Our momentum is strong and I find our prospects really quite exciting. This year is off to a very promising start despite the macroeconomic environment where geopolitical headlines disrupt global capital markets and our domestic economy’s growth is tenuous and politically charged. For those who are new to the Safeguard story, I’ll review the hallmarks of our strategy which are built on three pillars: focus, discipline and execution.
Focus is the first pillar of Safeguard’s strategic foundation. We deploy capital to high potential businesses in specific segments of life sciences and technology industries that exploit five strategic growth driving themes: maturity, migration, convergence, compliance, and cost containment. In life sciences, we target opportunities in the areas of lower relative technological and regulatory risk, not in new therapeutics but rather in molecular and point-of-care diagnostics, medical devices, specialty pharmaceuticals, and some selected healthcare services. In technology, we pursue transaction-enabling applications with a recurring revenue business model in Internet and new media, financial technology, healthcare IT, and other selected business services.
Safeguard’s discipline complements our focus. We will not deploy capital or pursue exits simply for activity’s sake. If an opportunity clears our strategic growth and return hurdles, we will respond appropriately.
Now while Safeguard’s deal team evaluates over 1,000 proposals annually, we remain disciplined in our capital deployment process. Today we hold interest in 17 partner companies. We have typically deployed up to $25 million in growth capital per company. We will time our exits from ownership positions in these companies to achieve targeted risk-adjusted returns on capital of 3 to 5 times over three to five years. As background, for all deployments since January 2006 than have been realized, written down or written off, Safeguard has realized aggregate cash-on-cash returns of 2.4 times. By way of comparison, according to Cambridge Associates, U.S. venture capital investments made since 2006 generated average cash-on-cash returns of 1.2 times. Now, based upon our evolving diversified deployment strategy, equity and debt in companies at varying stages, we believe that our aggregate returns on total capital deployed could reach 2 to 4 times over that three to five-year period.Read the rest of this transcript for free on seekingalpha.com
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