Return of Your Investment and My Retirement from Fund Management

20110610

After six years of running the Fundamental Technologies II fund (FTII), I have decided to retire from the fund management business.

As you've read in my earlier emails, it has been increasingly challenging to invest all of the cash in FTII. High cash levels have suppressed returns, but have also reduced volatility, over the past several years.

One of the reasons early stage investment has become more challenging is that today's most exciting companies are incredibly capital efficient. The vast majority are bootstrapped, or financed entirely by friends and family. Quite simply, only a very few of today's best companies require equity capital.

Other factors contributing to my decision include:

• Increased financial industry regulation
• Increased accounting and tax complexity
• My personal desire to devote more time to writing, and speaking, about exit strategies.

I'm proud that everyone who invested in FTII had a positive return on their investment – especially since this was through the difficult economic environment associated with the mortgage crisis.

It's also gratifying to me that the returns on FTII, and my previous fund, the BC Tech Fund, both validated the higher returns from an "early exit strategy."

I wish you continued success with your investment portfolio, and thank you again for your investment in FTII.

Dr. Basil Peters
CEO and Director