Tekcapital Spins out GenIP onto AIM

Tekcapital plc

02 October 2024

 

2 October 2024

Tekcapital Plc

("Tekcapital" or the "Company")

Tekcapital Spins out GenIP plc onto AIM

Tekcapital plc (AIM: TEK), the UK intellectual property investment group focused on creating valuable companies from investing in university technologies that can improve people's lives, is pleased to announce that its recently formed subsidiary GenIP ("GenIP") has completed its initial public offering ("IPO") on the AIM market of the London Stock Exchange plc, following which it is now 63% owned by Tekcapital.

GenIP, a technology business operating within the Generative Artificial Intelligence (GenAI) space, providing complementary platform-based services, is pleased to announce the admission of its entire issued share capital to trading on AIM, at 8.00 a.m. today under the ticker 'GNIP' ("Admission"). GENIP's Admission Document, as well as other information required pursuant to AIM Rule 26, are available on GENIP's website www.genip.ai.

Admission follows a Placing of 3,799,231 new ordinary shares by Novum Securities Limited ("Novum"), as well as a Subscription of 687,948 new ordinary shares, for a combined total of 4,487,179 new ordinary Shares at 39p per new ordinary share (the "Fundraising Price"), raising gross proceeds of £1.75 million (increased from an original target fundraise of £1.5m), before expenses (the "Fundraising"). Novum acted as Sole Broker and Beaumont Cornish Limited acted as the Nominated Adviser in relation to the Admission.

This is the fourth flotation from Tekcapital's incubator and the second this year following the successful IPO of MicroSalt in January.

Admission Statistics:

Fundraising Price (per Ordinary Share)	39 pence
Gross proceeds of Fundraising	£1.75 million
Free Float	24.48%
Net proceeds of the Fundraising received by GenIP	£1.2 million
Number of Ordinary Shares in issue following Admission	17,517,461
Market capitalisation at the Placing Price	£6.83 million

 Dr. Clifford Gross, Executive Chairman of Tekcapital said:

"We are excited to announce the IPO of GenIP plc., a terrific new company that we think can make a positive impact by helping its customers bring new innovations to market. With a significantly compressed gestation period, this IPO has resulted in a significant return on invested capital for our shareholders. We are looking forward to hopefully delivering further impactful results in future transactions using Tekcapital's accelerated incubation process."

Tekcapital holds 11,050,769 ordinary shares of GenIP which are subject to a 12-month lock-in period from the date of admission. This included 250,769 new ordinary shares which Tekcapital subscribed for in the fundraising at the fundraising price. Additionally, Tekcapital holds 250,769 warrants exercisable for a period of 3 years from the date of Admission at 10% above the IPO price.

About GenIP

GenIP® provides GenAI analytic services to help companies, research institutions and venture funds assess and commercialise new discoveries. GenIP combines expert human technical review with GenAI algorithms to provide insightful and verified services.

GenIP provides two complementary platform-based services:

1.   Invention Evaluator: Provides bespoke research reports that assess the market potential of new technological innovations and discoveries using AI-driven proprietary software; and

2.   Vortechs: which is an executive recruitment platform that through advanced machine learning algorithms and natural language processing technologies assists in matching technology organisations with experienced executives and business leaders.

GENIP believes that its integrated GenAI service offerings will help organisations to evaluate and commercialise their technological innovations. 

Strategy

GenIP's goal is to create a leading Generative AI analytic services company. To achieve this, the GENIP has established three strategic pillars:

·      Organically grow Invention Evaluator and Vortechs' revenue through institutional and corporate connections as well as increase client pipeline through marketing, advertising and social media spend.

·      Expand the Generative AI service offerings within Invention Evaluator and Vortechs' to reach new customers and improve margins.

·      Bolt-on acquisitions of additional Generative AI services that are helpful to our clients and have demonstrated initial market traction. 

Work Programme and Use of Proceeds

The gross proceeds of the Fundraising are principally expected to be used to:

·      launch a comprehensive ecommerce sales and marketing programme (approximately £450,000);

·      provide general working capital for GENIP (approximately £750,000); and

·      meet the costs and expenses of the Fundraising and Admission (approximately £550,000).

