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What can SoFla’s startup culture learn from the Theranos verdict? Experts weigh in

By David Lyons

January 8, 2021

As the fallen startup wunderkind Elizabeth Holmes awaits her sentencing for defrauding investors in her failed blood testing company, Theranos, what does the verdict the mean for venture capital investors in South Florida and elsewhere around the nation?

Holmes’s story is startling. She quit Stanford at 19, became a Silicon Valley executive and founded a blood-testing company that made unfulfilled promises of a technology that could revolutionize the industry. The firm was buttressed by the support of private and public sector titans including computer mogul Larry Ellison, former President Bill Clinton and media baron Rupert Murdoch. Former U.S. Secretaries of State George Shultz and Henry Kissinger sat on the Theranos board.

But in 2015, Shultz’s grandson, Tyler, a company employee, turned whistleblower and raised questions about the truth of Theranos’ claims and the Wall Street Journal launched an investigation.

Holmes last week was convicted in a California federal court of defrauding investors who sank millions into her company. She faces a maximum sentence of 20 years in prison, a fine of $250,000, plus restitution, for the conspiracy count and each of three counts of wire fraud.

The fallout, and South Florida

Post-verdict, commentators are divided on what the trial outcome means for the venture capital industry: Some insist the case was an exception rather than a sign of a flawed system that funnels billions into startups that seek to deliver new innovations to industries ranging from health care to transportation.

RELATED: Former Theranos CEO Elizabeth Holmes guilty of fraud and conspiracy »

Others believe it is symptomatic of a financial space where investors easily can be taken by “fake it until they make it” operators who offer more hype than results.

Meanwhile, South Florida has become a hotbed for startup culture, as more entrepreneurs relocate to the region from the Northeast, California and elsewhere, fueling a growing movement for entrepreneurs who need financing, mentoring and other support that will increase their odds of success.

The South Florida Sun Sentinel asked five experts familiar with the startup industry about the verdicts’ implications and how investors should proceed if they seek to join a burgeoning startup culture filled with both opportunities and risks.

They include:

  • James Cassel: investment banker, chairman and co-founder, Cassel Salpeter & Co., Miami.
  • Scott Jablonski: partner, business, finance and tax team, Berger Singerman, Fort Lauderdale.
  • Jeffrey Sonn: securities litigator, managing partner, Sonn Law Group PA, Aventura.
  • Siri Terjesen: associate dean and professor of entrepreneurship, Florida Atlantic University College of Business, Boca Raton.
  • Mark Volchek: founding partner, entrepreneur turned venture capitalist, Las Olas Venture Capital, Fort Lauderdale.

Impact on venture capital scene

Cassel: I don’t think this is a great “oh my gosh” moment that has come out that should shock people or change things drastically. There has been a very frothy situation with investors very quickly making decisions without maybe spending the time to do appropriate due diligence. And I think to a certain extent that’s what’s happened more in California than other places

Sonn: I think it’s a tip of the iceberg. I’m seeing in the last 10 years, and more so in the last five, the emergence of what we call fintech. Companies are raising small amounts from thousands and thousands of people. In the old days you would go out and raise money in large chunks. Now it’s more decentralized. We’re seeing more and more fraud out there in this type of platform.

RELATED: The SEC lowers the boom on Theranos — but there are more companies like Theranos out there »

Terjesen: I’m very glad this case is so public because people need to know, not only because there are liars and charlatans out there, but also because medical and biotechnology is an extremely risky business and not everyone does well.

Volchek: I’ve heard lots of people talk about focusing more on governance. There is no expectation that every company will be successful. I think they [investors] chalk it up to a loss and move on. I think they will say they will do more diligence. In this case there was so little oversight and so little governance. I was shocked when I saw the company was founded literally more than 15 years ago. This was a long drawn-out process of something that never worked.

How can investors avoid disaster?

Sonn: Obviously when it comes to a private deal, I think audited financial statements are key. People should not be afraid to ask. Number two, check the backgrounds of the principals. Find out if they have past bankruptcies, past tax liens, or past business failures.

You go to wherever the principals are and search the local courthouse websites to see what kind of litigation they’ve been involved in. When people invested with Elizabeth Holmes, how many of them paid attention to the fact she dropped out as a freshman from Stanford? How many paid attention to the fact she had no medical background?

Terjesen: When I look at this case, I feel like there is a halo effect happening such that once that [Holmes] got legitimacy from certain individuals and organizations, everyone else took her at her word.

RELATED: The Elizabeth Holmes story is not about the black and the blinks »

Naturally many people wanted to see a success story of a young smart woman in the medical space. Certainly, multiple people should have dug deeper and there wasn’t very effective governance. I hope it makes people more willing to do deeper due diligence in the future. I personally find it hard to attribute the lack of oversight to one particular individual, whether it was the chairman of the advisory board or the chief scientist.

Joblonski: Most venture capitalists I’ve worked with — if you think about the nature of what it is — it’s a higher risk investment that they expect to be illiquid for a while.

Professional investors in the venture space all do a basic level of due diligence because it’s high risk, because it’s illiquid, because it’s long-term and there is a great opportunity for an exit. The experienced venture investors … they have methods and they sort of get to know these founders and startups and emerging companies.

Volchek: We’re active. We get to know the management teams. We also do a lot of diligence up front. I think our diligence focuses on the founders. We certainly do background checks.

We spend a lot of time with individuals before making investments. We try to get to know folks. What I recommend to individuals is to invest in a fund, which is somewhat self-serving. People invest as a group rather than as individuals. It might be easy to fool one person, but it’s hard to fool 50 people in a room. I think it’s important to have lots of folks looking at something.

What startups should be doing

Joblonski: You don’t want to mislead investors, no matter at what stage of investment you are. That’s just the bottom line. The devil is in the details. It centers around the anti-fraud provisions of state and federal securities laws. The general advice is you don’t mislead. You should be as transparent as you can be. Investors want transparency, even if something isn’t rosy.

RELATED: Were you victimized by South Florida’s most depraved scams? »

Terjesen: At FAU in our classes we are absolutely teaching students how to speak transparently to investors and also how to consistently do due diligence in all parts of the business. We do that through classes and also having guest speakers who are successful entrepreneurs who have been there. And we can also use cases like this to show what happens when they don’t get this right.

What of South Florida’s future?

Joblonski: It’s exciting that our area geographically is seeing the volume of entrepreneurial activity in a variety of sectors that just don’t involve real estate funds. It is something that has been slow to move but has been taking off.

