discovery
Services
Syngenta Ventures
Top 10 Pharma companies
Fletcher Spaght
DHMRI
Sevin Rosen Funds
Health Diagnostics
Laboratory
O
H
N
H
2
O
H
glucose
• Involvement: Board observer
O
H
O
H
O
• Initial market focus: Testing & service
O
H
O
H
cholesterol
L-threonine
MARKET:
Diagnostics & Drug Discovery
Diabetes Diagnostics: $3 Billion & Growing
PSA Diagnostics: $12 Billion & Growing
$20 Million revenue in services
TINY
Impact:
Exit
at
8-‐12%
ownership
Metabolon is the leader in measuring biological pathways and is positioned to disrupt
billion dollar diagnostic markets with its novel solutions.
14
15. D-WAVE SYSTEMS
INITIAL INVESTMENT: Q2 2006
TINY
recognized
the
criNcal
importance
of
increased
compuNng
power
to
the
Internet-‐age
• Initial investment: Lead Series B
• Target Market: High Performance
Computing
• Business Model: Quantum Cloud
Computing
• Initial involvement: Board Member
Investors / Corporate Partners
Bezos
ExpediNons
In-‐Q-‐Tel
Draper
Fisher
Jurvetson
Goldman
Sachs
Google
NASA
Ames
Lockheed
MarNn
MARKET: High Performance Computing
High Performance Computing: $44 Billion by 2020
Cloud Computing: $33 Billion by 2016
TINY Impact: Exit at 2.5-5% ownership
D-Wave harnesses quantum mechanical phenomena to solve some of the most
computationally intensive problems known to humankind
* Market size estimates by Gartner and Market Research Media
15
16. SIONYX
INITIAL INVESTMENT: Q2 2006
TINY
idenNfied
the
potenNal
of
the
technology
&
helped
found
SiOnyx
•
Initial investment: Seed, 1st Institutional Investor
•
Initial market focus: Unknown – TINY helped
develop the first focus
•
Involvement: Board Seat
•
SiOnyx
Solu;on:
Compe;;on:
Current Milestones: 2 Diagnostic tests released
Comparable Companies:
Image Sensors
Cameras &
Camera
Modules
Omnivision (NASDAQ:OVTI)
Aptina, Pixim (Private)
FLIR Systems (NASDAQ:FLIR), Ambarella
(NASDAQ:AMBA), Pelco (Sub. of Scheinder
Elec.), Axis (STO:AXIS), Mobotix (ETR:MBQ)
Everfocus (TPE:5484)
MARKET: Infrared Cameras
$7B in 2013 è $25B in 2017*
Growth driven by
Security/Surveillance (Night Vision) and
Gesture User Interface (ex: Microsoft Kinect™)
TINY
Impact:
Exit
at
10-‐20%
ownership
SiOnyx is bringing disruptive performance and silicon economics to the multi-billion dollar
night vision, security & surveillance, and gesture user interface markets
* Sources: SiOnyx estimates and IMS Research.
16
17. HZO, INC.
INITIAL INVESTMENT: Q3 2011
TINY
idenNfied
submersion
water
protecNon
as
a
criNcal
feature
in
future
electronic
devices
• Initial investment: Lead Series A
• Initial Market: Water protection for
electronic devices
• Initial involvement: Board Member
TINY’s Contribution
• Established
an
experienced
management
team
• Seeded
company
with
outside
experNse
• Connected
company
to
strategic
partners
and
customers
MARKET: Electronic Device Market
Consumer Electronics: $3.3 Billion
Life Sciences: $3.1 Billion
Industrial Electronics: $0.7 Billion
TINY
Impact:
Exit
at
15-‐20%
ownership
HzO combines high-volume manufacturing with innovative coating technology to add
critical submersion protection to electronic devices
* Market size estimates by HzO, Inc.
17
18. ADESTO
INITIAL INVESTMENT: Q1 2007
TINY
idenNfied
major
scaling
challenges
in
front
of
tradiNonal
NVM
computer
memory
• Initial investment: Lead Series A
• Target Market: Non-volatile memory
• Initial involvement: Board Member
• Acquisition: Atmel’s flash memory
business
Investors / Corporate Partners
Arch
Ventures
Applied
Ventures
(Applied
Materials)
ATA
Ventures
AlNs
Semiconductor
Microchip
Altera
MARKET: Nonvolatile Memory (NVM)
NVM: $80 Billion/year in 2013
TINY Impact: Exit at 8-12% ownership
Adesto is addressing the need for ultra low-power, low-cost, high-speed, scalable
non-volatile memory (NVM) for stand-alone and embedded applications
* Market size estimates by Adesto
18
19. GROWTH IN AVERAGE OWNERSHIP
Sources of
Future Returns
Sources of
Recent Returns
16.00%
14%
14.00%
12.00%
10.00%
9%
8.00%
6.00%
5%
4.00%
2.00%
0.00%
2001-2004
2005-2008
2009-2013
Notes: Average ownership data includes investment-weighted ownership percentages on a fully diluted basis as of June 30, 2013, for
unrealized investments. Many of our current portfolio companies may raise additional capital, and depending on many factors our
ownership could increase or decrease in these companies as a result of these financings. The data for 2005-2008 does not include
ownership in Ancora Pharmaceuticals Inc. If this investment was included, the investment-weighted average ownership would be 15
percent.
