Safeguard Scientifics Inc (SFE) 2013 Q2 法說會逐字稿

Good morning, and welcome to the Safeguard Scientifics Second Quarter 2013 Financial Results Conference Call. (Operator Instructions) Please note that this event is being recorded. I now would like to turn the conference over to John Shave. Mr. Shave, please go ahead.

Good morning, and thank you for joining us today for our second quarter 2013 conference call and update. Joining me on today's call are Steve Zarrilli, Safeguard's President and Chief Executive Officer, and Jeff McGroarty, Safeguard's Senior Vice President and Chief Financial Officer. During today's call, Steve will review highlights of the quarter, as well as other developments at Safeguard and our partner companies. Jeff will then discuss Safeguard's financial results and strategies. After that, we will open the line for your questions.

As always, I must remind you that today's presentation includes forward-looking statements. Relying on forward-looking statements involves certain risks and uncertainties, including but not limited to, the uncertainty of future performance of our partner companies, the risks associated with our acquisition or disposition of interest in partner companies, risks associated with our decisions about the deployment of capital and the effective regulatory and economics conditions generally, as well as the development of the healthcare and technology markets and other uncertainties that are described in our SEC filings. During the course of today's call, words such as accept, anticipate, believe, and intend, will be used in our discussion of goals or events in the future. Management cannot be certain that final outcomes will be as described today. We encourage you to read our filings with the SEC, including our Form 10-K, which describe in detail the risks and uncertainties associated with managing our business. The Company does not assume any obligation to update any forward-looking statements made today.

Now here is Safeguard's President and CEO, Steve Zarrilli.

Thanks, John, and thank you all for joining us today for the update on Safeguard Scientifics and our partner companies. Safeguard and our partner companies achieved real progress and measurable growth during the second quarter. On the ground, where steady focus and consistent execution are vital, we are generally encouraged by partner company development and the gradual improvement in the domestic economy and deal flow climate. However, lately, optimism at the Main Street level is often obscured by macro level confusion over monetary policy, political posturing, and market fluctuations. Our optimism is supported by data, recent surveys of venture capital investors, and our own growth strategies. Thompson Reuters' data show that of 29 venture capital-backed initial public offerings to date in 2013, seven of them are trading above their offering prices. It's also worth noting that all of those recent IPOs with positive trading results are healthcare and technology companies.

The National Venture Capital Association and KPMG polled more than 100 VC investors during the quarter and found that nearly half of the respondents expect to increase the number of their investments this year by more than 10%. Information technology was identified as their favorable sector to put money to work.

Certainly, you can count on Safeguard among those with plans to increase capital deployments in growth stage companies, especially in the technology and healthcare sectors. Longer term, we are working to increase Safeguard's capital under management to a range of $550 million to $700 million by the end of 2015, from a current level of more than $400 million today. In the near term, as a part of our sharpened focus on Safeguard's core business, we intend to increase our roster of partner companies to 25 by year-end 2013. In addition, we are working to realize solid, risk-adjusted returns from additional opportunistic exits from partner companies. Our target is two exit transactions in 2013. We have three companies which are in active processes, excluding PixelOptics. We anticipate having greater clarity of success and timing by the end of September.

During the second quarter, we announced the resignation of Jim Datin, who previously led our capital management team. Since I was named CEO in November of last year, it's important to note that I have taken a more active role in the day-to-day capital management process here at Safeguard. After a significant review of organizational design matters, I have implemented a flatter organization structure to drive Safeguard's future growth. This proposed structure will provide a professional platform designed to yield greater efficiency and effectiveness in deploying capital and realizing exits.

We previously stated that we intend to further develop our segment domain knowledge with several key hires, and did so subsequent to the quarter end with the addition of Al Wiegman, who has a solid track record in healthcare IT and medical technology, to support our ongoing search for high potential growth stage enterprises. Al joins our other three senior capital management team executives, Dr. Gary Kurtzman, Phil Moyer, and Erik Rasmussen, who report directly to me and oversee our capital management team resources.

Safeguard's capital management team continues to operate at a high level, screening a substantial number of leads through our process that we believe should result in the closure on average of four to eight deals in any given 12-month period. We remain focused on deploying capital in healthcare and technology sectors, including medical technology, health technology, specialty pharmaceuticals, digital media, financial technology, and enterprise 3.0.