You’ve got a lot of people moving here. You’ve got sophisticated financial services people coming down in droves. You’ve always had the influx of diversified capital. Are we going to be Silicon Valley? No. Are we going to be Boston? No. Maybe we’re going to be our own brand of innovation locale. There is so much opportunity.

 

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Is the FDA’s Accelerated Approval of Molnupiravir Setting a Pharmaceutical Standard?

By Justin Honore

January 7, 2021

Ira Leiderman, Cassel Salpeter

In late December, the U.S. Food and Drug Administration approved Emergency Use Authorization of Pfizer’s Paxlovid, a pill to help treat COVID-19. The next day another pill, Merck’s Molnupiravir, was approved. This marked a big step in the fight against COVID-19, especially with these pills now available in several states. The pace at which these drugs were given the green light, though, is giving medical professionals questions and concerns. Will Molnupiravir’s and Paxlovid’s accelerated production set a new standard for pharmaceutical pill production, for better or for worse?

Dr. Kishor Wasan, Chief Medical & Scientific Officer at Skymount Medical U.S., has vast experience with drug development. He is an award-winning pharmaceutical scientist and he has published over 240 peer reviewed articles on lipid-based drug delivery and lipoprotein-drug interactions. Dr. Wasan says this accelerated approval and production isn’t a new process for the FDA or pharmaceutical researchers. So why is it drawing so much attention?

“It’s been around. The FDA is not actually skirting their processes: They’re just saying, ‘Hey, use this process.’ What is happening is this authorization is now being used a lot,” said Dr. Wasan. “The general public probably didn’t even know about it because it was probably only used in varying situations people probably didn’t know about.”

Since the initial vaccine was first made readily accessible to Americans, two variants have spread relentlessly, with the current dominant variant, Omicron, overwhelming hospitals. With these compounding factors at play, has there been a forced standard change for drug approval, one that will guide future authorization? Dr. J. Wes Ulm, a physician, medical researcher, and clinical genetics resident at the University of Pittsburgh Medical Center, who has a focus in translational medicine and has applied data-mining tools toward drug discovery and repositioning said, simply, “no.” However, according to Dr. Ulm, the FDA has been willing to shift aspects of its approval approach because of COVID’s public health urgency.

“It’s not only mortality from COVID 19 that’s been so high, but mortality from heart attacks, mortality and morbidity from strokes, from gallstones, from car accidents, from sports injuries, that’s gone up significantly because we just don’t have the staff to care for people,” said Dr. Ulm. “That’s the sort of public health emergency overwhelming hospitals that has led to a genuine rethink at the very least in the EUA process and even potentially for full approval or in the steps leading up to it.”

The key to enabling a fast-tracked approval process lies in Emergency Use Authorization that the FDA has at its disposal. Ira Leiderman, Managing Director at Cassel Salpeter and Company, said this emergency use authorization is one of many tools in the FDA’s tool belt. We asked him why, then, the FDA has been using this approach, and why it could be effective for these different forms of COVID-19 treatments.

“The FDA uses the data collected by the developers of the products looking at safety and efficacy from Phase 1 studies and ultimate efficacy from large Phase 3 studies to grant this emergency use authorization which will allow these companies to sell the products and at the same time allow them to continue collecting data and continue their filing process to get full product licensure,” said Leiderman. “This is not a cutback in quality, it is just the stop gap measure that is one of the tools the FDA has to expedite approval of products that are important and in need for public health purposes.”

At first glance it sounds like steps are being skipped when authorizing “emergency use,” but Dr. Wasan said the benefit risk analysis is heavily weighed. According to Dr. Wasan, all COVID treatments have had a limited number of patients because of the urgency of the decision, but as more data comes in, how the pill is prescribed could change. This limited data was one of the concerns in the Molnupiravir approval process which saw the FDA vote 13-10 in it’s initial recommendation.

“The initial data looked really great, it looked like it was really safe and that it seemed to have significant efficacy, but as they started to get more and more patients, they found that the efficacy actually started to go down and there were safety concerns,” said Dr. Wasan.

Moving forward Dr. Wasan can envision other cases where developers utilize already developed drugs and then modify them like they did for the COVID-19 pill as well as start the conversation with the FDA about the drug approval process before they present it to them.

 

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Homegrown EveryMundo acquired in $90M deal by publicly traded PROS

In so many ways, the fast-growing EveryMundo – even down to its name – reflects the #MiamiTech story

By Nancy Dahlberg
December 4th, 2021 

Homegrown #MiamiTech company EveryMundo, a pioneering leader in fare marketing technology for airlines, has been acquired by the publicly held PROS, a provider of SaaS solutions optimizing shopping and selling experiences.

PROS, based in Houston, will pay $80 million in cash at closing and deliver about $10 million in stock in the future, under terms of the transaction subject to customary conditions.

The good news for #MiamiTech: The EveryMundo team, including leadership, will continue to be based in Miami as part of PROS. EveryMundo plans to grow larger with airline customers, and already serves over 70 airlines globally including American, United, Japan Airlines and KLM. The deal will also help EveryMundo take its solution to other industries, as it started doing in recent months with Greyhound, Tennis Australia and others.

Since 2006, the fast-growing, bootstrapping EveryMundo, under co-founders Anton Diego and Seth Cassel, has helped brands maximize their digital reach and engagement with customers in any channel in the most flexible and profitable way – while creating a superior brand experience and brand loyalty. With its airline customers, this means being able to quickly publish offers on direct and indirect channels that can bring customers back to owned channels, avoiding the increasing fees charged per offer by Global Distribution Systems that limit reach and erode margin.

“Our company and technology were founded on this vision and dream to impact the market in truly innovative ways,” said Diego, EveryMundo’s CEO. “As part of the PROS family, our teams look forward to continuing this mission.”

What the deal brings to both sides

In an interview. PROS CEO Andres Reiner said digital fare marketing was a natural extension of PROS’ digital retail strategy. “For us the vision was always to bring together the marketing and the selling to give brands in our markets the right products to drive demand through their channels,”

Beyond great technology, “the quality of the people and the culture that [EveryMundo] built is really what attracted me the most,” Reiner continued. “They have similar value systems to what we have at PROS. It’s about caring about people and their growth opportunities and creating an environment where everyone can achieve their full potential.”

Cassel, EveryMundo’s president, explained that PROS is the world leader in revenue optimization for airlines, among other things, and that is enabling the airlines to identify the right price at the right moment. EveryMundo broadcasts that price out into the market, engaging the potential passenger with PROS technology for shopping. But PROS serves a wide range of industries outside of airlines where EveryMundo’s technologies could be key to driving more consumers to these brands, he said.