19
20. HARRIS & HARRIS GROUP
Our Four-Part Plan
Realize
Invest
Partner
Return
20
21. EXPERIENCED EARLY-STAGE INVESTORS
First Institutional Investor or Part of First Institutional Syndicate(1)
• ABSMaterials
• Adesto
• AgBiome
• Ancora
• Bridgelux
• Contour Energy
• Enumeral
• HzO
• Laser Light Eng.
• Mersana
• Nantero
• PWA
• Senova
• SiOnyx
• Ultora
Adaptive Web Tech. (Exited Position in 2001)
Ag Services of America (Exited Position in 1993)
Agile Materials (Exited Position in 2005)
Alliance Pharmaceutical (Exited Position in 1990)
American Equine Prod. (Exited Position in 1990)
Chlorogen (Exited Position in 2008)
CMA Group (Exited Position in 1995)
CORDEX Petroleums (Exited Position in 1998)
Crystal IS (Exited Position in 2011)
Cswitch (Exited Position in 2009)
Dynecology (Exited Position in 1997)
Evolved Nanomater. Sci. (Exited Position in 2008)
Experion Systems (Exited Position in 2005)
Exponential (Exited Position in 2009)
Genomica (Exited Position in 2001)
Harber Brothers (Exited Position in 1997)
Harris Newco (Exited Position in 2001)
Highline Capital (Exited Position in 1997)
Informio (Exited Position in 2002)
Molten Metal Tech. (Exited Position in 1993)
MultiTarget (Exited Position in 1998)
NanoGram (Exited Position in 2010)
NanoGram Devices (Exited Position in 2005)
Nassim & Nicolovius (Exited Position in 1994)
NBX (Exited Position in 1999)
NeoPhotonics (Exited Position in 2012)
NeuroMetrix (Exited Position in 2005)
Nextreme (Exited Position in 2013)
nFX (Exited Position in 1997)
Pharm. Peptides (Exited Position in 1993)
Phoenix Molecular (Exited Position in 2008)
PHZ Capital Partners (Exited Position in 2003)
Princeton Video Image (Exited Position in 1999)
Questech (Exited Position in 2011)
Re Capital (Exited Position in 1989)
SciQuest (Exited Position in 2000)
InSite Marketing (Exited Position in 2001)
Siluria (Exited Position in 2011)
(2)
Solazyme (IPO in 2011)
Sonex (Exited Position in 1996)
Starfire Systems (Exited Position in 2009)
Sundial Marketplace (Exited Position in 2001)
Voice Control Systems (Exited Position in 1999)
Xradia (Exited Position in 2013)
Zia Laser (Exited Position in 2008)
(1) Includes initial investments made prior to 2002. The first member of the current
investment team joined Harris & Harris Group in 2002.
(2) A portion of our shares of Solazyme remained unrealized as of June 30, 2013.
21
22. EVOLUTION OF OUR INVESTMENT FOCUS
Nanotechnology
Opportunity Space
Energy
Electronics
Electronics
Energy
Electronics
BIOLOGY
Life
Sciences
2002-2007
Energy
BIOLOGY
Life
Sciences
BIOLOGY
Life
Sciences
2008-2013
Future
We are Positioned to take Advantage of Many of the Exciting
Trends in Growing Life Science Markets
22
23. OUR EXPERTISE IS INTERDISCIPLINARY
Our
interdisciplinary
team
has
the
ability
to
iden;fy
and
diligence
cross-‐discipline
deals.
Physics
Engineering
Materials
Science
Medicine
Biology
Chemistry
5
Ph.D.
level
investment
professionals:
Chemistry,
Physics,
Biochemical
Engineering,
Gene;cs
and
Materials
Science
23
24. H&H APPROACH YIELDS A UNIQUE PORTFOLIO
???
Quantum
Compu;ng
Imaging
and
Visualiza;on
Synthe;c
Biology
Cancer
Therapeu;cs
Separa;ons
Solid-‐State
Sensors
Single
Cell
Analysis
Molecular
Engineering
3D
Biology
Omics
Molecular
Diagnos;cs
Structural
Varia;on
Drug
Delivery
Vaccines
Water
Microbiome
This
yields
a
unique
and
diversified
life
science
porZolio
at
the
intersec;on
of
biology
and
other
disciplines.
