Investment Process

Prospective investments are evaluated in terms of a number of criteria, including the background of the founders and the management team; the commercial viability of the technology; the extent of proprietary intellectual property; the degree of sustainable competitive advantage; the presence of a defined path to liquidity; and the likelihood of a positive exit scenario within a reasonable timeframe.

The process of evaluating investment opportunities is inherently subjective. Axis considers many variables, including the following criteria, as it executes its investment strategy:

• Management. The management team is critical to the success of any business, and it is especially important at the early stage of a business's life. Axis seeks to invest in businesses with strong management groups that display cohesive, aggressive and driven qualities.
  

  Companies often have technological depth but lack experience in building a technology business. Where appropriate and possible, we endeavour to provide investee companies with access to its network of business professionals who can contribute operations and management experience in addition to intangibles such as industry referrals. We advise the investee companies with respect to alternative means to add required experience through mechanisms like industry alliances, advisory boards and partnerships that create synergies and market opportunities. In addition, the management team of Axis anticipates adding value beyond capital investment through providing "hands-on" assistance and mentoring to the investee companies.
  

• Market. Of particular interest to Axis are businesses with a focus on solving a real need within a very large and growing marketplace. When these variables are present, companies have opportunities to gain significant market presence, shorten their path to profitability, increase their valuation, and thereby increase the likelihood of a large return on investment.
  
  
• Barriers to Entry. In order to maintain a competitive advantage, a prospective investee business should have features that act as barriers to a competitor entering its market. Typically, such barriers to entry include things like proprietary intellectual property, a unique understanding and experience within a market niche, or strong industry partnerships.
  
  
• Venture Syndicate. Axis prefers to invest as part of a syndicate of investors. A syndicate introduces additional capital and relationships to the investee company, thereby increasing the likelihood of success.
  
  
• Liquidity of Investment. Critical to achieving our objectives is planning an exit strategy that provides liquidity. Axis, working with co-investors, other shareholders, and the management team of the business, attempts to develop various exit strategies to maximize shareholder value. Due to the investment focus of Axis, the realization of the exit strategy is not likely to take place within the first several years of the life of the investment; however, this time frame may be shortened or lengthened due to each investee company's circumstances. Exit strategies typically include public offering of securities, sale to a strategic partner, sale to other shareholders, sale to management, or other public or private sale. The ability to implement an exit strategy will depend on the agreement of various parties to the terms of the exit strategy, and upon the financial condition and prospects of the business at the time of the proposed exit.
  
  
• Growth Potential. Axis seeks to invest in businesses with high growth potential. As a result, we will seek investee companies that are built around global business concepts, products, services or technology applications and have a clearly articulated strategy to achieve their projected growth.
  
  
• Profitability. Technology businesses with a reasonable, verifiable path to profitability will be favoured. As part of its due diligence process, Axis analyzes criteria such as working capital requirements, economies of scale within the business model, market trends, and historical comparable data within the marketplace to determine if the business will be able to reach a profitable state in an appropriate timeframe.