ATEL Growth Capital Fund 8, LLC. Financing Tomorrow s Technologies... Today

Transcription

1 ATEL Growth Capital Fund 8, LLC Financing Tomorrow s Technologies... Today

2 RISK FACTORS Investors are encouraged to carefully read the Prospectus for ATEL Growth Capital Fund 8, LLC which has been provided in conjunction with this brochure. This brochure constitutes neither an offer to sell, nor a solicitation of an offer to buy the securities described herein. The offering is made only by means of the Prospectus delivered prior to, or at the time of, this presentation. INVESTORS ARE ADVISED THAT THERE ARE SIGNIFICANT RISKS ASSOCIATED WITH AN INVESTMENT IN THE FUND, INCLUDING: The Fund will primarily provide financing for privately held venture capital financed companies, many of which may not have yet achieved profitability, and such investments are expected to involve greater risks of customer default than investments involving companies with proven records of profitability and more established credit Most of the Fund s distributions will be, and most of the prior ATEL programs distributions have been, a return of capital and not a return on capital Uncertainties in the finance industry, including economic recession and changes in general economic conditions, fluctuations in demand for its financing transactions, and interest rates may result, and in certain past ATEL programs have resulted, in delays in investment and reinvestment, delays in and disposition of assets, and reduced returns on invested capital The Fund s performance is subject to risks relating to defaults by its customers No market exists for the Units or is expected to develop, the Fund s Operating Agreement includes significant restrictions on the transferability of Units, and an investor may be unable to sell his Units or able to sell the Units only at a significant discount Initially, the Fund may be considered a blind pool because it is a newly formed entity with no prior operating history, and, except as may be set forth in a supplement to this Prospectus, the Fund has not specified any of its investments or customers, so that investors cannot evaluate the risks or potential returns from such investments Investors must rely on the Manager to manage the Fund and investors will have limited voting rights under the Fund s Operating Agreement The Fund will pay the Manager and its affiliated companies substantial fees The Manager will be subject to certain conflicts of interest If the Fund receives only the minimum capital, it will be more difficult to diversify its investment portfolio and any single investment transaction will have a greater impact on its potential profits The Fund does not guarantee its distributions or the return of investors capital The Fund cannot assume that its value assumptions will be accurate or that its assets will retain their value

3 A MESSAGE TO OUR INVESTORS We are excited to introduce ATEL Growth Capital Fund 8, LLC a publicly offered SEC registered program which provides secured loans to top quality venture-backed emerging growth companies. The program sponsor, ATEL Capital Group, founded in 1977, is an international financial services firm that provides lease financing to investment-grade credit companies and other secured loans to emerging growth companies. ATEL Capital Group has sponsored 14 public equipment leasing funds which have purchased over $2 billion of equipment leased to major corporations. Since 1999, our 7 prior growth capital funds have provided over $250 million of financing to venture backed emerging growth companies. ATEL has over 46,000 investors who have participated in our public equipment leasing and growth capital programs. Our team of acquisition and asset management professionals work with emerging technology companies in hardware and peripheral devices, internet products, life sciences, software, and clean technologies to provide the capital needed to grow and expand their businesses. Our growth capital transactions come from both direct originations with venture backed companies and from referrals through long-standing relationships we have developed with top-tier venture capital firms. Growth Capital 8 provides an investment class that is generally only available to institutional investors or very high net worth individuals. The Fund will be one of the only direct placement products of its kind and is unique in that it combines the features of debt and equity. In addition to earning an attractive rate of interest on our growth capital loans, we negotiate to obtain warrants on the stock of our borrowers. The warrants provide the opportunity for economic appreciation if the company is purchased or goes public in an initial public offering. To date, 33% of our growth capital portfolio has experienced such a liquidity event. ATEL Growth Capital 8 is available to you through an extensive network of high quality financial planning professionals encompassing many of the best known broker/dealers in America. We hope that the information that follows in this brochure and the prospectus will give you an understanding of how growth capital loans work, when combined with our seasoned fund management and depth of experience, creates a truly unique investment opportunity. We invite you to review this information with your financial advisor and we look forward to helping you reach your financial goals. Yours Truly, DEAN CASH PRESIDENT & CHIEF EXECUTIVE OFFICER ATEL CAPITAL GROUP

