Monthly Archives: February 2013

Why Investors Should Consider Private Equity – Part 1

What is one of the biggest reasons to go public? For the junior mining industry, it is to raise discovery and exploration capital. For other industries, it is a liquidity event and for more growth capital.

The following article was borrowed from a blog by Oreinc, a boutique merchant bank that provides research for companies, institutions, and investors in the junior commodities space. On September 11, 2012, when it was written the TSX Venture Index was $1,275. Today at February 17, 2013, the index was 7% lower at $1,186. Their thesis remains relevant. Here’s an excerpt from Oreinc’s and our views.

TSX Venture Index February 17, 2013

TSX Venture Index February 17, 2013

Oreinc:

I had a very interesting conversation with a senior market participant. I argued that in weak markets like the one we are currently in, I prefer to see companies shut down and reverted back into shells. I would like to see 20-30% of the junior companies shut down. He argued the market is so weak that if the exchange did not change the rules, some good companies would die alongside the bad companies.

Healthy Crowdfunder:

The market is indeed extremely weak given the unresolved financial issues in Europe and in the US. The memory of 2008 market crash remains vivid and the fundamental issues in Europe and in the US will remain unresolved until the deleveraging process has completed or we generate disruptive innovations making us all extremely productive.

Oreinc:

I agree that the market is completely shut down for many juniors, but we also have a significant number of private companies that could replace the sub-five cent players in the market. A good company should be able to do a $0.05 financing with a $0.075 warrant exercisable for two years.

Healthy Crowdfunder:

We are in a bearish market – the great recession. This is why at Healthy Crowdfunder we have decided to focus on health solutions. It is a necessity, in boom or bust times. Coupled with that, we have an ageing and not so healthy population who will only aggravate the rising health care costs, a major contributor to the fiscal cliff.  We will collaborate with those companies while they are private and work along with them until exit by M&A or a going public event.

Oreinc:

Weak companies spend 20-40% of their market caps in exchange fees, lawyer fees, and audit fees. There should be a point where the plug is pulled and the company is either restructured (a rollback) or put out of its misery (a delisting). A company with 150 million shares outstanding at $0.02-$0.03, no resource, and $250k-$500k per year of overhead needs to make changes.

If we let the weaker companies go out of business, we can put more focus on healthy companies. On the other hand, the stock exchange makes significant fees from zombie companies, so it will not give up its sugar rush with any speed.

Healthy Crowdfunder:

The way we manage our health and therefore, our impact on healthcare, needs to be rebooted. It is unsustainable. To catch up with rising healthcare costs, entrepreneurs and their management should be spending more time developing and accelerating the commercialization of their products, instead of being distracted by the capital raising process.

Investing in resource commodities is ideal when the global economy is growing. For now, investing in precious metals is the only logical strategy since global currencies are racing towards devaluation to be competitive. That is counterproductive. Competing countries should tighten their belt and produce products at lower costs with better quality and functionality.

At Healthy Crowdfunder we want to co-finance and co-develop predictive, preventive, and personalized health ventures. Now is the time to participate in such major undertaking. Read our blogs on why finance health.

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A Mini-Stroke Can Damage More Than the Brain (Why Finance Health Part 3)

woman in pain

People usually think about their health when they are already in pain, someone in the family has cancer, or suffered a heart attack, a stroke, or someone just died of some fatal illness.

This is the true story of two people very close to me. To protect the identity of this couple, we will call him Bob and his wife Margaret. Bob is a health junkie, lean muscular and looks twenty five years younger than his biological age. Nevertheless, he got hurt another way.

It all began in April 2001 when Margaret, his wife of many years suffered a brain attack called mini stroke – two years after he ventured into the health and wellness business. It marked the beginning of a long excruciating emotional and physical pain for his entire family. Shortly after Margaret’s debilitating stroke, she was diagnosed with hypertension, cataract and Type 2 diabetes. Ironically, their family had been running two successful health food businesses and Margaret was even a registered nurse. In fact, Bob said, he acquired the business to convert her into living a healthy lifestyle. Margaret had the privileged access to the products and professionals. Getting stroke at a young age should have been a wake up call. Instead, she continued to live the same way that led to her attack. Bob and his children tried to make her realize things would only worsen without changing her lifestyle – but to no avail.

Four years later in July 2005, Margaret’s system seized up. Her two kidneys shut down permanently. She had to undergo kidney dialysis four times a week. It was the only way to live; otherwise she would have died in a few days. Her obesity led to depression and a sicker mind. Her personal relationships kept falling apart including their marriage. Bob found it difficult to help a person who kept doing the same thing and expecting different results. Unlike her, he is always full of life and energy, capable of multi-tasking. Bob embraces life and everything about it. He said his wife had a death wish. He did everything he can. Unfortunately, the mini stroke might have damaged certain parts of her brain.

In December 2005, it was a good thing he went back home to check on his wife. Had he not reached her on time, Margaret was ready to kill herself, with a suicide note. Bob made a mistake. He tried to cure a sick mind. In Margaret’s case, she needed the true professionals.

In April 2006, he gave up and dropped the bomb and asked for divorce. She fought really hard to the British Columbia Supreme Court until mid-2007. The process included Bob’s bank accounts being frozen. So their creditors and suppliers became nervous as they were not getting paid on time. That led to inventory shortages and ultimately lost customers.

Fortunately in November 2007, she had a successful kidney transplant. It had kept her alive and returned to living a normal life. Unfortunately, her health battles have killed the family relationship as well as burned all their financial and material assets. Divorce

The medical system as we know it is dysfunctional. It is only profitable when people get sick or are already in pain. Unhealthy lifestyle destroys not only the sick person but as well as everything around that person. Healing a mentally sick person brought about by stroke is strictly for professionals only with the right technology.

It is people like my best friends Bob and Margaret who have inspired me to change healthcare. I am not a doctor nor a healer, but I have the power to assemble professional service providers. My mission is to prevent people from getting sick in the mind, in the first place. The brain attack damaged a part of Margaret’s brain. Western medicine was not enough to heal her. I believe in integrative and personalized medicine. I believe it is not too late to cure our sick healthcare system. We all have friends like Bob and Margaret and we can prevent the damages they went through. I believe that with Healthy Crowdfunder’s mission of co-financing and co-developing predictive, preventive, and personalized health, we will make this world a healthier and loving place.

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