Turning Around Under-performing Public Companies in an Overcrowded Public Market
According to Colin Wallace at Publex Ventures, over 5,000 public companies in the U.S can be classified as small-cap or micro-cap “orphans” that don’t benefit from a liquid market. While they have the obligations of being public, they don’t have effective access to the public capital markets. Publex introduced an interesting solution to this problem — the fund strategically engineers mergers between early-stage private companies and under-performing public companies, to accelerate liquidity while preserving the superior returns of early-stage investing.
Publex invests before, during, and after merging these companies into an operating public company that is under-performing or is in need of new technologies, business lines, or management to maximize its growth potential and attract market attention. “While there are many funds that invest in both public and private vehicles, Publex is unique in its business model of investing in private companies with the express purpose of combining them with an under-performing public company, then investing further in the combined public entity,” said Wallace.
Another interesting solution is offered by Silicon Valley start-up www.IdeaMamaClub.com, founded by a serial entrepreneur Olga Kostrova. IdeaMama’s unique virtual IP incubation platform offers a pre-assessed micro-cap deal flow, co-developed by its user community. IdeaMamaClub.com facilitates innovations in various industries including biotechnology, commerce, education, energy, entertainment, environment, finance, health, information technology, materials, space, transportation, and others.