Around a year ago, I took a close look here on the blog at AIM quoted Frontier IP (FIPP) which invests in a portfolio of novel technology focused businesses.
Without undertaking a rerun on the mechanics of the FIPP business model and strategy, anyone that is unfamiliar with the company can glean more from my previous piece here. (https://martinflitton1.wixsite.com/privatepunter/post/frontier-ip-looking-to-break-the-boundaries-01-03-23) This came about after my catching up with the CEO Neil Crabb.
Thus far, my investment in FIPP is somewhat under water, the shares then at 67p now considerably lower at a depressed 41p.
Despite the disappointing performance on the share price front, the story here remains a potentially exciting and rewarding play, given that there are some extremely interesting companies where stakes are held.
These provide for potentially significant growth opportunities ahead and quite possibly seriously decent returns for FIPP.
One of the difficulties in valuing FIPP however, has been that the investments held, apart from one NASDAQ quoted stake are all private entities, so you can only rely on the stated NAV to the most recent update, where I do tend to factor in a degree of caution.
That said, the current NAV discount to the share price which is in excess of 40% looks anomalous, hence I have added to my position, not least, as there appear to be a few investments that are nearing key inflexion points.
With situations such as FIPP, whilst there is obviously a speculative element, just one major winner can prove transformational and highly rewarding and the team here has already provided a hint of this, via success with its investment in Exscientia.
That investment has now been completely exited, which in total delivered an astonishing net proceeds return of £14m over the period from an original cost that was less than £2,000.
Whilst there are a number of FIPP investments that are certainly worth revisiting, it is Cambridge based Pulsiv that I am going to focus on for now, not least, as it appears to be in a position where, with a highly disruptive technology the prospects of a massive global opportunity would seem real enough.
Sceptics rightly point to those that have trodden this path before, promising much, only to fall by the wayside, where in reality, substantial game changing winners in the making too often disappear without trace.
In the case of Pulsiv though, the company really does look set to make that all important step from a nurtured creation that transitioned from the embryonic stage to proof of functionality to a now full on commercialisation.
But what is Pulsiv exactly about and importantly what is the apparent unique USP on offer here, that could, with an 18% stake prove highly lucrative to FIPP over the next few years.
In brief, Pulsiv has both developed and importantly patented its technology that enables a unique conversion of AC to DC, thus providing an unrivalled and flat efficiency profile to significantly reduce overall power consumption in a range of applications.
Ultimately, this results in greatly improved efficiency, cost optimisation and perhaps most importantly, a reduction in energy consumption that could benefit billions of devices that are used every day.
To hear more on this and where the story is currently at, I have once again been fortunate enough to catch up with the Pulsiv CEO Darrel Kingham.
Kingham, a former ARM man where he spent some sixteen years in total, which embraced various aspects of that company’s growth journey, is clearly happy with his lot back in Cambridge.
He told me that he is loving every minute at Pulsiv, where in conjunction with other members of the team he is continuing to build on the roadmap.
An electrical engineer by training, but one that is equally comfortable with sales, Kingham’s experience since his appointment in 2021 has resulted in the assembling of what looks to be an increasingly impressive team.
This has also been boosted by input and support from FIPP and it is apparent that this CEO is very much living and breathing the business.
Given that Pulsiv is a private entity, there is no necessity for it to release news at any given time, so for the FIPP investor, it can be something of a waiting and guessing game in terms of visibility and potential value.
That said, news has been building from the Pulsiv camp and the most recent announcement makes for impressive reading, where it would appear to further open the door to significant market penetration and adoption of its tech.
The latest news concerns the Cambridge based business in conjunction with GaN leader Innoscience and magnetics expert Frenetic, which will see Pulsiv releasing both reference designs (blue prints) and assembled modules for USB-C applications that are at the forefront of the industry.
What Pulsiv is providing, through its patented technology on a chip, is a cost effective and industry leading energy efficient solution that is ripe for mass adoption.
Timing is of course the essence across the accelerating technology space, but with the forthcoming EU law requiring all devices to be compatible with a USB type-C charging port by Autumn of this year, then Pulsiv would appear to have arrived at the right time and looks to be in a sweet spot.
Indeed, after seemingly resisting a move to the USB-C charging port, even Apple has made that shift.
And, in terms of numbers in the USB-C space alone, it is perhaps worth looking at the sheer volumes out there in the market, which amounted to some 2.3bn USB-C in wall sockets and chargers during 2023 and which is forecast to increase exponentially to 19.5bn by 2033.
Kingham, despite apparent enthusiasm, I am pleased to say appears to fall into that cautious camp of not wanting to overplay the story, where there are no bold claims and predictions, which has pleasing tones of the under promise and overachieving strategy.