Brands have no choice but to be present everywhere their customer and prospects find themselves, regardless of channel, Reiner added. “With EveryMundo, our collective portfolio gives brands much greater control over direct and indirect channels they participate in to consistently deliver superior brand experiences.”

The EveryMundo co-founders were recently exploring raising private equity for the first time. Engaging in discussions with PROS led to the acquisition outcome that seemed far more compelling and transformational for both companies. “Particularly coming out of the challenges and difficulties that COVID thrust upon us, it just felt like an awesome opportunity to put the company on such a phenomenal acceleration track as part of a much bigger thing now,” Cassel said.

‘We are immigants’

In so many ways, EveryMundo – even down to its name – reflects the #MiamiTech story. CEO Diego was born in Moscow and raised in Havana and Spain before immigrating to the U.S. in high school. The majority of EveryMundo’s 75-member Miami team are immigrants. Powered by that grit and hustle mentality that is Miami, EveryMundo was able to bootstrap and be profitables nearly every year of its existence.

During the pandemic, the company mustered all of that grit and then some to survive, recover, and then thrive again, securing relief loans and quickly creating new products for airlines tailored to the pandemic realities.

It all paid off in a big way.

In 2021, EveryMundo’s worldwide team has grown from 100 to nearly 150 people now. 2021 has also been a banner year for the company’s new customer acquisition, as it added 30 more brands this year, up from 50 at the end of 2020. “We don’t see that trajectory letting up, and we predict 2022 revenue to essentially be a full return to our trajectory prior to COVID,” Cassel said.

The next chapter

When Cassel and Diego looked for financial advisors they considered their options but stayed all in the Miami family: Cassel Salpeter & Co. served as financial advisors to EveryMundo in the transaction, along with Baird, which specializes in the airline industry. Cassel’s father James is chairman and cofounder of Cassel Salpeter and brother Philip is the firm’s managing director. “Working with them was an absolute pleasure and was a nice byproduct of this process,” Seth Cassel said. “I would absolutely wholeheartedly recommend them to anyone who needs financial advisory services.”

Through the years, Cassel and Diego, both selected as global Endeavor Entrepreneurs in 2015, have expressed that they wanted to make EveryMundo a company that makes Miami proud. Mission accomplished, and their story continues with this new chapter. “We’re excited and we hope this is representative of more great things to come for homegrown Miami tech companies,” Cassel said.

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Miami digital marketing firm EveryMundo acquired in $90M deal

By Ashley Portero
November 30, 2021 

EveryMundo, a Miami company that develops marketing software for airlines, was acquired by Pros Holdings in a deal valued at $90 million.

The acquisition will enable EveryMundo to take the “next step” in its quest to elevate marketing and growth opportunities for airlines and other businessto-business organizations, said co-founder and president Seth Cassel.

“The cultural fit with PROS is what makes this combination so unique and compelling and why we will further transform the brand experiences all businesses deliver,” he added.

Under the terms of the transaction, Pros (NYSE: PRO), a software-as-a-service firm headquartered in Houston, paid $80 million in cash at closing and $10 million in future stock. Baird and Cassel Salpeter & Co. LLC served as financial advisers to EveryMundo in the transaction.

Founded in 2006, EveryMundo provides “fare marketing” technology to airlines – including American Airlines and Japan Airlines Vacations – designed to increase customer engagement and long-term brand loyalty. It also assists other travel-related and recreational brands like Greyhound and Tennis Australia, according to a news release. The company has more than 140 employees.

Pros uses artificial intelligence-powered SaaS to optimize online shopping interactions across several industries, including airlines, automative, consumer goods and health care. Its platform gathers data to understand buyer preferences and deliver personalized recommendations to buyers.

Pros CEO Andrew Reiner said acquiring EveryMundo will help all of its portfolio companies deliver superior online shopping experiences.

“Brands have no choice but to be present everywhere their customers and prospects find themselves,” he added. “But winning in today and tomorrow’s market will require brands to earn more direct engagement and deliver the experiences their customers value most.”

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Why New White House Dashboard Could— Or Can’t—Help Address The Supply Chain Crisis

By Edward Segal

November 10, 2021

The White House’s new supply chain dashboard is a twice monthly collection of metrics that tracks the progress of delayed imported goods at the ports of Los Angeles and Long Beach and in the economy at large. The true value of the dashboard remains to be seen, however, with the prospect that the measuring tool could have unintended consequences.

Thomas Goldsby is the Haslam Chair of Logistics at the University of Tennessee’s Master’s of Science in Supply Chain Management. He thought the new high-level metrics, “…are helpful first steps but they don’t do anything to save Santa in 2021. They will be helpful in 2024 and beyond but the actions needed now [to address the supply chain crisis] should’ve been taken years ago.”

Today at the Port of Baltimore, the White House said President Joe Biden will detail what his administration has already done to get supply chains moving to help lower prices, speed up deliveries and address shortages.

Improved Communication

Daniel Dreyfus is the global customs leader and executive director of consulting at Ernst & Young. He observed that, “The supply chain dashboard is a step in the right direction to improve communication between the public and private sector so they can work together more effectively to navigate ongoing supply chain challenges.

“Every supply chain is different, if not unique, and each movement is different for reasons that include the impacts of elements beyond anyone’s control, such as issues related to Covid-19 most recently, or something perennial like extreme weather,” he said.

“Having more transparency into the current state of broader supply chain issues may help global supply chain operators and logisticians plan for contingencies more effectively,” Dreyfus concluded.

Too Long Of A Lag Time

Ali Hasan Raza is the co-founder and CEO of ThroughPut Inc., an artificial intelligence supply chain platform. He noted that, “While having visibility from end-to-end may help identify problems, updating the dashboard every two weeks is too much of a lag to actually act on operations. In short, you won’t be able to manage any better, but at least you will be able to see what’s happening.

A Database For Consumers And Distributors

Carla Saunders, operations manager of Consumer’s Health Report, said the dashboard, “will ultimately serve as a database for the consumer and distributors so they can move accordingly and receive updates on major imports such as automobiles, electronics, and other supplies.

She speculated that other “platforms down the road could potentially provide the country with additional accurate data to avoid a country-wide financial crisis, considering that AI has shown promising results in analyzing, determining and preventing financial disasters- the same formula can be applied to other problems within the country.”

Not Much Useful Information

James Cassel, cofounder and chairman of Miami-based investment bank Cassel Salpeter & Co. He said the new White House supply chain dashboard “doesn’t yet provide much useful information to help address [the country’s] logistics bottleneck.

