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Roadmap 04/11 (click here to expand/collapse)

Below is the Roadmap for select April 2011 website articles.    Please note  the website contains many more articles covering these same topics. For example, pre-game is integral to our program for attracting better R&D investment opportunities.

Provide Predictable Funding for Unpredictable R&D+
(Introduction to Franchise Capital Mgmt.)

Make funding more predictable (From Unpredictable R&D to Predictable Investor Returns)

  Attract and Retain Long-Term Investors

– Make a Market (You Have to See It to Believe It)

  Reinvest Interim Windfalls+

Make R&D success more frequent * (Execution is the Key to Success)

  Get Smarter at Tracking R&D Advancements+ and Transitions+ (Exits)
  Attract Better R&D-centric Investments
  Increase R&D Productivity (Execution is the Key to Success)

* Although it's still unpredictable

As funding agent+ we match investors and investments (owners of intellectual property+). Our role as funding agent (as middleman) is to keep investors happy, thereby ensuring steady funding for investments. We do this by packaging unpredictable R&D investments into an offering that is more attractive for investors (the perpetual fund). We do this by direct mediation into our unpredictable R&D investments (via franchise operations+), to ensure above-market productivity. Above-market R&D productivity is the only reliable means to ensure predictable funding.

The POW Priest

Summary: 

The POW Priest was a middleman. So is our funding agent. Here’s some insights about being a middleman.

Gregory Peck as a priest who helps escaped POWs in The Scarlet and the Black (1983).

We reached a transit camp in Italy about a fortnight after capture and received 1/4 of a Red Cross food parcel each a week later. At once exchanges, already established, multiplied in volume. Starting with simple direct barter, such as a non-smoker giving a smoker friend his cigarette issue in exchange for a chocolate ration, more complex exchanges soon became an accepted custom. Stories circulated of a priest who started off round the camp with a tin of cheese and five cigarettes and returned to his bed with a complete parcel in addition to his original cheese and cigarettes...

It's a bit of a puzzle how can a priest, presumably an honest agent, engage in trade and end up with more of not just one good by trading for it and accepting less of something else, but more of everything. That means everyone else, en masse, must have less. How did he manage it through voluntary exchange. In fact, he managed to make everyone he traded with better off...

Within a week or two, as the volume of trade grew, rough scales of exchange values came into existence. Sikhs, who had at first exchanged tinned beef for practically any other foodstuff, began to insist on jam and margarine. It was realized that a tin of jam was worth 1/2 lb. of margarine plus something else; that a cigarette issue was worth several chocolates issues, and a tin of diced carrots was worth practically nothing. … the cigarette became the de facto unit of exchange due to its fungibility and divisibility … – Munger on Middlemen

Discussion

The funding agent+ acts as a middleman. He or she stands between buyers and sellers of investments. Often products are complex (e.g., medical care) and transactions won’t happen without the intervention of a trusted intermediary (e.g., insurance firms). The role of the middleman, as an individual who does this for a living, is to understand the needs of buyers and the capabilities of sellers, and to broker the transaction so both parties view the completed transaction as beneficial.

Our funding agent must be seen as a trusted middleman between buyers and sellers of unpredictable R&D+. Buyers don’t understand or like unpredictability. Sellers need predictable sources of funds.

The middleman does whatever it takes to make the buy-sell transaction happen. They only profit when the transaction is completed. It is often the case where the middleman stands in the role of buyer or seller for an interim period. Or, the middleman lines up intermediate buyers and sellers, with the promise of rewarding these intermediates for their participation.1

Our funding agent must package unpredictable R&D into an investment bundle (the perpetual pool) that can be viewed as predictable by buyers. We ‘make a market’ in this bundle as needed. Our funding agent must convince owners of intellectual property+ to do whatever it takes to make their product more attractive to buyers. We commit to them for funding for the duration, and in return they commit to staying the duration to achieve repeated commercial success within our funding agent umbrella, providing windfall distributions back to our investors.

Doing whatever it takes often means being able to complete complex transactions. These are transactions involving multiple parties. It’s not just matching A with B. It’s often a case of matching A with B with C with D, as illustrated by our POW priest. The funding agent must build and maintain a comprehensive portrait of the buying and selling landscape. Each player in every transaction needs to be able to win. And this works across time. We continuously involve non-participants in today’s transactions, to increase the likelihood of their participation in future transactions.

Our investment algorithm+ is forward looking, and calculates optimal levels of fund share prices, investor rewards, windfall distributions, imputed share prices, investor retention+ efforts, derivative investment levels, and many other financial measures of growth, reliability, robustness and security. Many players with many diverse risk profiles and investment needs are built into our algorithm. (here) The numbers work, in that all players benefit, though no one outrageously.

Complex transactions often include a financing step (our cigarette). The fact that a participant at the moment does not have funding should not in itself stop a buy-sell transaction. The middleman often arranges financing that allows transactions to happen. Financing is often viewed as integral to a seamless product offering pulled together by the middleman.

We provide diverse arrangements of investment assets to attract diverse profiles of investors: perpetual fund+, derivative investment vehicles+, and retained windfalls+. Windfalls are used to stabilize perpetual fund share pricing and to reward investors in derivative investment vehicles. Perpetual fund money is used to fund investments up to their first windfalls. Derivative investment vehicles fill short-term gaps in funding in the perpetual fund or in reinvestment of windfalls. All investors have the full financial backing of the funding agent behind their particular investment. You invest into a particular asset, but your protection is comprehensive.

Our middleman routinely executes complex transactions in order to be there when exceptional transactions happen. Exceptional transactions are those where only a select, prepared few dare to participate, with the promise of exceptional benefits. Exceptional transactions are remembered by investors and owners of intellectual property. They build loyalty and long-term commitment of buyers and sellers in the face of competition during ‘unexceptional’ times. Our middleman builds up on-going relationships with customers during ‘unexceptional’ times as evidence he or she should be trusted during those times when trust is of the essence.

Our strength as a funding agent comes from our expertise in dealing with the unexpected: the unpredictable. It’s the basis of our entire financial operation. Investors and owners of investments get to know us from our work during unexceptional times. But it's our performance during downturns in the economy that allow us to demonstrate why these parties should join and stay with us for the duration.

The middleman discussion highlights the importance for the funding agent to grow and protect his or her reputation as an essential ingredient for making buy-sell transactions happen. Guarantees and assurances from the funding agent often are the deciding factor for buyers to buy and sellers to do whatever they must in order to sell. People pay premium prices for brands perceived as scarce – for a reputation not readily reproduced. This is the goal of the middleman.

We build a brand and we must live by the brand. As funding agent we often deal with investor’s life savings and researcher’s livelihoods. In Franchise Capital Management+ we create a new scrip, the i-share+, upon which the valuation of the entire firm rests. The value of scrip, a promissory note, only comes from the practices, institutions and reputation of its issuer (“In God We Trust”). Predictable funding comes from a predictable reputation for the funding agent.


Editor's Picks for April, 2011

  • 1. The American Lutheran Church' pension, for example, received a $750,000 commitment fee for agreeing to be a buyer-in-waiting of 10 million dollars of bonds, without putting up any money. These pledges which Milken lined up allowed Drexel [Milken’s company] to provide raiders with a letter stating it was "highly confident" the financing could be arranged. – The Secret World of Mike Milken
Further Reading
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