MDB Capital Holdings Issues Annual Letter to Shareholders
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Insights
The strategic alignment of MDB Capital Holdings with both early-stage 'Big Idea' companies and undervalued public companies presents a distinctive investment approach. The emphasis on ownership and operational involvement in early ventures, alongside equity-based compensation from mature companies, suggests a model that prioritizes long-term value creation over short-term gains. The acquisition of Provention Bio by Sanofi, resulting in a significant return on investment, illustrates the high-risk, high-reward nature of this strategy.
However, the reliance on a small portfolio of companies each year introduces considerable volatility to MDB's operating performance. Investors should be aware that, akin to sports team performance, results may fluctuate significantly. This variability could affect stock price stability and investor sentiment. The commitment to distribute gains rather than reinvesting them also means that the potential for compounding growth is limited, which could influence long-term investment strategies.
MDB's proprietary intellectual property database and analyst training platform highlight a focus on technology and IP-driven investment strategies. This approach can potentially uncover hidden value in sectors where IP is a critical asset, such as biotechnology and software. The emphasis on a community of investors contributing intellectual capital could foster a collaborative ecosystem, potentially accelerating the growth and success of portfolio companies.
However, the success of this model is contingent upon the company's ability to continuously identify and develop breakthrough technologies. The market's reception to MDB's initiatives, such as the launch of the Public Ventures clearing and trading platform, will be a key indicator of the company's ability to scale and attract additional investor interest.
The case of Provention Bio underscores the importance of MDB's investment in healthcare innovation, particularly in addressing chronic autoimmune and inflammatory diseases. The FDA-approved drug TZIELD represents a significant advancement in Type 1 diabetes treatment, demonstrating MDB's capacity to identify and develop transformative medical technologies. This not only has profound implications for patient care but also showcases the potential for substantial financial returns in the biopharmaceutical sector.
Investors should note the lengthy and complex process of drug development and approval, which involves substantial risk. MDB's ability to navigate this process and achieve successful exits, as seen with Provention Bio, is critical for justifying the high-risk nature of such investments. The potential for societal impact through these investments adds an ethical dimension to MDB's business model that may resonate with socially conscious investors.
Addison, TX, Jan. 31, 2024 (GLOBE NEWSWIRE) -- MDB Capital Holdings, LLC, (NASDAQ: MDBH) (“MDB”), a public venture platform with the objective of growing the public venture marketplace and optimizing the way meaningful technologies are financed and built, today released its annual letter to shareholders from its CEO and Co-Founder, Christopher Marlett.
To the Shareholders of MDB Capital Holdings, LLC:
Welcome to our first annual letter, which I plan to send every January to reflect on the past year and how what we learned will shape our plans for the following year.
First, I want to start with a revelation that hit me during a break from my normal routine, while enjoying the holidays with my family in the Pacific Northwest:
Our unique platform for venture-stage investing more closely resembles a great sports franchise than a traditional corporation.
How so? I’ll get to that in a moment. But first, I want to remind everyone what makes us different…
What We Do
At MDB, our team leverages a proprietary intellectual property database to identify two types of opportunities and unlock value.
- “Big Idea” Companies: We partner with universities and inventors of “Big Ideas” that have the potential to become category leaders. These are typically early-stage opportunities, where we commit firm capital to form the company. In turn, we own a majority stake and are intimately involved in day-to-day operations.
- Undervalued Public Companies: We identify and partner with more mature public companies with undervalued technologies that possess significant leadership potential. We endeavor to take our fees in equity. So here, too, our interests are strategically aligned with all stakeholders.
In both cases, we have a well-defined set of investment criteria. We then combine that with our community of experienced investors that commit not only their monetary capital, but their intellectual capital to help each company succeed.
In short, we are not stock pickers at MDB. We are technology and business backers.
The result is a unique approach that helps maximize the probability for a visionary technology to solve a big unmet need and in turn, create billions in stakeholder wealth and immeasurable value for society.
Take for example, our backing of Provention Bio.
We co-founded the company in 2017 with
That’s
This all brings me back to the sports analogy…
Continuing a Tradition
Great sports teams build a tradition of winning. But the results are never uniform.
Occasionally, teams have incredible seasons and win championships. Other times, they have great seasons and win conferences. Most years, they have good seasons and win divisions. And every so often, they have horrible seasons.
There are two reasons why you can expect our short-term performance at MDB to resemble a sports season:
- First, we focus on backing only a handful of “Big Ideas” and existing public companies each year.
- Second, we are not looking to pile up cash to invest in more and more opportunities each year. Instead, we plan to distribute gains to shareholders as value is realized in each company.
As a result, our year-over-year operating performance will be highly variable, based upon the small group of companies we currently hold, as opposed to the long-term operating performance of a growing group of companies we invest in and/or operate.
However, we believe our long-term performance will resemble a great sports franchise’s “tradition of winning.” That’s because we have also built a culture, framework, and process for repeatable and sustainable success.
The Secret Sauce
The formula for a great sport franchise is easy to deconstruct…
- It starts with a distinct culture and approach that attracts top talent. How else do you explain why so many top athletes are drawn to Ann Arbor, Columbus, Tuscaloosa, or South Bend, for example?
- It continues with a dedicated and disciplined approach to training and development which transforms “raw” talent into exceptional talent. All the great programs and coaches focus on getting a little bit better every day. Why? Because they realize habitual and incremental improvement leads to consistent and sustained success.
- It then involves engaging the community to support the franchise. Go to a football game at any of those places above and you instantly understand the power of community. Win, lose or draw those stadiums are full of fans! This “12th man” wills success to occur.
Of course, winning serves as a positive feedback loop, reinforcing and inspiring even more confidence in the formula above so that failure becomes more and more unlikely.