4 OPPORTUNITY Growth Capital 8 ATEL s Growth Capital 8 will provide primarily short term, high-rate secured loans with potential equity upside to promising pre-ipo companies. Our objective is to make loans to top venture-backed emerging growth companies in hardware and peripheral devices, internet, life sciences, software and clean technologies. In conjunction with these loans, the Fund will negotiate to receive warrants from the borrower that are convertible to common stock in the event of an IPO or sale of the company. In certain cases, the Fund may also seek to receive the right to invest in current or future rounds of equity. Opportunity - Growth Capital 8 Features High cash flow objective Regular distributions, paid monthly or quarterly, during the funding and operating periods; must distribute 11% per annum prior to reinvestment of cash flow* Combines the reduced risk of secured debt with the potential upside of equity Opportunity to acquire equity in emerging growth companies at pre-ipo prices An asset class that will further diversify an investor s portfolio of stocks, bonds and other investment assets Does not expect to generate Unrelated Business Taxable Income (UBTI) * The Fund s objective is to select and structure investments that will generate sufficient net cash flow to permit regular cash distributions and, potentially, subject to the Fund making prior distributions for the year of at least 11% of capital, reinvestment of additional cash flow through its funding and operational periods The Importance of Asset Allocation Owning a diversified investment portfolio across several asset classes is a proven investment strategy. Asset allocation has been shown to be one of the most important factors in determining an investment portfolio s performance. According to one independent study, more than 90% of a portfolio s performance is contingent upon the way its assets are allocated. However, it is imperative to note that no single investment category can continuously remain the best and no one can predict the top-performing asset class of the future.* * Source: Ibbotson Associates, Inc. Note that diversification and asset allocation do not guarantee a profit or eliminate the risk of principal loss 2

5 More than 46,000 Investors have Participated in ATEL s Prior Public & Private Programs ATEL partners with top-tier venture capital firms to provide secured asset acquisition and other loans to the most promising companies of tomorrow today. The venture equity firms represented above are firms that prior ATEL Growth Capital funds have worked with, however, there is no assurance that future ATEL funds will work with these firms. 3

6 OPPORTUNITY Growth Capital 8 ATEL Growth Capital Funds are one of the only direct participation programs that allow individual investors to participate in the growth capital market. As described earlier, the growth capital market provides secured higher-rate debt with an equity upside to a diversified portfolio of pre-ipo companies. Our management team has over 20 years experience as an asset backed financing lender and has originated a growth capital portfolio in excess of $250 million. ATEL s reputation and relationships within the venture community have provided our Funds the ability to invest quickly, wisely, and profitably. These dynamic factors have helped the Funds to diversify across a wide range of technology-driven companies. Opportunity - ATEL s Diversification by Industry for Prior Programs* 7% 16% Hardware & Peripheral 22% 22% Internet Products Life Sciences Software 34% Clean Technologies *Source: ATEL Capital Group - This chart represents the historical ATEL Ventures and Growth portfolio. However, past performance is no guarantee of future results. 4

7 ATEL has financed over $2 billion of equipment and working capital loans with more than 1,000 customers and more than 3,000 contracts ATEL s experience, rigorous due diligence, and extensive credit expertise have resulted in a loan loss rate of less than 2% over our growth capital loan portfolio. The Fund s portfolio of loans are often secured by the borrowers assets and are senior to other lenders and shareholders, which further contributes to our low loan loss experience. ATEL s Prior Originations and Losses ($MM)* * * As of March 31, Total Amount Funded Total Receivables Unrecovered Amount Funded *Source: ATEL Capital Group - This chart represents the historical ATEL Ventures and Growth portfolio. However, past performance is no guarantee of future results. 5

8 FUND FACTS Growth Capital 8 More than 46,000 investors have participated in ATEL s prior public and private Funds. ATEL Growth Capital 8 is based in the San Francisco Bay Area where the largest amount of U.S. venture equity is invested. Venture Equity Investments By Region RANK REGION VENTURE EQUITY INVESTMENTS (FOR CALENDAR 2011) NUMBER OF DEALS 1 San Francisco Bay Area (Silicon Valley) $11,253,000,000 1,095 2 New England $2,978,000, New York Metro $2,770,000, Los Angeles/ Orange County $1,879,000, *Source: The 2011 Money Tree Report by PricewaterhouseCoopers LLP, National Venture Capital Association and based on data from Thomson Reuters 6

9 ATEL Growth Capital 8 combines the reduced risk of secured debt with the upside potential of equity ATEL Growth Capital 8 - Fund Life Cycle Funding Period Operating and Reinvestment Period Liquidation Period 2 Years 6 Years 2-3 Years Funding Period: Units are only sold during the offering period ATEL has 12 months to invest it after the offering is terminated Investment dollars are used to provide equipment and venture financing Investors are extremely limited in their ability to sell units during the life of the Fund Cash distributions are expected to begin immediately after minimum funding and are expected to be paid monthly or quarterly Operating and Reinvestment Period: Equity raised during the offering period and, if available, excess operating revenues, may be used to make additional investments in portfolio assets Cash distributions are expected to be paid monthly or quarterly and are largely tax deferred The investment portfolio is actively managed throughout the life of the Fund Liquidation Period: Liquidation period is expected to last around 2+ years Investments will be liquidated at maturity or sold in an orderly manner Distributions are paid periodically to investors and the amount will fluctuate 7

