Hi
@Harmattom &
@DrunkNinja, sorry for the delay in responding, I've been busy the last couple of days.
I haven't been invested for five years that's true, only about 1. I referred to WBT as being early on in their life because they aren't showing revenue yet, and that's just the language I use. The fact is WBT are going to need a lot of capital to transition to high yield semiconductor manufacturing.
I don't like initial investors getting diluted. Full stop. There are many reasons for this. One is that I'm an ornery b@stard who doesn't trust anyone. Long term holders holders may have faith in the current CEO because of his past actions and his ability to hit technical R&D milestones and give Q&A sessions, but I don't see that as particularly relevant.
The company is now in a transition from R&D to commercialisation. The board could well dump the CEO now, or move him to a CTO position. Many tech companies at this stage do so. Giving up a significant amount of voting power makes this more likely not less. The people you have trust in may not be there for long.
So I always worry about the worst case.
I'm going to describe my nightmare scenario. I'm not suggesting that WBT are considering doing this, just that I've seen it happen before if you replace the country names (once I was on the inside of a board that was absolutely about to do it - the only thing that stopped them was that their tech didn't turn out as successful as they'd hoped).
The nightmare scenario for me is this:
Step 1) The high risk stage of the project is over, and now the Israelis want access to the upside of the technology that was developed in their country, even though it was funded during the high risk phase by Australian investors. There is internal pressure within the company, and from govt to do this.
Step 2) Existing shareholders get diluted - partially via cornerstone investor/institutional placements, partially through large options packages.
Step 3) Core technology and IP are spun out into a separate Israel-based company. Management explains to existing investors that this is only to protect the IP. Because they make consumer products, they don't want the IP to be exposed if they are sued by some sort of product failure, so instead, there is now an IP holding company separate to the original company. We are assured that the original company has an exclusive license to use the technology in all cases, so there is really no difference in profitability etc.
Step 4) The holding company is spun out, original shareholders some equity in it if they complain hard enough, but not very much at all.
Step 5) Throughout all of this, the original company keeps diluting initial shareholders by 15% a year (semiconductor development is expensive), and now the original shareholders own less that half the company.
Step 6) It turns out that there is a clause in the exclusive IP contract that can be exercised. The contract is modified so that now the original company only has exclusive rights for their existing clientele (someone like SiEn for example).
Step 7) Now that the tech is proven and the contract is modified, the IP holding company is free to sign up big names such as Apple or Samsung. They do so, and the original company's value is cratered.
Nightmare. And all completely legal.
Again, I'm not saying WBT is planning to do any of that, but it is to prevent such scenarios from taking place that I absolutely hate seeing initial shareholders diluted, especially for tech companies, and doubly especially for off-shore tech companies. Maybe the existing board would never do it, maybe they have a price where they would if big enough money was involved, maybe a future board would definitely do it given the chance.
The only way to be sure is to keep your voting power.
(20min delay)