I see our mission at MDB in the same way…
- We look at thousands of ideas and companies to deeply understand “talent” when we see it. These ideas are not obvious to others and hence the opportunity. They are like players that must be developed. Once we identify a good technology, we all lean in together to convince the inventor or entrepreneur that success is a greater probability with our culture, gameplan, and community than anywhere else.
- We develop ideas and technologies into something that is financeable and has a shot at becoming a meaningful company. We train and develop our team to not only know a good idea when they see it, but also how to develop it, thanks to our deep understanding of the technology and IP landscape. The more repetitions they get looking at ideas, the quicker and better we get at contextualizing the opportunity and developing a gameplan to realize it.
- We engage our community to unlock more value for companies we back. Success is not determined by big funds or individuals. It is determined by the efforts of many within a community that commit to backing a worthy technology for the long-term with all their resources – capital, expertise, connections, etc.
2023 in Review
Sports analogies aside, when I look back on 2023, I’m proud of our team’s accomplishments and the foundation it set for our collective success, including:
- Optimizing our analyst training platform to enable us to analyze thousands of technologies and companies each year. This work allowed us to:
- Identify and engage with several new leads for “Big Idea” companies.
- Evaluate all public companies under
$500 million in market value with patents to identify the ones with the greatest prospects of becoming market leaders in their technology category. - Partner with and complete a
$25 million offering for HeartBeam, Inc. (Nasdaq: BEAT), a cardiac technology company that has developed the first and only 3D-vector electrocardiogram (VECG) platform to help physicians detect heart attacks anytime, anywhere as well as diagnose other common heart conditions.
- Developing and advancing the technology and team at our subsidiary, Invizyne Technologies, Inc. – a leading designer of enzyme-based biomanufacturing systems. This includes securing approximately
$4 million in additional, non-dilutive funding, as well as adding seasoned industry experts to the leadership team. - Completing the infrastructure build-out and regulatory approval process at our broker dealer, Public Ventures. This includes:
- Securing DTC approval as a self-clearing broker-dealer, which represents the culmination of an almost three-year effort.
- Completing the development of our online and mobile trading application, PV Trade.
- Beta-launching our community member portal, which showcases the insights of our analyst team and provides the platform for our community to engage with our team, each other, and companies in the public venture asset class.
- Officially launching and delivering an integrated IP solution to new technology companies at our subsidiary, PatentVest. This involved initial recruitment of strategists, patent attorneys, and IP analysts, as well as formalizing our processes to create valuable IP and business development strategies for these companies.
- Developing and executing the first phase of our investor and public relations strategy to raise awareness for MDB, the companies we back, and the entire public venture asset class. This included regular exposure in major media programs and publications, including Bloomberg, Fox Business, and Newsweek.
- Last but certainly not least, completing our initial public offering on the Nasdaq on September 21. This historic milestone represented a necessary step to scale our mission to drive even more societal and shareholder impact and would not have been possible without all of you and the support of many people behind the scenes.
2024 Preview
As we enter the 2024 “season,” we couldn’t be more excited to know that our stadium is full of early supporters, our coaches and players know what success looks like, and our community is engaged to help expand and build the MDB franchise into something that could be truly legendary.
With that in mind, here is a short-list of what we expect to accomplish in the year ahead:
- Spinning out our most recent “Big Idea” investment, Invizyne, which sets the stage for potentially significant value creation.
- Launching our Public Ventures clearing and trading platform to our community of investors and then more broadly to qualified and interested public venture investors.
- Expanding our Public Ventures community via referrals of engaged, value-creating investors.
- Finalizing terms and making investments in one or more new “Big Idea” companies.
- Partnering and financing more undervalued public companies that possess significant leadership potential.
Wishing you all the best in 2024 and thanks again for keeping the faith!
Chris Marlett
Co-Founder, Chief Executive Officer
About MDB Capital Holdings, LLC
MDB was founded in 1997 with the purpose of backing visionary technology, inventors, and technology entrepreneurs via a new form of public venture capital that finances pre-revenue, early-stage companies through early public offerings, primarily listed on NASDAQ. After successfully launching 16 companies under this public venture model, MDB itself became a public entity to attract investors who share its vision to continue to launch new platform technologies into the public markets.
MDB currently has two wholly owned subsidiaries, Public Ventures, LLC ("Public Ventures'') and Patentvest, Inc., and has a majority ownership stake in Invizyne Technologies, Inc. MDB is also in the process of expanding the business scope of Public Ventures, an SEC registered and FINRA member broker dealer, to include self-clearing capabilities to enhance its investment banking services to both issuers and investors.
For more information, please visit www.mdb.com.
Forward-Looking Statements
This press release contains "forward-looking statements." These forward-looking statements are made as of the date they were first issued and were based on current expectations, estimates, forecasts and projections as well as the beliefs and assumptions of management. Words such as "expect," "anticipate," "should," "believe," "hope," "target," "project," "goals," "estimate," "potential," "predict," "may," "will," "might," "could," "intend," "shall" and variations of these terms or the negative of these terms and similar expressions are intended to identify these forward-looking statements.
Forward-looking statements are subject to a number of risks and uncertainties, many of which involve factors or circumstances that are beyond MDB's control. MDB's actual results could differ materially from those stated or implied in forward-looking statements due to a number of factors, including but not limited to, risks detailed in documents that may be filed by MDB from time to time with the SEC. The forward-looking statements included in this press release represent MDB's views as of the date of this press release. MDB anticipates that subsequent events and developments will cause its views to change. MDB undertakes no intention or obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise. These forward-looking statements should not be relied upon as representing MDB's views as of any date subsequent to the date of this press release.
Investor Relations Contact:
IR@mdb.com
Media Contact:
press@mdb.com
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