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Safeguard Scientifics Inc. Analyst Day Conference Call Transcript

Stocks in this article: SFE

Our game plan or our business model is very simple. We are deploying capital in new and interesting situations in the tech and life sciences sector. We might do growth buyout financing, growth equity financing, we could do some early stage financing and we have the capacity also to do some selective debt financing. We partner with our partner companies in tech and life sciences and we work to build value, and we realize that value with well-timed exits.

That’s the driver of the economic engine; we are not an operating company. Revenue and EBITDA is not the way to measure the success of Safeguard Scientifics. Now, many people hear that and they say, well, Safeguard is a public venture capital vehicle, or Safeguard is a public private equity vehicle. There is some similarity, but there are many more differences.

First of all, we don’t play quite as early as the A round venture capital community. We don’t play quite as late as the private equity community. We’re somewhat of an in-betweener. We’re in early enough that we have a chance for a ten-bagger but we’re not in so early that we’re going to face 40% of everything that we deploy as a goose egg, which is the A round formula, 40% goose egg, 40%, you’re lucky if you get your money back and 20%, you’re making money. That’s not our formula.

We provide operational support services to our partner companies. We don’t fish for them but we help teach them how to fish as they go and grow in their business.

Now recognizing that our people have operational experience at the sea level, when we take board seats we don’t give advice based upon some case study we read in business schools. We give advice based upon scars of experience on our backs and that is usually valued to be much more helpful to growing a business.

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