Equity Conference

Corrections or additions?

These articles by Barbara Fox were prepared for the November 22,

2000 edition of U.S. 1 Newspaper. All rights reserved.

Money Raisers: Tiger Investors

Don’t tell potential investors that your company is

first to market and that you have 18 months lead time over your

competition.

"Nobody has a year and half lead time any more," says Kim

Louth. "If you are first to market, you had better be looking

over your shoulder."

Louth has heard all the claims, whether lame or substantial, on which

entrepreneurs base their business plans. In April she and her husband,

C. John "Jack" Louth, left USTC Securities to start

their own company to help these young companies find the funds they

need. Their firm, Equity Research Group, is self-financed, and in

fact, was its own first client. It raised $400,000 from four

investors,

one a "major Wall Street name," one a partner at a major money

management company, and two independent venture firms.

Equity Research Group will stage its first Private Healthcare Company

Conference at the Nassau Club on January 25, from 8:30 a.m. to 5 p.m.

Private companies — the ones with realistic expectations —

may apply to make presentations at this conference (see story below).

The deadline is Friday, December 15. Call 609-737-0267; fax,

609-737-6647;

or www.equityresearchgroup.com

"Our raison d’ etre is to raise capital for early stage

companies,"

says Louth. To finance start-up and early stage companies in New

Jersey,

New York, and Pennsylvania, Equity Research Group does convertible

preferred equity placements and deals with the institutional market

or accredited qualified investors. When successful, the group gets

a success fee. "We are looking to raise smaller amounts of capital

for firms that fall below the radar screen of the investment banker,

from $1 million to $10 million," says Louth.

One of the Louths’ successful investment deals, dating from when they

were with another firm, is CardioPulmonary Corp., which markets a

software-controlled respirator that responds to the patient’s subtle

signals of a need for oxygen. It reduces "weaning" time, the

time needed for a patient to adjust to breathing alone, as well as

costs, and it is easier on the patient.

One current client is OxLife, a Florida-based medical oxygen

concentrator

manufacturer, for which the Louths are trying to raise $6 million.

The niche: the travel market for invalids. Because regular oxygen

tanks last for six hours, their use makes travel very difficult. An

alternate solution, an oxygen concentrator, is also bulky. It takes

the nitrogen out of air in a patient’s room and delivers oxygen to

the patient, but it is the size of an end table.

OxLife has developed, patented, and gained approval for a 28-pound

mobile unit that can be plugged into a converter on a train, boat,

or car. Coming soon is a 12-pound, battery-powered model.

A graduate of Widener University with an MBA from Drexel, Jack Louth

had worked as analyst and portfolio manager before going to the sell

side for Solomon Brothers, Maybon Nugent, and Janney Montgomery Scott.

When he left U.S. Trust New Jersey, he was UST Securities’ vice

president

of institutional sales.

Kim Casagrande Louth grew up in California; her father was a stock

broker and her mother did epidemiological cancer research. She worked

on Wall Street for Tucker Anthony and Dean Witter, before taking a

hiatus to start her family (she has two children) and open retail

jewelry shops in California and Colorado. When the recession hit,

she went back to Wall Street, doing institutional research for Janney

Montgomery Scott, and there met and married Jack.

Louth doesn’t want to raise money for capricious purposes. "I

want to raise money for medical improvements, for ways to ease one’s

life, or to improve a medical procedure," she says.

The Louths have a sideline to their business, a website entitled

www.tigerinvestors.com,

for those who might be looking for $250,000 to $500,000.

Advertisements

for this site, aimed at commuters, have been placed in New Jersey

Transit train stations.

Entrepreneurs pay $100 to post a business plan for six months; only

the accredited investors can view the plans. "We screen the plans

and have a form that they have to plug their plan into. If investors

go to our site, we want them to see that it is a quality deal,"

she says. Such postings are set up to attract investment of $50,000

to $500,000.

One such client is Net-transport.com, which hopes to raise $250,000

in a first round of financing. The company aims to solve the shipment

visibility problem quickly and at low cost.

Should an investment result from a connection made on the website,

the Louths would earn a fee. They proactively solicit connections

by leveraging their database of 1,700 investment firms. "We take

the applicant’s industry and screen for geography, the stage of

development,

and the capital they want, and we notify those investors by

E-mail,"

says Louth.

"Hopefully we will see some interesting deals flow," she says.

"We are getting a fair amount of interest from the train station

ads," she says. Left unspoken is the assumption that some of the

companies that post on the site may end up as active clients of Equity

Research Group.

An extra fillip that the Equity Research Group adds to website-derived

deals: the Louths make a charitable contribution, a tithe if you will,

to the charity chosen by the investor, in the amount of 10 percent

of their fee. "If we raised $1 million and our fee is five percent

or $50,000, a donation of $5,000 would go to the community group

chosen

by the investor," she says.

"What generated this," Kim Louth explains, "were the

obscene

stories in Red Herring [a publication that covers new companies] about

the ways funds are being generated and spent. People making huge sums

of money aren’t worried about earnings because once they have raised

their money they are paying themselves huge salaries," says Louth.

"I asked, does any of this money find its way into the hands of

someone doing some good?"

Equity Research Group, 2 Tree Farm Road, Pennington

Point West, Suite A-110, Pennington 08534. Kim Louth, CEO.

609-737-0267;

fax, 609-737-6647. Home page: www.equityresearchgroup.com and

www.tigerinvestors.com.

Top Of Page
Equity Conference

Private companies have until Friday, December 15, to

enter the Equity Research Group’s first Private Healthcare Company

Conference, scheduled for the Nassau Club on Thursday, January 25,

from 8:30 a.m. to 5 p.m. Featured speakers will be Samuel D. Isaly,

founder and managing partner of Orbimed Advisors, Devang V.

Kantesaria

of TL Ventures, Thomas B. Nagle of Valuation Counselors, and

Steven M. Cohen of Morgan Lewis & Bockius.

Attendees will include investment and venture capital firms that look

for private equity investments in the Northeast. Nine private

companies

will give presentations; they must be based in the Northeast Corridor

(Massachusetts to Washington, D.C.) and must fall into one of these

categories: Internet Healthcare, Medical Device/Equipment, Biotech,

or Healthcare Services. Cost: $600.

Presentations are limited to 30 minutes plus 15 minutes for questions.

The entire conference will be webcast on wwww.equityresearchgroup.com

for institutional and accredited investors who are unable to attend

the conference in person. Each presenter will receive a CD of his

or her presentation, which will include the Q&A session, and the video

of the presentation will be archived and available to accredited

investors

on the website for 30 days after the conference.

How to prepare for conferences like these? Do good market research

for your marketing plan and don’t try to hide anything, says Kim

Louth.

"We find when we talk to new companies they are naive about how

much investors can find out." Here are the top 10 new-business

claims that she says investors do not want to hear.

1. Our estimates are conservative.

2. If we build it, they will come.

3. The competition cannot get around our patents.

4. The market for our product is $X billion dollars since

that is what the entire industry generated last year.

5. Our MBA degrees will make up for our lack of hands-on

experience.

6. Drive the top line and the bottom line will follow.

7. Market share is more important than profits.

8. We will succeed because we will be first to market.

9. Banner ads will be a large percentage of our revenues.

10. The more we spend on advertising and marketing, the

more product we will sell. Says Louth: "The last thing investors

want to hear is `We have the best technology in the world and don’t

have to have a developed marketing strategy’."

— Barbara Fox

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