Polymathica Refined.. Erudite.. Visionary © 2010 The Institute for Advanced Social and Technological Analysis, LLC
Articles The Ventures Polymath A Polymath does not gain expertise in a field and then search for a question or problem that is susceptible to that skill set and knowledge base. Rather, the Polymath finds an interesting question or problem, determines what skills and knowledge are required to address it effectively and then either autodidactically or through collaboration gains those skills and knowledge. We have discussed how this difference can be productively applied in the research and enterprise environments. However, there is another class of questions that are amenable to the Polymathic Method, specifically those questions related to considerations of futurity. By stepping outside of the range of usual methodologies for analyzing any specific area of forecasting, future studies or risk assessment, the Polymath may gain a superior knowledge of futurity and, so armed, more productively deploy resources to promising projects. This will confer a prohibitive advantage in the activities of early round venture financing. With time, a significant number of Polymaths will be productively engaged in the early round financing of polymathic ventures. These activities will fall into three general categories. The first is the investment in promising technologies and enterprises on one’s own behalf. This will require a very large portfolio and a very strong emotional constitution. Consequently, we will not be considering this category in our article. The second is to create a Venture Enterprise that creates a series of investment funds financed by relatively wealthy investors. This is the traditional Venture Capitalist. The third is to create a ‘book’ of risk tolerant investors and then to act as an intermediary between the entrepreneur and the investor. This is the traditional Investment Banker. Polymathica Fellows so engaged can reasonably expect to achieve the minimum income expectations of $250K+ within three years and $500K+ within five years. Successful Venture Polymaths will significantly exceed these minimums. National and local governments create barriers to entry into the last two options that differ from jurisdiction to jurisdiction. Therefore, we will discuss them in general terms and allow the individual Polymath interested in this opportunity to learn about and conform with the local regulatory requirements. As we discuss examples, we will do so primarily within the context of the U.S. legislation described in Regulation D of the Securities and Exchange laws. The Transformation Story Polyamthica has a compelling story to tell of the coming Transformation. It will reorganize nearly all industries and create spectacular and surprising opportunites for the risk tolerant investor. It is a story which includes a major theme of visionary investors reaping enormous profits and those with a ‘tomorrow will be like today, only more so’ view of the future suffering dramatic loss of capital. We currently tell the story in general terms to all who will listen. However, we tell it in detail , through The Future 101, only to the Fellows of Polymathica. We will be adding to that, investors who are willing to make a significant investment commitment to the various projects that Polymathica Institute will spawn. Consequently, one of the first orders of business for the Fellowship is to build educational vehicles about The Transformation that can be pesented to the investment community. Their purpose is not to sell debt or equity instruments, but rather to educate a community so that they can properly interpret the investment opportunities that may be presented to them through Polymathica Venture enterprises. It will also serve the purpose of beginning a dialogue with accredited investors that may lead some Venture Polymaths to acquiring funds for investment purposes. In one aspect, Polymathica will tell the story of the coming Transformation, not from the viewpoint of a Futurist, but rather from the perspective of a risk tolerant investor. In other words, we will speak about how the impending explosion of Robotics and AI automation will reshape the economy. We will speak of the many opportunities presented by the massive demographic shifts that the ‘live anywhere’ professions will enable. We will speak about the opportunities presented by Internet radio and television and the revolution of cultural idenfications. The story is best told through Venture Fund and Investment Banking Polymaths. The marketing begins by creating a presentation about the Transformation directed at long term investment opportunities. It is best presented as a seminar presented in all major metropolitan areas. Lists of accredited investors is procured and they are invited to attend the seminar. They will receive a 15 minute ‘teaser’ video. At the end of the seminar, they will be invited to join our contact list. They will attest to being an accredited investor and check off which industries interest them. This, then, becomes a shared resource for acquiring investment leads for Venture Funds and Private Placements. The Venture Capital Polymath The Venture Fund Polymath will not differ structurally or organizationally from any other Venture Capitalist. The differentiation exists in the scope of the Polymaths investment considerations. A Venture Capital Firm acts as the General Partner in a series of Venture Capital Investment Funds. The Venture Enterprise will typically approach institutional investors and high worth individuals, soliciting large investments with a clearly stated overall investment strategy. For example, a Polymathica Venture Fund may have a minimum investment of $100,000 with the stated purpose of providing start up capital for developers of construction industry robotics. The typical Venture Capital Enterprise has $350 million under management. The typical principal directs a little over $30 million. Consequently, the typical Venture Capital firm will have between ten and fifteen principals. A Venture Enterprise typically will be compensated through an annual fee of between 1% and 2.5% of the net investment plus 20% to 30% of the return. It is becoming more common for a portion of the return to be excluded from the carried interest calculation. We do not expect that Polymathica Venture Polymaths will be significantly different from traditional Venture Capitalist, save that we expect that they will be more successful in the long run. Consequently, a typical Venture Fund Polymath can expect to create $30,000,000 X .02 + $30,000,000 X .20 X .20 = $1,800,000 in annual fees and income participation. After covering expenses and staff support, a successful Ventures Polymath can expect to earn over $1,000,000 per year. Investment Banking Polymath Venture Fund Polymaths will live with and counsel an enterprise from the day of initial investment until they exit via IPO, merger or acquisition. In addition to the initial investment decision, they are expected to participate in the management of the enterprise. For those who are primarily interested in making the investment decision and lack either the interest or the disposition for long term management, the opportunity of an Investment Banking Polymath is more appropriate. These Polymaths develop a ‘book’ of risk tolerant, high net worth investors, both institutional and individual. A large portion of the value added resides in the perceived quality of decision making that leads the Investment Banker to offer the deal to his clients. This book may be managed by the Polymath or, in larger operations, through a number of securities sales people. Investment Banking Polymaths cultivate, directly and often with the assistance of staff analysts, early round financing opportunities that fit their knowledge and skill set, structure the financing deal, often assist in the preparation of the business plan and assist in the presentation to potential investors. Commission rates vary by type of deal. However, the typical early round private offering typically is done for a 10% commission plus expenses. An individual Investment Banker who places $10 million in funding each year will earn $1.0 million in commissions. Often an Investment Banker will take an underwriting or lead role in some deals and participate to a lesser degree in other deals. Sometimes, stock options are granted to an Investment Banker to create motivation to underwrite without any additional initial expenses. Successful Investment Bankers have a clear motivation to recruit sales people who either bring a ‘book’ or create one, relying upon the experience and reputation of the firm. In this way, the Investment Banker Polymath can reach extraordinary annual income levels. In most jurisdictions licensure is required to engage in some or all of these activities. Also, additional requirements are necessary to function as a dealer-broker. It is our intent to acquire Fellows who will initiate the process of creating dedicated dealer/brokers in jurisdictions where it is feasible. The remainder of the Fellows interested in becoming an Investment Banking Polymath can generally attach their license to a small investment house and participate in placements with other agents until a more permanent arrangement is developed. Short Term Opportunities Conclusion We refer to Venture Capitalists, whether acting on their own behalf or through a Fund and Investment Bankers, in aggregate, as Venture Polymaths. They are similar to traditional Venture Capitalists and Investment Bankers in professional activity, however, because of superior analytical techniques applied to a superior knowledge of futurity, they will eventually replace the primarily MBA credentialed practitioners of today. They are, in reality, functioning as an Applied Futurist. The Fellowship of Polymathica will move aggressively to implementation of opportunities for Ventures Polymaths.