How to Obtain Superior Returns: Top 10 Reasons to Invest with Archimedes’ Offspring
Are you a non-accredited investor? Are “superior returns” the holy grail that you’ve been seeking? This article will show you how.
The Non-Accredited Investor and the Independent Inventor: the Value Proposition Presented by Connecting the Two
Innovation and the inventing process, along with the inventors themselves, have been the key ingredients in driving the growth of the American economy over the past two hundred years. They are a vital component of the U.S. competitive arsenal.
And investments in true innovation have always provided superior returns for the average investor whose been lucky enough to get onboard at the earliest possible stage, i.e., when the inventor first conceives of their idea .
Who are these non-accredited investors about whom we speak? Those decent, hard-working, ordinary Joe’s and Jane’s for whom investing is often a daunting and anxiety-provoking process.
It’s the recognition of these two inescapable facts that has served as the impetus for the creation of Archimedes’ Offspring (AOS).
At AOS we believe it’s time to encourage and support those innovative people who are dedicated to the inventing process and who have always driven the American economy. At the same time, as a society we need to provide superior returns to those investors who have been traditionally left out of the innovation process. To those folks who prove themselves insightful enough to recognize a “good deal” when they see one.
What We Believe
We believe that by supporting both the inventors and their investors in a controlled, monitored and nurturing environment, we can unleash the huge potential for innovation currently laying dormant in America.
By doing so, we can make a significant contribution in helping to revitalize the U.S.’s economy, while providing investment returns that make the returns from more traditional investments, like 401(k)’s, savings accounts, money market funds and bank CD’s, seem pale in comparison.
In addition, by providing the valuable resources that AOS will provide to these inventors in the form of mentorship and support during the inventing process, along with the funding to make such process possible, AOS will be able to deliver superior returns to the ordinary investors in the AOS Invention Investment funds.
What Our Experience Has Taught Us
Along the above lines, a central tenet of the Archimedes’ Offspring business is the need for professional expertise in order for the inventing process to proceed in an efficient and cost-effective manner.
In the case of inventing, having professionals in the inventing support business onboard, with real expertise, who can evaluate new concepts (whether those concepts involve landing on the moon, designing and manufacturing a new fighter jet, or even making investments in the venture capital or private equity markets), is always a good thing and a very smart move.
And, while the mere involvement of an experienced professional in a process won’t, by itself, assure a positive outcome, when present, that professional significantly helps to increase the chances for success.
When you couple that expertise and professional diligence with the additional industry and financial resources needed to bring an idea to fruition, the chances for success increase exponentially and the failure rate plummets.
It’s this approach that drives the business model undergirding the Archimedes’ Offspring project.
Once you apply a team of extremely experienced, reputable and honest service provider professionals (consisting of experts in patent and product searching; patent evaluation; preparation and prosecution of patent applications; prototyping and design engineering; short-run manufacturing; and trade show attendance and marketing) to the process and, then, cap it with a vetting system that ensures product industry participation in the final decision-making, the picture (and the chances for success) looks very different.
Our Central Premise
This is the central premise of the Archimedes’ Offspring business model: that honest and reputable professional expertise, coupled with committed and diligent mentorship and supervision and sufficient funds to see the project to completion, will increase the success rate by several orders of magnitude, resulting, not only in a greatly improved success rate, but a success rate with a much greater return, not only for the inventor, but for whomever invests alongside that inventor.
Here are Those Top 10 Reasons ….
Consistent with the above, here’s some of the major reasons why investing with one or more of the Archimedes’ Offspring Invention Investment Families instead of existing speculative, or even traditional, investments, makes eminent sense and will provide superior returns for the average investor:
1. Lower risk profile
The money is invested in “lesser-risk” (i.e., maximum investment per investment target is limited to $75,000) inventions, versus “higher-risk” (i.e., downside, potentially, the loss of several million dollars per investment target) startups. This goes a long way to ensuring that the the investments will be able to produce superior returns for the AOS investors.
2. Direct, partial ownership of extraordinary inventions themselves, not indirect ownership represented by investments in company stock.
Investments made in inventions is for something “concrete” i.e., partial ownership acquisition (% subject to negotiation) of title to an invention and its related intellectual property, not securities in a startup company
3. Previously-approved investment amounts are prudently disbursed based on identifiable milestones being met during the invention development process
Maximum capital invested in any single invention – $75,000, invested in three separate tranches – for each tranche for which investment is approved, an additional % of ownership in the invention is surrendered (projected aggregate average: 20%)
4. Strict adherence by AOS and the Inventor to previously-specified types of permissible invention exits assures investors of an above average return
At the outset of the investment, the inventor must agree to exit through licensing or outright sale of the intellectual property to a third party.