24
25. OUR DISTINCTIVE APPROACH
Interdisciplinary innovation is required to address
these life science challenges.
BIOLOGY
Electronics
Physics
Materials Science
Chemistry
IT
Engineering
LIFE SCIENCE
SOLUTIONS
Mathematics
25
26. EXAMPLES OF BIOLOGY
DNA SEQUENCING
SEMICONDUCTORS
PERSONALIZED
GENOMICS
PROTEIN
BIOCHEMISTRY
INFORMATION
TECHNOLOGY
NOVEL THERAPEUTIC
TARGETS
ONCOLOGY
PHYSICS
3D NON-INVASIVE
IMAGING AND DIAGNOSTICS
26
27. A DECADE OF BIOLOGY
BIOLOGY
INVESTMENTS
ENABLES
Engineering
Single Cell Analysis
Physics
Non-Invasive, HighResolution Imaging
Electronics
Personal Genomics
IT
Protein Structure Analysis
Mathematics
High-Quality
Molecular Diagnostics
Material Science
H&H PORTFOLIO COMPANY
Targeted
Bio-Compatible
Drug Delivery
27
28. DisrupNve
Science
OUR COMPETITIVE POSITION –
EARLY STAGE AND DISRUPTIVE SCIENCE
SFE
Internet
/
Social
Media
KIPO
GSVC
SVVC
Late-‐Stage
Passive
Involvement
Early-‐Stage,
AcNve
Involvement
Harris & Harris Group Uniquely Addresses an Underserved Market
Amongst Publicly Traded Equity-Focused Investment Companies
29. Liquid
OUR COMPETITIVE POSITION –
EARLY STAGE AND LIQUIDITY
GSVC
SVVC
KIPO
SFE
KPCB
Illiquid
Venrock
Polaris
Khosla
ARCH
Ventures
Late-‐Stage
Passive
Involvement
Early-‐Stage,
AcNve
Involvement
Harris & Harris Group is a Liquid Vehicle for Early-Stage Investing
30. HARRIS & HARRIS GROUP
Our Four-Part Plan
Realize
Invest
Partner
Return
30
31. PARTNERING TO INCREASE RETURNS
Return
Return
Return
Cost
Cost
R&D
Seed
Stage
Early-‐Stage
Later-‐stage
VC
VC
Time
Return
R&D
Seed
Stage
Early-‐Stage
Later-‐stage
VC
VC
Time
32. EARLY-STAGE EXPERTISE AND CORPORATE EXPERTISE IS
CRITICAL FOR BRINGING NEW TECHNOLOGY TO MARKET
EARLY-STAGE
DEVELOPMENT
Company formation,
Management Team
Identification, University IP
Negotiation, Initial Funding
and Performance Metrics
SCALE AND
MANUFACTURING
Manufacturing Scale,
Factory Integration,
Pilot Facilities,
Clinical Trials
Value Creation
$$
Cumulative Cost
REVENUE GROWTH
Introduction and Access to the
Market and Customers
TIME
Corporate involvement is critical to providing scale and distribution. Understanding the
optimal transition point is quintessential to build capital efficient businesses.
32
33. PARTNERING EARLY IS BENEFICIAL
Corporate
Partner(s)
Scale
&
Manufacturing
Technology
Plaeorms
Company
Building
Market
Access
Corporate
Partner(s)
Scale
&
Manufacturing
Market
Access
Technology
Plaeorms
Company
Building
Opportunity
Space
We believe the skillsets of Harris & Harris Group and
corporate partners are highly complementary.
33
34. OUR PARTNERING STRATEGY
Our two paths to working with corporations.
Corporate
Partner(s)
•
•
•
•
•
Investment
Development Programs
Commercialization/
Purchase Agreements
Licensing
Expertise
•
•
•
Investment
Strategic Insights
Management Fees and
Carried Interest
H&H Portfolio Companies
Corporations are an important part of
Harris & Harris Group’s current and future strategies.
34
35. CURRENT EXAMPLE OF OUR PARTNERING STRATEGY
Three Large Corporate Partners
Investment in Initial Round of Funding
+
Development Programs
Corporations currently add value to Harris & Harris Group
and our portfolio companies in multiple ways.
35
36. HARRIS & HARRIS GROUP
Our Four-Part Plan
Realize
Invest
Partner
Return
36
37. RETURNING VALUE FOR SHAREHOLDERS
We seek to create value for shareholders by:
• Increasing net asset value per share (NAV) through:
- Gains on our investments
- Reduction of number of shares outstanding
• Distributing a portion of net capital gains on investments
to shareholders through:
- Present: deemed dividends
- Future: deemed and actual dividends
We believe execution on our four-part plan
will generate meaningful returns to shareholders.
37
38. HARRIS & HARRIS GROUP
Harris & Harris Group
builds transformative companies
from disruptive science.
38