10 MARKETPLACE What is Growth Capital? The practice of lending to pre-ipo companies is commonly referred to as venture debt or growth capital financing. Growth capital allows emerging companies to grow their businesses with less equity dilution. Growth capital enables venture-backed companies to leverage fixed assets and their enterprise value to get more utility out of each equity dollar. Like our prior growth capital funds, Growth Capital Fund 8 will provide emerging growth companies with financing that can assist in product development, expansion, acquisition of complementary technologies, or other operational imperatives. ATEL works closely with the venture capital community to identify promising private companies looking to add buying power to their capital structure. The key differences between growth capital and venture capital are: ATEL Growth Capital 8 Objectives Provide short-term, secured Equity upside - warrants loans to pre-ipo companies with Low default rate existing top-tier Venture Capital backing High interest rates on short term loans Venture Capitalist s Objectives Provide funding in exchange for equity (creates dilution of shareholders) High risk portfolio strategy Typically have a 5 to 10 year funding commitment to portfolio companies 8

11 ATEL works with top-tier venture capital firms to provide secured loans to the most promising companies of tomorrow today Growth Capital in the Marketplace Recent events in the capital markets have moved rapidly to change the economic landscape. Wall Street has experienced unprecedented change and even the strongest pre-ipo companies have had difficulty obtaining financing from traditional sources. Throughout this turmoil, ATEL has continued to operate efficiently to fund top quality venture backed companies. In fact, we believe our Funds have benefited from more favorable transaction terms as we were able to take advantage of liquidity problems faced by many of our competitors beginning in U.S. Venture Capital Raised and Invested ( ) The 2011 $10 Billion funding gap (illustrated in the chart below) creates an opportunity for Growth Capital 8 to provide loans which would narrow the difference between equity raised and venture fundings. $35.0 $30.0 $25.0 U.S. $ Billions $20.0 $15.0 $10.0 $5.0 $0.0 -$5.0 -$10.0 } $10 Billion Funding Gap -$ VC Funds Raised VC Funds Invested Excess (Deficit) of VC Funds: Raised Over Invested) * Source: Data compiled from National Venture Capital Association Fundraising Reports through September 30,

12 EXPERIENCE ATEL Capital Group Since 1977, ATEL has specialized in financing equipment to a wide cross-section of corporations in the U.S. and abroad. For over 35 years, we have worked with over 46,000 investors, financed over $2 billion of equipment and working capital loans with more than 1,000 customers and more than 3,000 contracts. ATEL s management team is comprised of highly skilled and knowledgeable professionals averaging over 30 years of equipment finance and 20 years of growth capital finance experience. Dean Cash, President & CEO of ATEL Capital Group has led ATEL for over 32 years. In 2012, ATEL celebrated 35 years in business. The longevity of our experienced and stable management team helps ATEL realize its goals and objectives. Why Companies Borrow from ATEL 35 Years Experience Seasoned Management Growth Capital Equipment Leasing Robust Infrastructure Founded in 1977, ATEL is one of the largest independent finance companies in the U.S. focusing on both large ticket equipment leasing and venture debt financing in the U.S. and abroad 17 years average tenure with ATEL and over 30 years of equipment finance and 20 years of growth capital experience ATEL Growth Capital has funded over $250 million in secured financing to 85+ emerging growth companies The ATEL leasing Funds have originated and financed over $2 billion of equipment acquisitions ATEL currently has 80 professionals headquartered in San Francisco with offices in Denver and relationship managers nationwide 10

13 ATEL Growth Capital 8 Objective: Provide shortterm, secured loans to pre-ipo companies with top-tier Venture Capital funding ATEL Prior Program Growth Capital Portfolio Companies The companies identified below represent prior ATEL program borrowers and financing customers. While representative of the types of companies the Fund expects to finance, investors in Growth Capital 8 will have no interest in these prior transactions and there can be no assurance as to the identity of its customers. Hardware & Peripheral Internet Products Life Sciences Software Clean Technologies IPO or Acquisition/Liquidity Event 11

14 ATEL Growth Capital 8

15 HOW TO INVEST ATEL Growth Capital 8 Owning a diversified investment portfolio across several asset classes is a proven investment strategy. However, it is imperative to note that no single investment category can continuously remain the best and no one can predict the top-performing asset class of the future. Your financial advisor can help identify a variety of opportunities designed to meet your personal investment goals. Utilizing asset allocation techniques, you and your advisor can select a well-diversified portfolio designed to maximize return and minimize risk. Institutional investors are the primary lenders to venture backed companies. This investment is also available to individual investors only through a program such as Growth Capital 8, which can be purchased exclusively through our extensive national network of financial planning professionals. We are pleased to invite you to invest in ATEL Growth Capital 8, LLC. Participation in the Fund offers the potential for regular cash distributions, diversification and equity upside.* We Look Forward to Welcoming you to the ATEL Family of Funds. Please review the enclosed Prospectus for complete details. When you are ready to finalize your investment: Complete the subscription agreement, initial, and sign where indicated Make your check payable/funds transfer according to the subscription documents Your financial consultant will fill out Section 7, and confirm your address before mailing in your completed subscription As a complimentary service, your distribution checks can be directed to multiple accounts and investment plans. We encourage you to take advantage of this opportunity to help further diversify your investment portfolio. ** These are Growth Capital 8 s objectives. There can be no assurance as to the timing or amount of distributions.

16 The Transamerica Pyramid 600 Montgomery Street, 9th Floor San Francisco, CA t f Date of Initial Use: August 20, 2012