“The dashboard provides information about the problem, but it’s not information that can really help solve the problem. What needs to be provided is a way of addressing whether or not incoming shipments can be diverted to other ports, whether they have available capacity, and whether or not trucks can be diverted to more expeditiously bring in products and get them to their final destinations.”

Taking A Process View

Ravin Jesuthasan, global transformation leader at Mercer, noted that, “The dashboard is made up of three metrics that track the movement of product from when they get here, when they are unloaded and when they hit the stores. The dashboard is a great example of taking a process view of a problem and identifying indicators at the most critical pain points in the process.

“It would be too easy to focus on one metric (e.g., no. of ships at anchor) but that only tells you one part of the story. Organizations experiencing the pains of the widespread labor shortages would be advised to approach the problem with a similar set of process metrics so they can diagnose the key drivers of their specific workforce challenges.”

Will Not Solve Many Pressing Issues

Oren Zaslansky, CEO of Flock Freight, observed that, “While a dashboard will certainly shed some light on the ongoing supply chain challenges, it will not solve many of the more pressing issues that need to be addressed.

For example, trucks that are not utilizing all available space to move freight, thus increasing the need for additional trucks and drivers. If the government was more focused on filling trucks, without impacting dwell times and transit speed, there would be a more significant impact to supply chain management.”

Useful For Forecasting And Planning

Dwight Morgan is executive vice president of business development at M. Holland Company, an international thermoplastic resin distributor. He counseled that, “A central repository for supply chain statistical trends will be useful to help companies forecast and plan. However, it will be important that it not be a political exercise. It might be better for it to be sponsored by a nonpartisan entity rather than the White House.

“Given the dynamics of supply chain challenges and the likely duration, greater frequency [than every two weeks] for a longer period would be in order. In reality, there’s probably little the government can do to quickly alleviate many supply chain pressures, since they are driven by the pandemic and its asymmetrical impacts on the global economy.“

Provides Data That Companies Already Know

Abe Eshkenazi is the CEO at the Association for Supply Chain Management. He noted that, “While the new White House dashboard may provide good information, it’s likely data that companies already know.

“The necessary changes are at every step of the supply chain, data is just one critical aspect. There are simply not enough workers to manage the supply chain crisis, and until more people are hired and trained in supply chain roles, we cannot expect to see drastic improvements.”

A Weapon In Future Trade War Against China?

Michael Gravier is an expert in global supply chain management and a professor of marketing at Bryant University. He said, “the massive scale of evolution in our society and economy demand that we take action, or at least we study what’s happening.

“One fear is that the dashboard will also be used as a weapon in the cold war arsenal for a trade war against China. China will no doubt respond soon with a similar tool. Nobody has forgotten the importance of economics to the fall of the Soviet Union, and the bringing of China into the world trade order was a critical move in that long strategy,” he said.

“In the long run, the dashboard is a brilliant move. We are just at the beginning of understanding global supply chains and how they influence trade…this understanding will inform legislators and policy makers and guide the executive branch in its enforcement and oversight,” Gravier predicted.

What’s Needed Next

Supply chain engineer Barry Bradley noted that the White House dashboard shows the what—one source of truth for the scale of the problems in the U.S. supply chain. What’s needed now to fix the problems is a dashboard for the why—root causes of supply chain bottlenecks stopping goods from reaching their destinations. “With visibility into the why the action need is more clear and bottlenecks are more quickly removed, resulting in a safer, cheaper and more resilient supply chain,” he said.

 

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Boeing Faces New Challenges To Image, Reputation And Credibility

By Edward Segal

October 15, 2021

Boeing is facing two new challenges this week to its image, reputation and
credibility.

Federal Grand Jury Indictment

Yesterday CNN reported that a federal grand jury indicted a former key
executive of Boeing for fraud. They alleged “he deceived the Federal Aviation
Administration while it was first certifying the 737 Max jet that would go on to
have two fatal crashes caused by design flaws.”

“The charges were not against a top executive. Instead, they were against
Mark Forkner, 49, who was the chief technical pilot for Boeing during the
certification process for the jet and is accused of deceiving the FAA during that
process in 2016 and 2017.”

“Forkner’s attorney did not respond to a request for comment, and Boeing
declined to comment,” CNN said.

Improperly Made Dreamliner Parts

Boeing is confronting a different issue that involves another one of their
planes.

According to Reuters, the airplane manufacturer said that “some titanium 787
Dreamliner parts were improperly manufactured over the past three years,
the latest in a series of problems to plague the wide-body aircraft.”

The company said the quality issue does not affect the immediate safety of
flights, adding it had notified the Federal Aviation Administration. Boeing is
working to determine how many planes contain the defective part, Reuters
reported.

Boeing did not immediately respond to a request to comment for this article,
and there was no mention of the fraud charges or Dreamliner parts issue on
the company’s website.

Expect Increased Scrutiny

Dennis E. Sawan is a personal injury and insurance lawyer at Sawan & Sawan.
He observed that, “Given the callousness allegedly exhibited by Boeing with
respect to the [737 Max] we can expect that the company will face increasing
scrutiny from regulators, who will no doubt bring out the fine-tooth combs
when reviewing Boeing’s safety representations in the future.

“Moreover, companies that place profit over consumer safety have repeatedly
faced multi-million dollar punitive damage verdicts—and Boeing is unlikely to
escape this fate if the allegations in the fraud case prove to be true,” he
predicted.

“While Boeing remains a dominant force in commercial flight, airlines may be
increasingly wary of conducting business in the future —especially if it leads
them to incur additional and unexpected liability for the operation of certain
types of aircraft,” Sawan concluded.

Power To Damage

Jonathan Hemus is managing director of crisis management consultancy
Insignia. He said, “There are so many crisis management [lessons] from this
tragic [737 Max] case, not least the enormous power of crises to damage lives,
livelihoods, reputations and businesses.

Importance Of Culture

“These latest developments highlight the critical importance of leaders
instilling a culture that facilitates crisis prevention or swift resolution. Three
years [since] the first 737 Max crash, this latest attention on Boeing shows
how much easier it is to enter the spotlight due to a mishandled crisis than to
exit it. Mishandled crises are not ‘here today, gone tomorrow’ events; their
impact on an organization like Boeing can linger for years, sometime
decades,” he observed.