Our aggregate partner company revenue guidance for 2013 remains unchanged at $250 million to $270 million, compared with $197 million for 2012. At the halfway mark for this year, we believe that the majority of Safeguard's partner companies are performing at or above their operating projections for the year. However, there are a few that are still working through some challenges. To address the wide range of updates that we have at our partner companies, I'm going to focus on nine of them in order of revenue stage. For an in depth detail, as we stated earlier, please refer back to our press release.

So let's start with the development stage companies. As NuPathe mentioned during its Q1 quarterly results conference call, the additional capital that the company will require to launch Zecuity and to fund operations and debt service obligations beyond that point will depend largely upon the timing, scope, terms and structure of a commercial partnership for Zecuity. To meet its capital needs, NuPathe intends to raise additional capital through collaborative--corporate collaborations, partnerships or other strategic transactions, debt or equity financings, or other funding opportunities.

With respect to some initial revenue stage companies, PixelOptics we recognized an impairment charge of $9.9 million during the second quarter of 2013. PixelOptics has completed the redesign of its product Empower and requires additional capital for commercial launch. As a result, PixelOptics is working with a transaction advisory firm to raise additional capital or explore strategic alternatives, including M&A.

Safeguard does not intend to deploy substantial additional capital in PixelOptics. Safeguard has deployed $36.9 million in PixelOptics since 2011, and has a 25% primary ownership position. Our current carrying value is $3.3 million.

Sotera Wireless is growing the customer base for its patient monitoring platform, ViSi Mobile. This FDA-approved patient-worn medical device continuously monitors all core vital signs with accuracy typically found in intensive care units. During the quarter, Sotera Wireless announced a partnership with a Utah-based healthcare network of 22 hospitals, 185 clinics, and more than 1,000 physicians. The U.S. addressable market for Sotera Wireless is approximately 500 hospitals that are considered early technology adopters. The company forecasts a 20% penetration of the 5,800 U.S. hospitals by 2018.

Safeguard deployed $1.3 million in Sotera Wireless in February. We also paid $1.2 million to acquire additional shares from a previous investor and now hold a 7% primary ownership position. We anticipate an opportunity to consider deploying additional capital within the next 12 months.

Moving on to some of our expansion stage companies, there is also solid progress to report at Crescendo Bioscience. The company's blood test for rheumatoid arthritis, called Vectra DA, is now available in all 50 states after the company received clearance from the New York Department of Health's Clinical Laboratory Evaluation Program. Crescendo Bioscience's test was also granted Medicare coverage and its laboratory earned accreditation from the College of American Pathologists. The annual marketing opportunity for assessing rheumatoid arthritis activity is estimated at $1.6 billion. RA afflicts more than 1.5 million U.S. patients and 4 million people worldwide.

Safeguard deployed $10 million of capital in Crescendo Bioscience last December and has a 13% primary ownership position.

GoodStart Genetics has developed accurate and comprehensive pre-pregnancy tests that screen for all 23 disorders recommended for screening by major medical societies. During the second quarter, GoodStart Genetics received a clinical lab permit from the New York State Department of Health to provide its screening test to reproductive health practitioners throughout the state. With this license, GoodStart Genetics became the first laboratory to offer extensively validated next generation DNA sequencing technology in New York where nearly 25% of all reproductive health screening is performed annually.

GoodStart Genetics expects to achieve revenues in 2013 of at least $25 million, achieve profitability during the third quarter of 2013, and operate at cash flow breakeven by the end of 2013. I will remind you that revenue in 2012 was approximately $5 million. Safeguard has deployed $12 million of capital in GoodStart Genetics since 2010, and has a 30% primary ownership position.

At NovaSom, the company announced last week that it appointed a new CEO, John Spitznagel, who also joined the company's Board of Directors. He has more than 45 years of experience in the healthcare industry. His experience in building successful commercialization programs is exactly what we need at this time for the future success of NovaSom's AccuSom home sleep test. Safeguard deployed $20 million in NovaSom in June of 2011, and has a 30% primary ownership position.

Putney is a specialty pharmaceutical company that develops high quality, cost effective generic medicines for pets. During the second quarter of 2013, Putney launched its second FDA-approved generic equivalent product, which is a flavored antibiotic tablet to treat urinary, respiratory, and skin infections in dogs and cats. Putney believes the new tablet will be a stronger competitor, capturing sales from more expensive antibiotics in a $25 million market. Putney now has four FDA-approved veterinary generic products with a pipeline of over 20 more products in various stages of development and the Center for Veterinary Medicine review. Safeguard deployed $10 million in Putney in September of 2011 for a 28% primary ownership position.

