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
"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
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,
"Our raison d’ etre is to raise capital for early stage
says Louth. To finance start-up and early stage companies in New
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
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
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
for those who might be looking for $250,000 to $500,000.
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
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
and the capital they want, and we notify those investors by
"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
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
by the investor," she says.
"What generated this," Kim Louth explains, "were the
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?"
Point West, Suite A-110, Pennington 08534. Kim Louth, CEO.
fax, 609-737-6647. Home page: www.equityresearchgroup.com and
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.
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
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
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
"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.
that is what the entire industry generated last year.
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
Corrections or additions?
This page is published by PrincetonInfo.com
— the web site for U.S. 1 Newspaper in Princeton, New Jersey.