‘Massive Systemic Issues’

Joey Smith is the director of aviation services at investment bank Cassel
Salpeter & Co. He said, “Apart from Boeing’s lingering reputational issues and
its mismanagement of the 737 Max crisis, it’s also apparent that there are
massive and systemic issues within Boeing’s culture…”

Smith cited, “… the lack of checks and balances, transparency and
communication between senior management and the rank and file personnel
to do the right thing with safety as the first consideration. These company
culture issues allow for an environment where so many additional crises
develop with additional platforms and their supply chain. Boeing needs more
than just a tweak. It needs an overhaul.

“Additionally, the overhaul needs to address what appears to be
fear, intimidation and compensation issues related to pushing projects
forward, which can open the door to negative results and catastrophic
events,” he concluded.

Other Recent Boeing Crisis Situations

Boeing has had a lot of experience dealing with crisis situations over the past
several years.

Impact 737 Max Crashes

In November, the FAA lifted its ban against the 737 Max. Caroline Sapriel,
managing partner of crisis management firm CS&A International, told me at
the time that, “It will take time and this black mark on their history may never
be completely erased.”

Billions In Fines

Reuters reported that in January, “Boeing agreed to pay more than $2.5 billion
in fines and compensation after reaching a deferred prosecution agreement
with the U.S. Justice Department over the MAX crashes, which cost Boeing
more than $20 billion.”

Engine Explodes

Last February, three months after the company returned the 737 Max to
service, an engine on a United 777 exploded over Denver, raining debris on a
neighborhood below. Airlines in the U.S., Japan, and South
Korea grounded dozens of the Boeing 777s, and the Federal Aviation
Administration ordered United to increase their inspections of the aircraft.

Potential Electrical Issue

In April, Boeing faced another crisis involving its 737 Max. As reported
by Forbes, the airline manufacturer recommended that a potential electrical
issue in a specific group of 737 Max airplanes be addressed before they fly
again.

 

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With Merck’s COVID Antiviral Announcement, Can the Pharma Pipeline Build Treatment Momentum?

By Justin Honore

October 8th, 2021

At the start of the month, pharmaceutical company Merck dropped big news: it has developed a COVID antiviral drug that would cut hospitalization and mortality risks by 50%. In the drug’s study, patients taking the placebo pill saw 14% hospitalization rate and eight deaths, the trial group with Merck’s drug had only 7% hospitalized, and zero deaths.

But this appears to be just the tip of the iceberg: Kaiser Health News reports at least three COVID antiviral candidates, including Merck’s, going through latestage clinical trials, meaning a variety of COVID drugs could be on patient’s prescriptions here soon. What’ll be some of the positive domino effects to come from approval of COVID antivirals, not only on the pharmaceutical production pipeline, but on the general population’s health? Ira Leiderman, managing director of the healthcare practice at Cassel Salpeter & Co., gave MarketScale his take on the coming treatment

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What Happens to Evergrande in China Stays in China

While US markets were a little shaken by news of Evergrande, commercial real estate will likely be fine.

By Erik Sherman

September 24th, 2021

Concerns about property developer China Evergrande Group had investors going early in the week of September 20. Dow futures were off by nearly 500 points, when Fortune took a pulse on Monday. They’d ultimately drop by more than 664 points, as the site DowFutures.org’s historical graph noted.

A look at the same Dow futures history graph showed that by Tuesday, roughly two-thirds of the drop had come back. So, maybe not the next Lehman Brothers, as some opined?

“With more than $300 billion in liabilities and only $15 billion in cash on hand, Evergrande is currently the world’s most indebted real estate developer,” wrote Ryan Detrick, chief market strategist for LPL Financial. “Worries are mounting that starting next week it won’t be able to pay $84 billion of interest due (according to Bloomberg), along with potentially missing a principal payment on at least one of its loans.”

There was reason for concern, especially if you were a shareholder. And if you were holding a portion of the company’s bond debt through global mutual funds or ETFs, that could well be the case.

When it comes to impacts on commercial real estate and the US stock markets, one needs to look at how much of the securities are held in funds controlled by fund groups like Vanguard and Blackrock. “If they have substantial positions in the China Evergrande Group, this could be a problem,” James Cassel, chairman and cofounder of investment bank Cassel Salpeter & Co., tells GlobeSt.com.

But there are hard assets, unlike Lehman, and the danger seems largely in someone else’s backyard.

“The Evergrande issues are important but shouldn’t be overblown,” David Russell, vice president of market intelligence at TradeStation Group, tells GlobeSt.com. “Global banks don’t have a lot of exposure to Chinese real estate so global contagion isn’t a huge concern now. There’s no significant links to US commercial real estate. We’ve also seen little impact on high-yield credit spreads.”

There might even be some good news for the commercial real estate industry. “We may see a small shock to equity and real-estate markets globally depending on the Chinese government’s response in the short term,” Vinny Yu, a former portfolio manager at investment firms and co-founder of investment app JAVLIN Invest, tells GlobeSt.com. “But in the medium term, there may be a flight to quality for both real-estate and equity investments from China to the US.”

“It could ultimately be a positive because less Chinese construction means less demand for copper and steel,” Russell adds. “That could help bring down inflationary pressures and reduce the need for interest-rate hikes in the US. Never forget that the roaring bull market of the 1990s followed the collapse of Japanese real estate in 1992.”

 

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MoSys and Peraso Technologies Announce Definitive Agreement for Business

September 15, 2021

Combined Company to Capitalize on Significant Growth in 5G,

Targeting Opportunities in mmWave and Multi-Edge Computing

 

SAN JOSE, CA and TORONTO, ON / ACCESSWIRE / September 15, 2021 / MoSys, Inc. (NASDAQ:MOSY) (“MoSys”), a provider of semiconductor solutions that enable fast, intelligent data access for cloud, networking, security and communications systems, and Peraso Technologies Inc. (“Peraso”), a global leader in the development of 5G mmWave silicon devices, announced today the signing of a definitive agreement (the “Arrangement Agreement”) for a business combination by way of a statutory plan of arrangement under the Business Corporations Act (Ontario) (the “Business Combination”). Upon the closing of the Business Combination (the “Closing”), the stockholders of Peraso are expected to hold, on a fully-diluted basis, a 61% equity interest in the combined company, with the remaining 39% equity interest to be retained by the stockholders of MoSys, assuming the Escrow Release Conditions (as defined below) are satisfied, or a 57.7% equity interest by the stockholders of Peraso and a 42.3% equity interest by the stockholders of MoSys, assuming the Escrow Release Conditions are not satisfied, in each case, as described further below. On Closing, MoSys will change its name to Peraso Inc. and expects shares of its common stock to continue to trade on the Nasdaq Capital Market under the new ticker symbol PRSO. The Arrangement Agreement and the Business Combination have been approved by MoSys’ and Peraso’s boards of directors and are subject to approval by MoSys’ and Peraso’s stockholders. The Business Combination is expected to close in the fourth quarter of 2021.