Now, I'll move on to highlight two of our high traction partner companies whose revenues are in excess of $20 million, and then turn it over to Jeff for a financial review.

Beyond.com is a network of over 1,000 niche career sites, which helps employers and more than 30 million job seekers pinpoint the most relevant opportunities based on location, industry, and expertise. This is achieved through 75 unique career channels, 2,500 industry communities, and 500 professional communities, which reach more than 100 countries in the Beyond.com global network.

Beyond.com grew its revenues in 2012 by over 50%, and expects to do the same in 2013. Safeguard deployed $13.5 million of capital in Beyond in March of 2007 and has a 38% primary ownership position.

The last partner company that we'll highlight this morning is MediaMath, a pioneer in digital advertising analytics. From its network of nine offices worldwide, MediaMath serves more than 3,500 clients and all of the top ad agencies. Safeguard has deployed $8.5 million of capital in MediaMath since July of 2009 and has a 22% primary ownership position. During the second quarter, MediaMath relaunched its android business unit after incorporated pixel-free technology acquired from Akamai Technologies' data cooperative in January. Now the android digital unit has about 300 advertisers who control over $30 million of daily advertising spend. In the next year, MediaMath intends to add self-service features to the android offering to allow cooperative members to run reports and access data anytime.

MediaMath is experiencing significant growth through international expansion. The company is already in the EMEA and has broadened its penetration of the Asia Pacific region through an agreement with [YieldOne], a large Japanese supply side platform owned by DAC Group.

Now, users of MediaMath's platform are expected to be able to access audience segments in Japan, maximizing ad campaign performance and minimizing spend on wasted impressions. And with that, I'm going to turn it over to Jeff for a financial update.

Thanks, Steve. Let's lead off with a review of key financial metrics for the quarter and six months ended June 30, 2013. At period end, we had $180.1 million in cash, cash equivalents, and marketable securities. The total carrying value of outstanding debt was $49.4 million, resulting in net cash of $130.7 million. During the quarter, primary uses of cash were follow-on deployments of $8 million in four partner companies, and cash used in operations of $4.6 million.

During the quarter, we also received $6.4 million in cash, which was previously held in escrow, related to the sale of various legacy companies in 2008. For the six months, primary uses of cash were $7.5 million in funding and acquisition of ownership interests in new partner companies Pneuron and Sotera Wireless, follow-on deployments of $12.8 million in five partner companies, cash used in operations of $11.5 million, and deployments in Penn Mezzanine loan participations of $2.3 million.

Our priorities for uses of cash remain unchanged. They are capital deployment at the new partner companies, follow-on funding for current partner companies and Penn Mezzanine loan participations, corporate expenses, and expansion of our platform.

Our roster of partner companies totaled 20 at June 30. The carrying value of Safeguard's 20 partner companies at June 30 was $136.3 million. The cost of our interest in those companies totaled $233 million. Safeguard's financial strength, flexibility, and liquidity are evident from the Company's balance sheet at June 30, 2013.

Now it's time for Steve to lead us through the question and answer segment of our call.

Thanks, Jeff. Operator, you can open the phone lines for questions.

Thank you. (Operator Instructions) The first question comes from Troy Ward with KBW.

Great. Good morning. First, could you talk about looking at this quarter the other income loss of $21.4 million? I know $9.9 million of that was from Pixel. But that leaves kind of $11.5 million. Over the last two quarters, that's run at about a $6 million rate, and the last 18 months it's been about a $5.5 million rate. Was there any other write-downs in the quarter that were significant to a portfolio company, or what caused the larger jump to that $11.5 million rate, excluding Pixel?

Hey, Greg. Good morning. No, there were no other significant changes. There were--there was one write-down of an unrealized loss related to NuPathe, which is classified as available for sale, and therefore--or a fair value accounting. So as their stock price moves, we write that up and down. So there was a slightly over $2 million reduction in our carrying value of NuPathe in the quarter.

Do you have, or are you able to give, how many shares of NuPathe you own, so that we can monitor that going forward?

Yes. We have about 17% of their outstanding common shares and we also have warrants that factor into our fair valuation of our holdings. But they're on a similar pro rata magnitude, so you're looking at about 17% on an outstanding basis and about 17% on a fully diluted basis.

Okay, great. And then, on the operating expenses, you said through six months you've had $11.5 million of cash operating expenses. Are you still targeting your $15 million to $16 million target for the full year, given that we're kind of well on pace to exceed that through the first six months?