In the alternative, the inventor is permitted to (i) repay the amount invested by AOS, with interest at a rate negotiated at the time the “bridge loan” is made (i.e., 20% per annum or above).
Lastly, the inventor may come back to AOS if the invention is “one in a million” and the inventor is seeking permission to create a company to commercialize the invention by seeking private funding (other than from AOS) to grow it.
In such a case, the inventor must “buy back” their invention and the related IP rights at a price to be determined at the time of “buy back” based on the valuation of the idea or invention existent at the time of such buy back, determined by a professional appraisal and reaching a mutually-satisfactory “buy-back” agreement with AOS.
5. Investors have complete control over future executive cash compensation.
Under the terms of the Management Contract, investment managers (which includes all senior-level staff positions) will get reasonable, but modest, compensation (payable by AOS Management, Inc., but subject to reimbursement by the IIFs acting on a joint and several basis), of up to, but no more than, $5,000 per month per individual. In the beginning, many of the members of the management team will be earning monthly compensation at considerably below the top $5,000 level.
Going forward, that monthly compensation is permanently capped at that level, subject to increase only in the event of a vote to increase that amount which is favored by at least 51% of all of the shareholders of all of the IIFs voting, collectively, as a single class. It is anticipated that, initially, there will be 6 such positions, but in any event, not more than 10 positions at any point in time.
6. Initial investors receive a substantial preference over any payout to management arising out of increases in the funds’ net asset values.
Under the terms of the Management Contract AOSM will receive nineteen percent (19%) of each IIF’s outstanding capital in the form of shares of Series B Preferred Stock.
Such stock will possess an anti-dilution preference, but will otherwise be subject to a liquidation preference in favor of the Series A Preferred Stock described below.
In every initial securities offering by an IIF, the investors in such initial offering (which, in every case, will be a Series A Preferred Stock offering), will receive one hundred percent (100%) of their capital back prior to any distribution to the investment managers or the remaining shareholders.
AOS intends that all shares of Series A Preferred Stock will be owned by the investors in an IFF’s initial securities offering, which AOS believes will consist of members of the general investing public.
7. Investors need only invest in those inventions and industries they favor.
Managers help manage (subject to approval by an IIF’s Board of Directors) the IIF’s investments. Each IIF is dedicated to a specific industry or, for larger industries, industry segment.
8. AOS’s Investment-based crowdfunding model enables each of the funds to easily raise additional capital as new opportunities present themselves.
Money is raised from general public through innovative use of new Federal Title III and Title IV “public offerings” under the JOBS Act. Under this regime, if need be, each of the IIFs can raise capital (i.e., do an “offering”) every 12 calendar monthsand, under extraordinary circumstances, as often as every 6 months.
9. AOS’s IIF’s are “no load” funds”; no additional fees are ever charged.
In the case of each IIF, the fund it represents is a “no load” fund. There are no additional fees.
However, AOSM will be entitled to receive reimbursement of moderate, reasonable and necessary business expenses incurred by AOSM on behalf of the IIFs (i) in the running and maintaining of the IIFs’ businesses on a day-to-day basis, and (ii) for capital expenditures incurred to support and improve the combined organization’s business operations.
10. The prospect of superior returns for the average investor
Given the smaller, maximum amount of money invested (i.e., $75,000) per investment opportunity, AOS represents, potentially, a tremendous opportunity for a greatly enhanced rate of return at a much lower risk profile (than, say, speculative securities or venture capital-funded portfolio companies).
The Bottom Line
To put it simply, in the opinion of Archimedes’ Offspring and its designee, AOS Management, Inc., the invention portfolio pool is much more favorable than either traditional investments or even other speculative alternative investments since with the AOS invention portfolio pool risk is spread over many, many more investments. Thus, the diversification it presents is far greater than is possible under, say, the venture capital model, where the average venture capital fund cannot invest in more than 30 portfolio companies per fund raised.
We believe that investments in Archimedes’ Offspring-sponsored Invention Investment Families will prove to be, over the longer-term, a superior investment over both traditional and speculative alternative investments and will, ultimately, produce superior returns for the average investor. We’re excited to bring this brand new, innovative concept to investing within the next few months.
Stay tuned to learn more about Archimedes’ Offspring-sponsored opportunities to be offered in the near future.
Ray Burrasca is the Executive Vice President and Chief Operating Officer of Archimedes’ Offspring, an unincorporated “umbrella” organization whose mission is to make “reasonable returns investing” affordable for ordinary Joe’s and Jane’s and, in the process, to reinvent innovation in America. He can be reached at ray@archimedesoffspring.com or by phone at (303) 910-2344.
