REG - Tekcapital plc - Tekcapital Spins out GenIP onto AIM

TekcapitalAnnouncement

02/10/2024 08:00

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RNS Number : 5275G  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
(http://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  (#_ftn1)

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
(http://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 (http://www.genip.ai) .

 

For further information about Tekcapital, please contact:

 Tekcapital Plc                                                                                          Via Flagstaff
 Clifford M. Gross, Ph.D.

 SP Angel Corporate Finance LLP                                                                          +44 (0) 20 3470 0470

 (Nominated Adviser and Broker)
 Richard Morrison/Charlie Bouverat (Corporate Finance)/Abigail Wayne / Rob Rees
 (Corporate Broking)

 Flagstaff Strategic and Investor Communications                                                         +44 (0) 20 7129 1474
 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.

 

 

 

- Ends -

 1  (#_ftnref1)
https://www.industryventures.com/insight/the-venture-capital-risk-and-return-matrix/

 

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