Yes, we are. One of the reasons--that's a cash number that I disclosed, $11.5 million. And that includes the payment of cash bonuses from the prior year's management incentive plan.

We should see a significant decline in the back half of the year?

On a cash basis, yes.

Okay, great. And then, one last question and I'll hop back in the queue. On Pixel, you put in $3 million last quarter, $2.2 million this quarter, so $5 million so far this year. And it has a $3.3 million carrying value after this write-down. Can you just talk about your thought process of putting that capital into the business and what's the ultimate plan here from your perspective of what your--how you want to continue working with Pixel over the long run?

Yes. Troy, what we're focused on is a--oh, I'm sorry--Greg and Troy--what I'm focused on is getting them to the goal of either an exit or a significant capital provider who is capable of funding commercialization. So back in January, we did provide some additional capital through the course of the first quarter and into the second quarter in the amounts that you mentioned. And it was a way for us to continue to allow the company to pursue a process to achieve those goals. We're actually not right now providing any additional capital. One of the other investors has actually taken the lead there and is funding the company through the end of September. And we've provided them some enhanced economics on that tranche of capital, so that we can determine what level of additional capital we may apply going forward.

The company is talking to a number of parties - parties that are capable and are motivated to partner with or acquire this technology from Pixel. And we're working through a process that we're hoping we'll conclude before the end of the third quarter. If the company is unsuccessful in that process, Safeguard probably would have up to $2 million of responsibility for any additional costs. But we expect that there is going to be a successful outcome here to get the technology into the hands of another party or to have a capital provider step in for the commercialization.

Great. Thank you for the color.

Thank you. And the next question comes from Bob Labick from CJS Securities.

Good morning.

Good morning, Bob.

Good morning. I wanted to start with the management team, Steve. You touched on it in your opening remarks. There's been a lot of changes over the past 12 months to 18 months, both to the executive team and to the deal teams. And so, I was hoping you could kind of just walk us through the expected benefits from the new structure and all the changes. Is it a lower cost structure? Is it greater speed and decision making? Or what do you expect are the benefits from the changes over the last 12 months to 18 months?

Well, there's clearly a cost benefit to the changes that you've seen take--that have taken place over the last 12 months. And you're going to see that reflected in the future expense structure of the business as well. In addition to reallocating certain expenses or even reducing expenses, we--actually also, in connection with the strategy of wanting to have more partner companies, have balanced the resource mix between the operations team and the deal team professionals, so that we can not only create leverage for those deal team professionals, but provide a balance of capability so that we can move these companies through a process much more effectively and efficiently.

I did flatten the organization. I spent a lot of time with the deal team professionals under--wanting to get involved in the inner workings of what's happening. We wanted some additional--different resources in place moving forward to address the opportunities that we saw and see in the market. And we wanted to operate in a little bit of a leaner way, so that we could make decisions more effectively and more quickly on a day-to-day basis.

So I think what you're going to see as we move forward is the opportunity to move a bit quicker is really the goal here, and a bit more consistently. And that really is kind of core to the theme that I started with back in January that I'm trying to really get the organization into a rhythm, so that we take some of these peaks and valleys out of the process or at least minimize them to some degree.

Okay, great. That's very helpful. And in that light, obviously, you've mentioned the goal of two profitable exits by year-end. And could you just talk about where we are in that process, because it's been, I don't know, 2.5 years or so, and then there's only five months left to get two. So how--what can you tell us that can give outsiders confidence in where that process is and you can achieve that goal?

Yes. And I'd like to kind of level set this discussion in another way as well. We did have four exits, if you recall, from late December of 2011 through May of 2000--I mean, late December of 2010 through May of 2011. And they were four big exits. And I have said this in the past. I think what we tend to lose sight of is two of those actually were accelerated beyond or ahead of what we originally anticipated. We actually thought two of those companies were going to be exited in 2012. So you start with the premise that had that occurred in the way that we originally anticipated, you would have had two in '11, two in '12, and I've been very specific in saying that we're targeting two in 2013. So let's get to the specifics of what is transpiring there.

We have three companies that are in process outside of what we discussed with regard to Pixel. I can't necessarily be predictive as to when those processes will be completed, but we are finding that there are interests in these companies that we have in process. But we're not going to give these companies away. There's a--there is a little bit of bottom fishing that's going on right now that we're trying to make sure that we're not a party to. We do take seriously our responsibility to provide proper returns on these assets. These companies are performing well. They're actually performing ahead of plan and we're not willing to get a deal done just for the sake of getting a deal done.