 

Management Commentary

“We are pleased to sign the Arrangement Agreement with Peraso, as we believe the Business Combination will provide substantial opportunities for our business across expanded high-growth markets,” stated Dan Lewis, MoSys’ Chief Executive Officer. “The combination will broaden our product lines, add operating scale and unlock potential selling synergies across common customers. Together, the company is uniquely positioned to target high-growth opportunities in 5G, as well as telecom and data networks. The deployment of 5G faces two key bottlenecks: the sub-6Ghz spectrum is exhausted and software-only solutions have become a limiting factor in effectively accelerating network hardware. Peraso’s market-leading mmWave technology, combined with MoSys’ accelerator engine ICs and virtual accelerator engine IP, directly addresses these bottlenecks and the significant spectrum needs of future 5G networks. With a combined IP portfolio of 130 patents, our technologies and solutions provide more bandwidth, better latency and faster throughput to meet the increased requirements of the more than 70 billion connected devices forecasted by 2030, as well as significantly expanded growth prospects beyond what MoSys can achieve as a standalone company.”

“It has been our goal at Peraso to develop market-leading technologies addressing the needs of the 5G market,” stated Ronald Glibbery, Chief Executive Officer of Peraso. “By joining with MoSys, we believe we can deliver a broader set of solutions to our combined customer base, using complementary technologies to address the networking and communication needs of our customers from the edge to the core and into the cloud. As a Nasdaq-listed company, Peraso will gain increased visibility and recognition, along with broader access to the global capital markets, which will support our long-term growth initiatives given the forecasted ramp in mmWave and 5G networks in the coming years. We believe the Business Combination provides meaningful benefit to both companies, their stockholders and other stakeholders. I am excited to become CEO of the combined company and look forward to working closely with Dan and all of the other members of the MoSys and Peraso teams, as we move forward.”

 

Business Combination Summary

The following is a summary of the key terms of the pending Business Combination, as contemplated by the Arrangement Agreement. The current report on Form 8-K filed by MoSys, Inc. with the U.S. Securities and Exchange Commission (“SEC”) will contain additional information about the Business Combination. The Closing is subject to the satisfaction or waiver of customary closing conditions, including approvals by stockholders of MoSys and Peraso. There can be no assurances that the Business Combination will be consummated. Pertinent terms of the Business Combination include:

The Business Combination will be implemented by way of a court-approved plan of arrangement under the Business Corporations Act (Ontario), under which a Canadian subsidiary of MoSys will acquire the issued and outstanding shares of Peraso. Peraso will survive the Business Combination and become a wholly-owned subsidiary of MoSys.

Directors, officers and significant stockholders of Peraso and the directors and officers of MoSys have entered into voting agreements under which the parties have agreed to vote their shares in favor of the Business Combination.

Peraso stockholders may elect to receive either shares of MoSys common stock or shares of a Canadian subsidiary of MoSys, which will be exchangeable into MoSys common stock (the “Exchangeable Shares”). Holders of Exchangeable Shares will be entitled to cast votes on matters for which holders of MoSys common stock are entitled to vote and will be entitled to receive dividends, if any, that are economically equivalent to the dividends, if any, declared by MoSys with respect to its common stock.

On a fully-diluted basis, the stockholders of Peraso will receive consideration of approximately 14.2 million shares of MoSys common stock or Exchangeable Shares on Closing, with approximately 1.8 million of such shares (the “Escrowed Shares”) to be deposited into escrow pursuant to the terms of an escrow agreement (the “Escrow Agreement”), such Escrowed Shares to be released to the stockholders of Peraso if, between 12 months and 36 months of the Closing, the common stock of the combined company achieves a VWAP (volume-weighted average price) of at least $8.57 per share for any 20 trading days within a period of 30 consecutive trading dates subject to earlier release upon a corporate sale or reorganization (the “Escrow Release Conditions”).

Prior to Closing, all debt of Peraso is to be converted into common stock or repaid in full, or will be reflected in an adjustment to the share exchange ratio.

The Arrangement Agreement also contains indemnification and termination provisions, and, under certain circumstances, requires the payment of a termination fee.

 

Management and Organization

The combined company will be led by Ronald Glibbery, Peraso’s CEO, with Dan Lewis, MoSys’ President and CEO, continuing to serve as President. The board of directors is expected to initially comprise five members, including three appointed by Peraso and two by MoSys.

 

Webcast Presentation

MoSys and Peraso invite all interested parties to view a webcast presentation by Ron Glibbery, Dan Lewis and Jim Sullivan for an overview of the combined company. The recorded presentation is available for viewing on the Investor Relations section of MoSys’ website or by clicking here.

 

Advisors

In connection with the Business Combination, Cassel Salpeter & Co. served as financial advisor to MoSys, and Mitchell, Silberberg and Knupp, LLP and Borden Ladner Gervais LLP served as legal counsel to MoSys. Evans and Evans served as financial advisor to Peraso and provided a fairness opinion to the board of directors of Peraso, and Stikeman Elliott LLP served as legal counsel to Peraso.

 

About MoSys, Inc.

MoSys, Inc. (NASDAQ:MOSY) provides both integrated circuits (ICs) and intellectual property (IP) solutions that enable fast, intelligent data access and decision making for a wide range of markets. MoSys’ primary product line is marketed under the Accelerator Engine name and includes the Bandwidth Engine IC products, which integrate its proprietary, 1T-SRAM high-density embedded memory and a highly efficient serial interface protocol resulting in a monolithic memory IC solution optimized for memory bandwidth and transaction access performance. In 2020, MoSys began offering for license its initial Virtual Accelerator Engine IP, which consists of software, firmware and related IP. The Virtual Accelerator Engine IP include multiple function accelerator platform products, which target specific application functions, initially Packet Inspection for routing, security and operations, and will use a common software interface to allow performance scalability over multiple hardware environments. For additional information on MoSys, Inc., please visit www.mosys.com.

 

About Peraso Technologies Inc.