Board of Directors

Lord David Willetts - Non-Executive Chairman

The Rt Hon Lord Willetts FRS is Chairman of the U.K. Space Agency, President of the Resolution Foundation and former U.K. Minister for Universities and Science. He served as the Member of Parliament for Havant (1992-2015), and previously worked at HM Treasury and the No. 10 Policy Unit. Lord Willetts is also a visiting Professor at King's College London, former Chair of the British Science Association and a member of the Council of the Institute for Fiscal Studies. Lord Willetts is a graduate of Oxford University.

Melissa Cruz - Chief Executive Officer

Melissa as part of her CEO function helps global clients create marketplace value from university-developed IP. With a background in marketing and sales, Melissa collaborates with a diverse set of organizations in the United States, China, Europe, and Latin America to facilitate technology transfers between developed and developing countries. Melissa received her B.A. in International Business and an M.S. in Marketing from Florida International University.

Kevin Fitzpatrick - Chief Financial Officer

Kevin is a CFO/Finance Director with over 20 years' experience in SME and entrepreneurial businesses across various sectors and industries including Tech, SaaS, Media, and Retail.  He has held numerous board positions with both quoted public and private businesses with full executive responsibility for finance, legal and corporate finance. He graduated from University College Dublin with a BA(Hons) in Economics and qualified as a Chartered Accountant with Deloitte.

Dr. David Gann - Independent Non-Executive Director

Professor David Gann CBE is a business leader, chairperson, former University leader, and non-executive director with a reputation for creating and supporting innovation and growth, and mentoring science-based start-ups. He is a leader in the development of fusion energy, as Chair of UK Industrial Fusion Solutions, and previously Chair of the UK Atomic Energy Authority. He is a non-executive director of VenCap International plc, a leading venture fund-of-funds. David is an entrepreneur, having formed several companies, mentors start-ups, and advises Boards. He has been non-executive director of Directa Plus plc, currently on the Advisory Board of Euroclear and was Group Innovation Executive at Laing O'Rourke plc.

Tekcapital's Technology Incubation Process

Tekcapital is a technology transfer company that acts as a catalyst, transforming research into tangible products and services that can benefit society and produce above average returns on invested capital. We play a vital role in fostering innovation and bridging the gap between academia and industry by delivering products and services that can improve the quality of life of the customers we serve.

As demonstrated with the flotation of GenIP, Tekcapital creates value by applying the following process:

1. Identifying and Assessing Technology Readiness:

Using our global proprietary network, we seek to uncover promising technologies from research institutions and assess the commercial potential of these technologies.

2. Intellectual Property Protection:

We selectively acquire and develop patents or other forms of intellectual property protection to secure exclusive rights to the intellectual property. 

3. Market Research and Analysis:

We identify potential markets and target audiences for the technology. 

Competitive Analysis: We assess the competitive landscape to understand market dynamics and pricing.

4. Company Formation:

We build new companies to develop, manufacture, and sell the new products and services that utilise the technology we have acquired.

5. Secure Leadership:

Identify and onboard board and senior management with star power.

6. Provide Initial Seed Financing & Support:

We invest in and assist in securing funding from external sources, when possible, for research, development, and commercialisation efforts.  Additionally, we provide operational support when needed.

7. Value Creation:

We own equity stakes in the start-ups we have developed or have invested in and seek to spin-off these companies to accelerate the commercialisation of the technology and deliver a return on the capital we have invested for our shareholders.

Tekcapital utilised the above process to incorporate and build GenIP and contributed two of its assets Invention Evaluator and Vortechs, which were valued on 30th of June at US$191,564. In 2024, Tekcapital created two new products by integrating existing GenAI large language models into these assets.  

At GenIP's IPO price of 39p, Tekcapital 63% stake in the business is now worth ~£4.3 million ($5.76m) representing a significant return on the net book value of the assets transferred into GenIP.

For this transaction, we have delivered a strong return on invested capital for what would normally require a substantially longer period compared with the traditional venture capital model. According to data from the American Venture Capital Association, the average time to realise an exit from a venture capital investment is around 5-7 years from the initial funding and to achieve 10x multiples it usually takes 8 years or more.[1]

Tekcapital believes its technology incubation process helps to mitigate adverse selection and accelerates the commercialisation of early-stage technologies which can result in above average returns on invested capital.

