Allied Minds is "an innovation company that forms, funds, manages and builds startups based on early-stage technology originating from U.S. universities and federally funded research institutions. We created a new business model for overcoming early-stage development gap between basic research and commercial development. Our investors are aligned with our vision that cutting-edge invention is an attractive, yet under-developed, asset class."

So it's basically a venture capital firm with a market Cap of £629m

Impressive pre close today showing a number of its investments / subsidiary companies have increased markedly in value. This has come about because they have secured funding, typically from Allied Minds ($64m in FY15) plus third parties ($42m in FY15) , at a higher valuation to the last time they raised money. So as an investor it means your Net Asset Value per share is rising. All good!

But let's look a little bit closer at its "net asset value"

Reading Allied Minds' most recent half yearly report, 19 investments are classed as early stage, 3 are commercialisation stage. So it's all very early stage stuff mainly in biotech / healthcare and IT areas. The healthcare all looks very early with most investments at Phase 1 or below. In an optimistic scenario these investments wont reach commercialisation for at least 4-5 yrs. 

In the meantime current revenues for the year are around $3m

Direct Costs are an eye watering $80m pa ($40m SG&A, $40m R&D), although this hasn't been updated for H2 where the company has taken on more staff (cost!).

So annual loses are around $80m pa

Cash on the balance sheet is $195m

Therefore at the current burn rate the company has 2.5yrs of cash left before it runs out. However this is prior to any further new or follow-on investments made, which are likely to be in early stage, non revenue producing companies.

So I figure this has around 1-2 years before the next cash call (probably a cash box placing for 10% of the company)

In a nutshell, We have a company trading on the inflated value of non revenue producing, early stage investments, an area that has been incredibly hot over the last 2 years (look up "investment unicorn" on Google for proof). Would I put my house on…

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