Based in Toronto, Canada, Peraso is a fabless semiconductor company with a focus on the development of mmWave wireless technology and Wireless Gigabit (WiGig®) chipsets. Peraso is also a leading supplier of semiconductors in the PtP and PtMP markets. Since its inception in 2008, Peraso has developed a broad range of core competencies in the field of 5G mmWave semiconductors, including mmWave RF circuits, mmWave signal processing algorithms, beam forming and beam steering algorithms, real time calibration and system monitoring, low cost/high performance antenna technology and high volume production test capability. For additional information, please visit www.perasotech.com.

 

Additional Information and Where to Find It

A full description of the terms of the Business Combination will be provided in a proxy statement for the stockholders of MoSys (the “Proxy Statement”) to be filed with the SEC. MoSys urges stockholders, investors and other interested persons to read, when available, the preliminary Proxy Statement, as well as other documents filed with the SEC because these documents will contain important information about MoSys, Peraso, and the proposed Business Combination. The definitive Proxy Statement will be mailed to MoSys stockholders as of a record date to be established for voting on the proposed transaction. Stockholders will also be able to obtain a copy of the definitive Proxy Statement (when available), without charge, by directing a request to: MoSys, Inc, 2309 Bering Drive, San Jose, CA 95131, attention: CFO or by sending an e-mail to priv_IR@mosys.com. The preliminary and definitive versions of the Proxy Statement, once available, can also be obtained, without charge, at the SEC’s website (www.sec.gov).

 

Participants in Solicitation

Under SEC rules, MoSys, Peraso, and their respective directors, executive officers and other members of their management and employees may be deemed to be participants in the solicitation of proxies of MoSys’ stockholders in connection with the proposed Business Combination. Investors and security holders may obtain more detailed information regarding the names, affiliations and interests of MoSys’ directors in its Annual Report on Form 10-K for the fiscal year ended December 31, 2020, which was filed with the SEC on March 18, 2021. Information regarding the persons who may, under SEC rules, be deemed participants in the solicitation of proxies to MoSys’ stockholders in connection with the proposed Business Combination will be set forth in the Proxy Statement for the proposed Business Combination when available. Information concerning the interests of MoSys’ and Peraso’s participants in the solicitation, which may, in some cases, be different than those of MoSys’ and Peraso’s stockholders generally, will be set forth in the Proxy Statement relating to the proposed Business Combination when it becomes available.

 

Non-Solicitation

This press release is not a proxy statement or solicitation of a proxy, consent, or authorization with respect to any securities or in respect of the proposed Business Combination and shall not constitute an offer to sell or a solicitation of an offer to buy the securities of MoSys or Peraso, nor shall there be any sale of any such securities in any state or jurisdiction in which such offer, solicitation, or sale would be unlawful prior to registration or qualification under the securities laws of such state or jurisdiction. No offer of securities shall be made except by means of a prospectus meeting the requirements of Section 10 of the Securities Act of 1933, as amended.

 

No Offer or Solicitation to Sell

This communication is for informational purposes and is not intended to, and shall not, constitute an offer to sell or the solicitation of an offer to sell or the solicitation of an offer to buy any securities, nor shall there be any sale of securities in any jurisdiction in which such offer or sale would be unlawful prior to registration or qualification under the securities laws of any such jurisdiction.

 

Forward-Looking Statements

This press release contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended, which are intended to be covered by the “safe harbor” created by those sections. All statements in this release that are not based on historical fact are “forward looking statements.” These statements may be identified by words such as “estimates,” “anticipates,” “projects,” “plans,” “strategy,” “goal,” or “planned,” “seeks,” “may,” “might”, “will,” “expects,” “intends,” “believes,” “should,” and similar expressions, or the negative versions thereof, and which also may be identified by their context. All statements that address operating performance, development of the events, objectives or goals, refinement of strategy, and anticipation of certain behavior of stockholders in connection with MoSys, Peraso, or the Arrangement Agreement, the expected synergies, and other financial benefits from the Business Combination, that are not otherwise historical facts, are forward-looking statements.

There can be no guarantee that the proposed Business Combination described in this press release will be completed, or that they will be completed as currently proposed, or at any particular time. Actual results may vary materially from those expressed or implied by the statements here due to changes in economic, business, competitive or regulatory factors, and other risks and uncertainties affecting the operation of the businesses of MoSys and Peraso. There are a number of specific factors related to the Business Combination, including:

  • The ability of MoSys and Peraso to obtain stockholder approval for the Business Combination and related transactions;
  • The ability of Peraso to obtain court approval for the plan of arrangement implementing the Business Combination;
  • The ability of the combined company to successfully maintain a Nasdaq Capital Market listing;
  • The ability of the combined company to successfully integrate the operations of MoSys and Peraso;
  • Conditions to the Closing that may not be satisfied or that the Business Combination may involve unexpected costs, liabilities, or delays;
  • The occurrence of any other risks to consummation of the Business Combination, including the risk that the Business Combination will not be consummated within the expected time period or any event, change or other circumstances that could give rise to the termination of the Arrangement Agreement;
  • Risks that the Business Combination disrupts current MoSys’ plans and operations or that the business or stock price of MoSys may suffer as a result of uncertainty surrounding the Business Combination;
  • Risks related to the COVID-19 pandemic, including public health requirements in response to the outbreak of COVID-19 and the impact on MoSys’ business and operations; and
  • MoSys or Peraso may be adversely affected by other economic, business, or competitive factors.

 

MoSys does not intend to update publicly any forward-looking statement for any reason, except as required by law, even as new information becomes available or other events occur in the future.

For further information:

Investor Relations Contact:

 

Shelton Group

Leanne K. Sievers | Jeffrey Schreiner

949-224-3874 | 512-243-8976

sheltonir@sheltongroup.com

 

MoSys, Inc. Contact:

Jim Sullivan, CFO

MoSys, Inc.

408-418-7500

jsullivan@mosys.com

 

Peraso Technologies Inc. Contact:

Ronald Glibbery, CEO

Peraso Technologies Inc.

416-637-1048

ronald@perasotech.com

 

SOURCE: MoSys, Inc.

 

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Investment Bank Cassel Salpeter on Institutional Investors

By Javacia Harris Bowser
August 20, 2021
 

  • An institutional investor is a company or organization that invests pooled assets on behalf of its clients.
  • Examples of institutional investors include hedge funds, mutual funds, and endowment funds.
  • Because institutional investors buy and sell large amounts of securities, they can greatly influence price dynamics in the market.
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All investors are not created equal, and institutional investors are in a league of their own. They’re often called the “whales of Wall Street” because of their influence on the market. There are several different types of institutional investors, and you may be wondering what sets them apart from the average investor.

What is an institutional investor?