About Tekcapital Plc

Tekcapital^® creates value from investing in new, university-developed discoveries that can enhance people's lives. Tekcapital is quoted on the AIM market of the London Stock Exchange (AIM: symbol TEK) and is headquartered in the UK. For more information, please visit www.tekcapital.com.

About GenIP Plc

GenIP^® provides generative artificial intelligence (GenAI) analytic services to help companies, research institutions and venture funds assess and commercialise new discoveries. GenIP combines expert human technical review with GenAI algorithms to provide insightful and verified services. GenIP is quoted on the AIM market of the London Stock Exchange (AIM: symbol GNIP) and is headquartered in the UK. To learn more about GenIP, please visit www.genip.ai.

For further information about Tekcapital, please contact:

Tekcapital Plc		Via Flagstaff
Clifford M. Gross, Ph.D.
SP Angel Corporate Finance LLP (Nominated Adviser and Broker)		[phone]
Richard Morrison/Charlie Bouverat (Corporate Finance)/Abigail Wayne / Rob Rees (Corporate Broking)
Flagstaff Strategic and Investor Communications		[phone]
Tim Thompson/Andrea Seymour/Fergus Mellon

LEI: 213800GOJTOV19FIFZ85

General Risk Factors and Forward-Looking Statements

This Press Release is directed only at Relevant Persons and must not be acted on or relied upon by persons who are not Relevant Persons. Any other person who receives this Press Release should not rely or act upon it. By accepting this Press Release the recipient is deemed to represent and warrant that: (i) they are a person who falls within the above description of persons entitled to receive the Press Release; (ii) they have read, agreed and will comply with the contents of this notice. The securities mentioned herein have not been and will not be, registered under the U.S. Securities Act of 1933, as amended (the "Securities Act"), or under any U.S. State securities laws, and may not be offered or sold in the United States of America or its territories or possessions (the "United States") unless they are registered under the Securities Act or pursuant to an exemption from or in a transaction not subject to the registration requirements of the Securities Act. This Press Release is not being made available to persons in Australia, Canada, Japan, the Republic of Ireland, the Republic of South Africa or any other jurisdiction in which it may be unlawful to do so, and it should not be delivered or distributed, directly or indirectly, into or within any such jurisdictions.

Investors must rely on their own examination of the legal, taxation, financial and other consequences of an investment in the Company, including the merits of investing and the risks involved. Prospective investors should not treat the contents of this Press Release as advice relating to legal, taxation or investment matters and are advised to consult their own professional advisers concerning any acquisition of shares in the Company. Certain of the information contained in this Press Release has been obtained from published sources prepared by other parties. Certain other information has been extracted from unpublished sources prepared by other parties which have been made available to the Company. The Company has not carried out an independent investigation to verify the accuracy and completeness of such third-party information. No responsibility is accepted by the Company or any of its directors, officers, employees or agents for the accuracy or completeness of such information.

All statements of opinion and/or belief contained in this Press Release and all views expressed represent the directors' own current assessment and interpretation of information available to them as at the date of this Press Release. In addition, this Press Release contains certain "forward-looking statements", including but not limited to, the statements regarding the Company's overall objectives and strategic plans, timetables and capital expenditures. Forward-looking statements express, as at the date of this Press Release, the Company's plans, estimates, valuations, forecasts, projections, opinions, expectations or beliefs as to future events, results or performance. Forward-looking statements involve a number of risks and uncertainties, many of which are beyond the Company's control, and there can be no assurance that such statements will prove to be accurate. No assurance is given that such forward looking statements or views are correct or that the objectives of the Company will be achieved. Further, valuations of Company's portfolio investments and net asset value can and will fluctuate over time due to a wide variety of factors both company specific and macro-economic. Changes in net asset values can have a significant impact on revenue and earnings of the Company and its future prospects. As a result, the reader is cautioned not to place reliance on these statements or views and no responsibility is accepted by the Company or any of its directors, officers, employees or agents in respect thereof. The Company does not undertake to update any forward-looking statement or other information that is contained in this Press Release. Neither the Company nor any of its shareholders, directors, officers, agents, employees or advisers take any responsibility for, or will accept any liability whether direct or indirect, express or implied, contractual, tortious, statutory or otherwise, in respect of, the accuracy or completeness of the information contained in this Press Release or for any of the opinions contained herein or for any errors, omissions or misstatements or for any loss, howsoever arising, from the use of this Press Release. Neither the issue of this Press Release nor any part of its contents is to be taken as any form of contract, commitment or recommendation on the part of the Company or the directors of the Company. In no circumstances will the Company be responsible for any costs, losses or expenses incurred in connection with any appraisal, analysis or investigation of the Company. This Press Release should not be considered a recommendation by the Company or any of its affiliates in relation to any prospective acquisition or disposition of shares in the Company. No undertaking, Press Release, warranty or other assurance, express or implied, is made or given by or on behalf of the Company or any of its affiliates, any of its directors, officers or employees or any other person as to the accuracy, completeness or fairness of the information or opinions contained in this Press Release and no responsibility or liability is accepted for any such errors or omissions. or opinions or for any errors or Intellectual Property Risk Factors.

