Letter Requesting that TIGRcubs™ Are a Security Structure Utilized by SBICs (Small Business Investment Corporations)
Office of the CEO
Entrex Inc.
48th Floor
311 South Wacker
Chicago, IL 60606
August 20, 2009
The Honorable Mary L. Landrieu, Chairman
Committee on Small Business & Entrepreneurship
United States Senate
428A Russell Senate Office Building
Washington, D.C. 20510
Chairman Landrieu,
Pursuant to your request for follow-up from my May 13 testimony before the U.S. Senate Committee on Small Business and Entrepreneurship, I offer a brief update and a formal request for a meeting with the leadership of the Small Business Investment Company (SBIC) program.
As you heard on the day of the briefing, Entrex is creating a new capital market system (an Entrepreneurial Exchange) that has as its centerpiece an institutionalized investment structure (TIGRcubs™: Top-line Income Generation Rights Certificates) TIGRcubs™ are revenue participation securities that are efficient and effective for a broad range of American private business owners and attractive to institutional investors.
It’s been three months since my testimony and, today, sixteen funds, each capitalized at $100M, are in various stages of development focused on revenue-based investing using the TIGRcub™ security structure. Some of these funds are already deploying capital to the very companies that the SBA serves.
I tell you this to convey the enormous appetite we’re seeing from institutional capital sources to not only support local and regional businesses, but also to support the American business landscape in general. The comment I hear repeatedly at meetings is that TIGRcubs™ give investors a compelling and institutionalized product to access the large, and previously difficult to reach, private company segment.
There is an exceptional opportunity now to leverage the SBIC program by collaborating with the SBA to qualify the TIGRcub™ security structure as an eligible security for the SBICs. As an initial step, several current TIGRcub™ Fund Managers, some of whom are former SBIC Fund Managers, vetted the security and believe it would qualify as SBIC eligible. They also see its ability to generate appropriate returns for investors.
We believe that every SBIC should become aware of the TIGRcub™ and look for opportunities to use the security alongside their existing equity and debt transactions. This can result in more diverse portfolios that earn cash returns into their funds and, ultimately, back to the government as a whole.
Given an audience with the appropriate leadership of the SBIC program we could quickly introduce the security, its benefits, and align a strategic conversation around its potential use within their existing program structure.
I await your follow up and am available at your discretion.
Sincerely,
Stephen H. Watkins, CEO
Entrex Inc.
cc: Karen Mills, Administrator
U.S. Small Business Administration (SBA)