Now, having said that, when I say they're in a process, they've got professionals working with them. They're meaningfully looking at opportunities and talking to parties that could result in a transaction that we're targeting. And we're going to have greater clarity as we get through the next 60 to 75 days to determine whether or not this goal is going to be achieved for 2013. I'm still bullish. We've--and I'm bullish because the processes are active. They're not dormant. They're--the parties are engaged in a very meaningful way in a variety of dialogue. But it's interesting in one situation--and I won't disclose the company--we got what in effect was a low ball offer about nine to 10 weeks ago. And it took the party that's interested to recognize that it was a low ball offer and reenergize the conversations just recently, so that we could get back into a more reasonable and rational structure.

So there is a little bit of a dance going on, point number one. Point number two, the M&A market actually--and I'm not suggesting that this is a direct correlation to what we're seeing. But it actually got softer in 2013 than where it was actually when we were leaving the year in [2014]. There is some data that we've been looking at where Q1 through Q3 of 2012 was kind of moderate and then there was a big spike in Q4. And then, it kind of moderated again in Q1 and Q2 of 2013. We're trying to get a sense of the pulse from other resources and sources of data to see where that activity will increase, and we're hoping that there is going to be some lift there as well.

And then, the final point I'll leave with you, that these companies that are in process--not only the ones that are in process, other--Pixel, we've had our challenges with. And I've been trying to be pretty transparent and forthright with respect to those challenges. Most, if not all, of our other companies are performing at or above our expectations for the year and--including the three that are in those processes.

So when I take it from a balance perspective, I want those exits as much as everyone else does, believe me. I think it's important to show that we have the ability to put money to work and to gain those exits. But I also want to make sure that when we do them that we're actually maximizing value. It wouldn't behoove us on a future trend basis to be in any way selling companies or having these companies bought at a value that we think is not reasonable and rational. Sorry for the longwinded explanation, but you've got my stream of consciousness on it.

Very helpful. And then, I'll ask one last question and I'll get back in queue as well. And we've talked about this before on prior calls. But--so assuming that things work out as planned and you have two exits, you already have a very strong balance sheet with a significant amount of cash. How will you weigh the use of share repurchases versus deployments versus holding cash on a go-forward basis?

Well, so let's start with a couple of core tenets to the cash discussion. First of all, I think I've said probably before that on a cash basis, no less than $80 million to $100 million on hand at any given time I think is a number that allows us to show stability and strength in the marketplace. We partner with a lot of other parties out there, and they look at our balance sheet, as do these partner companies that we get involved with. You shouldn't lose sight of the fact that when a company is considering taking capital from Safeguard, because we are a public company, those management teams are pretty smart and they'll look at our public filings and look to see what kind of strength we have, point number one. Point number two, if you recall, we've always said that upon the maturity of that debt we intend to repay that debt with cash, even if it were put back to us under the convert feature. So I look at net cash and not necessarily gross cash when I'm talking about cash.

Number three, going back to the previous conversation, I can't unfortunately at this point be so highly predictive as to when an exit is going to occur that I'll know when the influx of cash is coming. And when I add that all up--and I want to make sure that we don't lose pace in the market, because if you recall other conversations, we can't miss a year of putting capital to work, both follow-on capital to support companies that are growing and that can use this capital profitably, and new opportunities - four to eight opportunities a year. Albeit, our average deployment is probably more in the range of $5 million to $15 million for a new deployment versus something closer to $20 million or $25 million, I'm still looking to put somewhere between $40 million to $60 million of new capital to work each year plus follow-on.

So when I add all of that together, right now we think that we don't have an extraordinarily large amount of free cash. The other point to keep in mind--and our Board actually has an active conversation about cash and the use of cash. And if we get into a rhythm that we hoping that we do get into in the future, we can start thinking about whether or not we've got cash that's in excess of what we reasonably or rationally need at any given time.

I also have been on record as saying that if we do think about ways in which we might use cash to reward our shareholders, it probably would not be in the form of a buyback, but we would figure out if there's a rational and reasonable way to think about dividends. But again, we're going to get ahead of ourselves in this conversation. Right now, we're focused on maintaining a certain amount of cash that allows us to be credible, stay on pace with our goals, and recognize that there's some--there's a lack of predictability right now as to the timing and amounts of cash inflow from exits.