Tekcapital's mission is to create valuable products from university intellectual property that can improve people's lives.  Therefore, our ability to compete in the market may be negatively affected if our portfolio companies lose some or all of their intellectual property rights, if patent rights that they rely on are invalidated, or if they are unable to obtain other intellectual property rights. Our success will depend on the ability of our portfolio companies to obtain and protect patents on their technology and products, to protect their trade secrets, and for them to maintain their rights to licensed intellectual property or technologies. Their patent applications or those of our licensors may not result in the issue of patents in the United States or other countries. Their patents or those of their licensors may not afford meaningful protection for our technology and products. Others may challenge their patents or those of their licensors by proceedings such as interference, oppositions and re-examinations or in litigation seeking to establish the invalidity of their patents. In the event that one or more of their patents are challenged, a court may invalidate the patent(s) or determine that the patent(s) is not enforceable, which could harm their competitive position and ours. If one or more of our portfolio company patents are invalidated or found to be unenforceable, or if the scope of the claims in any of these patents is limited by a court decision, our portfolio companies could lose certain market exclusivity afforded by patents owned or in-licensed by us and potential competitors could more easily bring products to the market that directly compete with our own. The uncertainties and costs surrounding the prosecution of their patent applications, and the cost of enforcement or defence of their issued patents could have a material adverse effect on our business and financial condition.

To protect or enforce their patent rights, our portfolio companies may initiate interference proceedings, oppositions, re-examinations or litigation against others. However, these activities are expensive, take significant time and divert management's attention from other business concerns. They may not prevail in these activities. If they are not successful in these activities, the prevailing party may obtain superior rights to our claimed inventions and technology, which could adversely affect their ability of our portfolio companies to successfully market and commercialise their products and services. Claims by other companies may infringe the intellectual property rights on which our portfolio companies rely, and if such rights are deemed to be invalid it could adversely affect our portfolio companies and ourselves as investors in these companies.

From time to time, companies may assert patent, copyright and other intellectual proprietary rights against our portfolio company's products or technologies. These claims can result in the future in lawsuits being brought against our portfolio companies or their holding company. They and we may not prevail in any lawsuits alleging patent infringement given the complex technical issues and inherent uncertainties in intellectual property litigation. If any of our portfolio company products, technologies or activities, from which our portfolio companies derive or expect to derive a substantial portion of their revenues and were found to infringe on another company's intellectual property rights, they could be subject to an injunction that would force the removal of such product from the market or they could be required to redesign such product, which could be costly. They could also be ordered to pay damages or other compensation, including punitive damages and attorneys' fees to such other company. A negative outcome in any such litigation could also severely disrupt the sales of their marketed products to their customers, which in turn could harm their relationships with their customers, their market share and their product revenues. Even if they are ultimately successful in defending any intellectual property litigation, such litigation is expensive and time consuming to address, will divert our management's attention from their business and may harm their reputation and ours.

Several of our portfolio companies may be subject to complex and costly regulation and if government regulations are interpreted or enforced in a manner adverse to them, they may be subject to enforcement actions, penalties, exclusion, and other material limitations on their operations that could have a negative impact on their financial performance. All of the above-listed risks can have a material, negative affect on our net asset value, revenue, performance and the success of our business and the portfolio companies we have invested in.

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[1] https://www.industryventures.com/insight/the-venture-capital-risk-and-return-matrix/

 

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