An institutional investor is a company or organization that invests pooled assets on behalf of its clients. Institutional investors buy and sell much larger quantities of stocks, bonds, or other securities than the average individual investor. Examples of institutional investors include mutual funds, pensions funds, and insurance companies.

Because institutional investors manage more capital than everyday investors, they often have access to resources the average investor does not.

“Institutional investors have access to a fair amount of databases and analytical tools to help them do their job,” says investment banker James Cassel, chairman and cofounder of Cassel Salpeter & Co. “They also sometimes have access to the management of companies and to individuals with expertise in different fields that can help them in making investment decisions. They try to do proprietary research that individuals may not have access to.”

The access they have to the management of companies helps them to have deeper insight into the businesses, explains Jeremy Cohen, senior vice president of Investor Relations at Edelman.

“Institutional investors have more resources to conduct deeper due diligence, whether that is channel checking or having their analyst call on customers to get a better sense of trends,” Cohen says.

Quick tip: Institutional investors sometimes use program trading, which is the use of computer-powered algorithms to automatically buy or sell stock based on certain momentum in the market. Institutional investors employ teams to examine every aspect of the different markets they buy, sell, and trade in. Individuals on these teams must have extensive knowledge of the markets and money management, and may come from a finance or accounting background.

They may be former investment bankers or stock analysts. Many will have a CFA certification on their resume, but Cohen says a liberal arts degree can be just as valuable if research and critical thinking skills were adopted along the way.

How do institutional investors impact the market?

Institutional investors are sometimes called market makers because they can have such huge influence in the financial industry. This is because of the large amounts they trade and how involved they are in important market events.

  • Influence security prices: Institutional investors routinely trade large amounts in the market and are a driving force of supply and demand. In fact, the proportion of US public equities managed by institutions has risen to about 67% in 2010. These large movements cause stock prices to rise and fall depending on their activities. These changes in prices, although typically short-term, do influence how other investors interact with the market and can have a wider effect on the economy.
  • Report earnings: Institutional investors are responsible for reporting earnings, usually on a quarterly basis so that clients know how a company is performing financially. This will provide insights into whether investors should buy or sell – which can result in volatility within that quarter.
  • Provide liquidity in the market: Because institutional investors are often large funds and financial institutions, they’re able to provide capital to companies when they need it.
  • Participate in initial public offerings (IPOs): Institutional investors have the resources to utilize both public and private information to inform how and when to engage in an emerging company IPO. An academic study found that newly public companies with substantial institutional investment significantly outperformed those with less. The same study found that these institutional investors succeeded by making better use of the available public information – focusing on key metrics such as operating history, prior earnings, size, and liquidity.
  • Monitor governance issues: Institutional investors play an important role in monitoring corporate governance issues, which has previously included: majority voting, focusing on the quality and diversity of Boards of Directors, as well as compensation structures and concerns about the runaway growth in executive pay.

Types of institutional investors
There are several types of institutional investors, and each type is responsible for managing a large number of assets and investing these funds based on their clients’ goals. Examples of institutional investors include hedge funds, pension funds, endowment funds, and private equity funds.

Let’s break down each type:

  • Hedge funds: These are pooled investment funds that aggressively invest in a wide array of assets, with the goal of providing the highest return as quickly as possible.
  • Private equity funds: These types of funds gather money to be invested in companies that likely will have a high return rate. Unlike hedge funds, private equity funds are focused on long-term potential and may not seek a return on investment for four to seven years.
  • Pension funds: These types of fund accumulates money that will be paid to employees after retirement. These funds gather contributions from employees and employers – or both – to be invested in capital markets such as stock or bond markets. The goal, of course, is to multiply the money for the benefit of retirees.
  • Endowment funds: These are investment funds established by a foundation with donations made to the organization. Universities, nonprofit organizations, churches, and hospitals often use endowment funds. The foundation typically makes frequent withdrawals from the endowment fund, within the guidelines of the fund’s established usage policy. A university, for example, may use an endowment fund to award scholarships.
  • Commercial banks: These types of financial institutionals invest a portion of the money they hold for customers, but federal regulations restrict how much risk banks can take on to protect your deposits.
  • Insurance companies: These types of companies make money in part by investing a portion of the premiums received from their customers.
  • Mutual funds: These investing vehicles allow investors to pool their money for investments that are actively managed. Examples include bond funds, money market funds, stock funds, and target-date funds.

Quick tip: Institutional investors oftentimes have experience in specific industries that helps them make their investment decisions.

Retail investors vs. institutional investors

Institutional investors are not to be confused with retail investors. Understanding the difference is important because institutional investors and retail investors have different resources and regulations and even face different fees. “A retail investor is an individual; an institutional investor is an organization,” Cohen explains.

If you’re working with a brokerage firm or robo investing app to invest your own money for your own personal goals – such as planning for retirement, paying for kids’ education, or buying a beach house – you’re a retail investor.

Retail investors are considered less savvy than institutional investors and therefore are subject to more protective regulations from the Securities and Exchange Commission (SEC) to prevent them from making complex, high-risk investments. Retail investors also have considerably smaller purchasing power and thus often pay higher fees.

Institutional investors, on the other hand, invest funds from other entities for the benefit of those clients and on a much larger scale and more frequently. “The biggest difference is size and sophistication,” Cohen says. “An institutional investor will have analysts and portfolio managers and they’ll have the infrastructure to trade more quickly.” Because of their size and sophistication, institutional investors can typically negotiate better fees and are under fewer restrictions. Here’s an overview of the major differences between the two types of investors:

Institutional investor

  • Invests and manages the money of other people and organizations
  • Trades frequently and works with large amounts of money
  • Able to negotiate lower fees
  • Has access to specialized knowledge, research, and resources
  • Subject to fewer protective regulations

Retail investor

  • Invests own money
  • Trades infrequently and works with a relatively small amount of money
  • Subject to high brokerage fees
  • Has limited investing knowledge and resources
  • Subject to more protective regulations

Quick tip: Individual investors can get access to professional money management. You could, for example, invest in a mutual fund through Fidelity or Berkshire Hathaway and get institutional management with expertise in investing.

The financial takeaway Institutional investors are companies or organizations that invest on behalf of their clients – usually other companies or organizations. Institutional investors are the big fish of investing because they can greatly impact the market, in part by making much larger and more frequent trades than the average individual investor.

As with nearly all things, when it comes to investing, knowledge is power. Institutional investors have deep pockets and a wealth of information to help them manage the massive amount of funds they’re in charge of. While you may not be able to buy, sell, and trade like the market makers, you can empower yourself with a deeper understanding of investing.

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