Investment Approach

Given that roughly 90% of tech startups fail, we need a diligent and disciplined approach to identify the companies that actually succeed and go on to garner billion-dollar valuations.

And that’s where Disruptive Tech Research’s unique, intellectual property-centric investment approach comes in…

Strategy Part 1: Mega-Growth Tech Trends

We start with a top-down research process that puts the most promising and transformational technology trends to work in our favor.

Forget overhyped, overpriced and/or entirely undeserving trends.

We’re after growth trends that promise to endure for years to come. No matter what happens next in the world. (Think Mobile, Cleantech and Big Data, for example).

Strategy Part 2: Micro & Small Caps Only

Once we identify the most unstoppable tech trends, it’s time to switch gears and embrace a bottom-up approach.

We need to identify individual companies positioned to benefit the most from each trend. That leads us to focus exclusively on micro and small cap stocks.

Why? Because the market’s smallest companies are routinely overlooked and undervalued. Yet, they’re often the most nimble and innovative. As such, they offer the most profit potential.

Strategy Part 3: No Analyst Coverage

We whittle the list of investment opportunities down even more by focusing exclusively on companies without mainstream analyst coverage.

Study after study (and our own experience) confirms the lack of attention creates tremendous inefficiencies, which we can strategically exploit.

We employ a boots on-the-ground, deep dive approach to due diligence to pinpoint the disruptive technology investments with the most asymmetric return profiles.

Strategy Part 4: Visible Inflection Point

Disruptive technologies take time to mature. Years, in fact. That means getting the timing right is equally important as getting the company right.

Too early and we’re destined to suffer through years of dilution and meager returns, as a technology remains stuck in the lab. Too late and we’re guaranteed to miss out on the most explosive share price moves, as market adoption is too far along.

Getting it just right, then, comes down to focusing on companies with a visible inflection point – a path to market that is within reach and attainable.

Strategy Part 5: Seasoned Leadership

Executive ability is the most difficult variable to quantify, let alone control for in investing.

To increase our odds of success, we look for management teams with proven track records over inventors with a garage, a great idea and no business acumen.

We also look for independent board members with relevant experience and more importantly, no qualms about kicking any bums out of the corner office. A shakeup in leadership is sometimes just what’s necessary to unlock the full value of a disruptive technology.

1 Part Genius: Dominant Patent Portfolio

Since 2009, we’ve made intellectual property (i.e. – patents) the cornerstone of our investment approach.

Why? For one thing, patents sort out the pretenders from the true innovators.

What’s more, being first-to-market is no longer a sustainable competitive advantage. Only operating companies with the strongest, most robust and unique patent portfolios stand a chance at true, long-lasting disruption.

Small companies with big patent portfolios often attract strategic buyers, too.

Bottom line: By focusing exclusively on disruptive technology companies with dominant patent portfolios, we dramatically increase our return potential.