Post date: Dec 26, 2012 1:59:57 PM
QUESTION:
Now, you invest in developmental stage technology companies, what are some of the big trends you're seeing right now? Where's the VC money flowing in this sector?
ROBERT POMEROY, CEO, HORIZON TECHNOLOGY FINANCE:So we actually, all of our investments are secured loans and we take warrants, equity kickers in all of the transactions we do. So we're playing in the technology space in what we call a smart way. But we approach four technology sectors: information technology, clean technology, life science meaning drug development and medical device, and healthcare information and services. So there's activity in all of those today. In the technology sector, we're seeing a lot of SAS model software and service, cloud computing, some interesting new technologies that empower mobile devices for instance. In the clean tech space, a little bit under, having a difficult time right now because the solar industry is unsettled. Right. But we're still seeing enabling technologies and materials, solar and alternative materials which are sort of interesting. In the life science, we've always been a big player in the life science space, drug discovery; medical device is very big right now and diagnostics. And then in healthcare information, the service is all about efficient healthcare.
QUESTION:
So let me ask you, given the current interest rate environment, what does that mean for your business in terms of loan demand and how you're actually making money off the loans?
ROBERT POMEROY, CEO, HORIZON TECHNOLOGY FINANCE:
Right. So we, demand in our sector is less driven by macro economics than it is by sort of development cycles. This is a really good time for new opportunities. And we're seeing more than our first year, we have a very robust pipeline right now. The interest rates for our loans, our loans are really alternative to equity from additional equity from the venture capitalist. So, as such it trades in a range that's a lot less volatile than the interest rate environment. But we're seeing loans today that will pay interest rates from 10% to 14% which is good for us.
QUESTION:
Let me ask you. For a retail investor who's watching, who is interested in obviously making money and trying to get in on a company before it is well-known to everyone, so we know IPO is a typical exit strategy and we know that hasn't always worked especially this year, right? There have been some disappointments whether it's Facebook or BATS. Is there a better way for a retail investor to get into some of these companies whether it's through angel investing or looking at a company like yours where they're doing a lone approach?
ROBERT POMEROY, CEO, HORIZON TECHNOLOGY FINANCE:
Well, that's why we say we think we're the smart way to plan the technology space because we're very diversified by sector that I described to you. Our average loan is between $5 million and $10 million. We have 40 to 50 accounts at any loans outstanding anytime and we take warrants in all of them. We have the warrants in these companies even after they've repaid the loan. So today, we have close to 60 warrant positions in young companies. And the warrants have a long life. So it's a way that to get a good solid return from a dividend perspective because we're charging good interest rates and we're getting paid but you also might have that nice surprise and we've had those already.