Okay, great. Thank you very much.

Thank you. And the next question comes from Jim MacDonald from First Analysis.

Yes. Good morning, guys.

Hey, Jim.

I just wanted to follow up on a couple of recent questions. On the management kind of shift, do you see any potential change to the segments--the industry segments you'd invest in, just given the different personalities of the new players versus the old players?

I think you're going to see just a continuation of--well, first, with the change that was specifically made, I think it's just a further emphasis on healthcare technology and other sectors within healthcare as we define it. I'm actually very comfortable right now in the leadership we've got in place in the way that we're covering the market. Phil is focused on enterprise applications and infrastructure. We're seeing a lot of interesting opportunities there. Erik and his team are focused on digital media and other internet 3.0 types of opportunities. Gary is very important to us and focusing not only on some healthcare IT things, but also on the whole med tech sector. We shouldn't lose sight of some of the real opportunity that he's been able to foster with Crescendo and GoodStart Genetics and some of those that I think are going to show real promise. And then, Al kind of fills out the rest of that healthcare picture for us in the areas of healthcare technology and other platforms that we're seeing being developed within the overall healthcare services arena.

Great. And back on the exit conversation, you talk about three processes. You didn't mention the potential for potential IPOs. Is that a possible interpretation of processes, or more likely talking about M&A?

Yes, M&A for those that I mentioned before. The only company that I think in our group of partner companies today that is really thinking about an IPO is probably MediaMath. And that's an ongoing process. And they acknowledge that it's an ongoing process. Their CEO was recently quoted in some article recently in the last 10 days or so that he acknowledges that it's an opportunity potentially for him, but he's going through a very thoughtful process determining what's in the future for him.

Okay, great. So that must mean that's not one of the three at this point.

Right.

And then, could you just give an update on your position on raising the new side-by-side fund?

We have not had any success there. The markets are not very conducive as we're continuing to find. We've spent some time over in Europe. We haven't deployed--we haven't spent a lot of money in pursuing these opportunities. But we're not seeing the traction that we were hoping to see. I've got the team really kind of focused on the core business because that's where I think shareholder value is going to be driven.

Right. And maybe just one more. You didn't deploy any new partner companies this quarter. Was there any impact from the shift in personnel that might have delayed deployment?

The shift in itself didn't delay deployment. We've got a couple of companies that were--that we have term sheets out with and we're hoping that we'll have closure in the near term. But, no, the shift in personnel isn't slowing the process. I'm actually hoping that it will accelerate the process.

Okay. Thanks very much.

Thank you. (Operator Instructions) The next question comes from Ed Woo from Ascendiant Capital.

Yes. Thank you. You mentioned that there are a couple of term sheets out. How does the market look for investments? I know you mentioned that possibly the M&A market might be a little bit soft on the exit side. But how does it look on the investment side?

We're still seeing a lot of great opportunities. But the challenge that we have is valuation. There's a lot of inflated expectation around valuation. And the way we make money and the way that we make money for our shareholders is to make sure we get in at the right valuation. So we're not willing to overpay. And it takes time sometimes to walk somebody down the valuation ladder. Some of the companies that we get involved with have other capital providers that are wishful in their thinking about what the follow-on round of capital is going to result in from a value perspective or a valuation perspective. And we're willing to participate in a number of these opportunities at the right valuation. So they're--those conversations sometimes take longer than what we originally anticipate.

But the flow is good. If my colleague from the deal team management structure were here on this call, they would tell you that they're seeing opportunities. It's--the thing that we're focused on is making sure that we're focused on the best companies possible at the right valuation. And that's where we spend a lot of our time.

(Inaudible) in any of the industries, are you seeing maybe more flows in either life sciences or technology, or are they about the same?

I think what you're going to find is that we're going to probably--in capital deployed, you'll get a little bit of a weighting of probably 60-40 healthcare to technology. From a sheer number of companies it will be more even. And that's really--the weighting is actually kind of driven off of the fact that the healthcare companies are probably requiring a little bit more capital, given where we tend to focus in that kind of Series B or Series C realm, than the technology companies require. But the flow is good on both sides.

Great. Well, thank you and good luck.

Thank you.

Thank you. And there are no more questions at the present time. So I'd like to turn the call back over to Management for any closing remarks.

Thank you. And we just thank everyone for joining us today and we'll keep you apprised of our progress.

Thank you. This concludes today's teleconference. You may now disconnect your phone lines. Thank you for participating and have a nice day.