Israel

Below are excerpts of the Q&A, which have been edited for brevity: 

Todd Dollinger, Co-Chairman & Co-CEO, Trendlines GroupTodd: We have a large portfolio of 56 companies today. We have a larger percentage of more mature, more experienced companies today than we have ever seen and we feel that to bemost productive these companies require more of our effort in helping them mature and bring them to revenues and bring them before investors and the strategic partners that will acquire these companies this year and in the years ahead.

Steve: We have many companies that are in revenue today. Todd talked about Arcuro’s sales in the first quarter of this year are probably greater than their sales for all of last year.

Steve Rhodes, Co-Chairman & Co-CEO, Trendlines Group.Similarly on the agritech side, we have companies that are expecting to do sales of two and three times more than they did last year. Just one example: Sol Chip which in 2021 had US$65,000 of sales, in 2022 had $500,000 and in 2023 expects sales of US$1.5-2.5 million.

Companies growing like that brings us closer and closer to exits. We can't of course predict when those exits will occur as they're up to the market, they're up to the buyers.

But I can say with confidence that we are in talks all the time with the market. Todd was in the States recently speaking with major multinational companies and exposing them to selected portfolio companies.

We're pushing very hard for exits and I think that we're going to see significant exit activity in the next couple of years which will then enable us to distribute dividends as we've promised.

Todd: We put a tremendous amount of effort into properly positioning companies for sale and for sale at what we believe to be appropriate value producing prices. That's why we attend conferences, we visit with our strategic partners around the world.

In fact, I'm off again tomorrow on a trip that'll take me to Canada and Singapore, and we'll be meeting with some of the biggest medical device companies in the world during the course of these visits.

Steve: The truth is that up until now we have not seen a significant decline in investment activity in our portfolio companies. Our company Viaqua closed an investment around just two weeks ago. Another one of our medical device companies is closing a round this week.

We've encouraged all of our portfolio companies to both look at their expense structure to make sure that they can extend their runway on the one hand and on the other to begin their fundraising activities earlier because we believe it could take longer to raise capital.  

Todd: It's a really interesting question and there are two key factors that address the inquirer’s thought -- one is the ability to raise and the second is valuations.

Trendlines fits in a very interesting niche in the investment world. As you know we don't raise money for companies at multi-billion dollar valuations, we are startup specialists and we work on growing those companies. We've actually never raised money at valuations even in the hundreds of millions of dollars much less billions of dollars.

When you're talking about raises and valuations of 10 million, 20 million, 30 million dollars there is, in difficult times, less downward pressure on the valuations. As well, we see continuing availability of capital.

Take a look at what we've achieved during down years (see chart below) and first of all you see we continue to raise more money each year than the year before. This has been a constant threat for a number of years now and the valuations are increasing.

So who gets battered during these tough times?  The companies that go out and raise a billion dollar, multi-billion dollar valuations. They wind up losing 80, 90% of their value in some cases.

We, on the other hand, see on average valuations increasing and the total amount of funding increasing. I realize that's a bit counter-intuitive but that’s what our numbers are.

We anticipate a good year this year even in these confusing market times and confusing political times internationally and domestically.

Trendlines' presentation deck is here. 

Steve Rhodes (left) and Todd Dollinger enjoying a meal of nasi lemak in Singapore. File photo."We use this non-IFRS information internally to assess our business as well as for internal strategic decision-making and identifying future impact our portfolio companies may have on our results," wrote Todd Dollinger and Steve Rhodes, who are co-Chair and co-CEO of Trendlines, which is listed on the Singapore Exchange.

"The values do not represent any forecast or future performance, but rather as an extra aid for the reader in understanding our view of our portfolio companies. Given our use of non-IFRS information, we believe that such information may be important to investors as seen through the eyes of management."

The fair market value of the Trendlines portfolio as at 31 December 2022 was US$89.8 million, while the non-IFRS measurement was US$146.6 million.

Compare that with its market cap of just S$74 million or US$55 million.

Notably, in the non-IFRS measurement the valuation discount that Trendlines applies to the value of ordinary share holdings is eliminated.

"While this discount correctly represents the fair value of our holdings in the portfolio companies, our experience to date from our previous 10 exits, has been that the valuations of the ordinary shares upon exit were large enough to eliminate the discounts in relation to the preferred shares."

On the key work ahead, Trendlines reiterated its strategic plan for 2023 which it announced in November 2022, which is to help its advanced stage portfolio companies realize significant exits.

Since Trendlines' listing in 2015, its portfolio value has grown from US$57.2 million to US$89.8 million and generated an additional US$49.4 million in exit proceeds from the portfolio.

Another interesting vignette from the annual report is the list of Top 20 shareholders, with Robert Stone appearing for the first time there. His holding is worth north of S$2.2 million currently. Annual report 2022 Robert Stone is a familiar name to investors who are into Singapore-listed stocks such as China Sunsine and Dutech Holdings as he is/was a Top 20 shareholder in a number of companies. (See: Robert Stone: Another year accumulating DUTECH and CHINA SUNSINE) Also among the Top 20 in Trendlines is Wang Yu Huei (aka Alan Wang) with 10.4 million shares -- he is a Top 20 shareholder in numerous other companies. He is MD and controlling shareholder of his investment vehicle, Asdew Acquisitions (18.4 million shares of Trendlines).  These shareholdings are unchanged compared to the annual report 2021. Also continuing to maintain its holdings is Morph Investments, a low-profile value-oriented fund which also appears in the Top 20 shareholder lists of several companies.

The 2022 annual report is here.