What he could tell me to date though, should provide for both reassurance and a continued and increasing optimism for FIPP investors, as he explained how things currently stand.
Speaking with him about where Pulsiv is now at and the latest news, the CEO commented, “It has taken time for us to get to where we are now, having put the infrastructure in place by going through the process of proof of concept to the validation and then securing deals with distributors.”
With that done, Kingham emphasised that the technology is not only proven and efficient, but has performed at the very top of expectations with some glowing endorsements from those that have been scrutinizing the product.
Significant distributional deals are already in place and the long-term strategy is to seriously disrupt the power electronics industry which should be boosted by ongoing regulatory pressure on reducing CO2 emissions.
With a rapid growth in the number of electronic devices permanently connected at any one time, the opportunity for adoption of Pulsiv’s offerings would seem to be enormous and one that doesn’t come around too often.
Kingham clearly has his feet on the ground though and says that given the sheer amount of devices around from laptops to power tools and phone chargers along with numerous others you could care to think of, then Pulsiv would only need to make a small in-road to achieve game changing numbers.
There is certainly no overplaying on the prospects ahead, with the company seemingly at a strategically key inflexion point, with plenty yet to be achieved.
In relation to the most recent news, Kingham commented, “it would be purely speculative to make any predictions about market penetration at this stage, but we want to become the new standard for USB-C and a number of other vertical applications.”
Further news following on from the release should emerge at the end of this month, which will provide for additional colour.
For now, Kingham reveals that they have advanced orders for the 65W USB-C modules in place ahead of the official launch and the team is aiming for significant volumes this year.
The company actually has two arms to its offering with OSMIUM focused on the aforementioned device market along with HORIZON that is concentrated on the solar energy markets.
The tech itself is embedded into a tiny chip that Kingham revealed to me, which in turn is then added to a small board that is subsequently inserted into the end application.
The chips are the key I am told, where Kingham also informed me that every precaution has been taken to prevent reverse engineering and cloning by would-be-competition.
And on that front, the CEO says that they have naturally undertaken their own tests and comparisons which sees Pulsiv coming out ahead of the game with a superior offering.
As many will undoubtedly be aware, technology moves fast, markets evolve at an increasingly breathtaking pace, which is something the CEO is clearly aware of, hence the focus now is very much on securing orders and remaining ahead of the game.
It has to be said though, that in my experience over the years, the drive of adoption and expansion requires significant sums of money, not least, as it underpins credibility with potential major customers.
Kingham acknowledges this and said there will be a couple more funding rounds, with the second of those likely to be significant and the largest to date, as the company looks to seize the opportunity of scale.
Whilst that development will be something else to watch out for, particularly if some new and well-known names buy into the story, no doubt FIPP investors will be more inclined to keep close tabs regarding news on industry adoption.
To that end, I suggest to Kingham that perhaps three years could be a reasonable timeframe for some really marked and identifiable progress to be delivered, although my assumption appears to be wide of the mark, as he said he hopes to demonstrate on this front a lot sooner than that.
Importantly, in order to drive ahead there is a clear and defined roadmap in place where the CEO said “both OSMIUM and HORIZON have been proven to work as advertised, so the focus is now on securing orders.”
As part of the pathway, Pulsiv has developed vertical solutions that will not only help to simplify the customer journey, but accelerate that of revenue too, with OEM’s playing a big part of that.
Aside Kingham, founder Dr Zaki Ahmed who created the company’s intellectual property portfolio remains a key part of the business, whilst former SharkNinja chief technical officer Dr Tim Moore is also playing a significant role as chief product officer.
Looking ahead, there should be further news throughout this year, which should provide for added insight into the progress and long term potential of Pulsiv and its groundbreaking technology.
Looking out on the horizon and from a FIPP investor perspective I asked Kingham as to what direction the company was likely to take as in an IPO or a Trade Sale.
The CEO says that they will keep all options open, but the focus for now is very much being on securing and growing revenues.
From a personal perspective, I feel it would be good to see Pulsiv, if things proceed as hoped for to go down the IPO route, although perhaps a US listing may be preferable given the current sentiment and lowly valuations across the UK market.
Equally though, a Trade Sale can prove beneficial at the right price and I have seen a few of those over the years which have been delivered at relatively early stages of a company’s growth cycle and at rewarding levels.
FIPP's stake is at present valued around the £9m mark which already equates to a substantial chunk of its £23m market cap.
Therefore, if the story at Pulsiv alone progresses as hoped for and envisaged by its board, one would expect FIPP’s shares to reverse the recent trend and that is without upside from the likes of Alusid which is mulling over an IPO this year.
I plan to continue following the Pulsiv story and hopefully catch up again with Darrel Kingham in due course as news flow gathers momentum.