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Allied Minds slashes costs

The investment group is burning through cash at a fast pace
February 12, 2019

Allied Minds (ALM) has outlined plans to cut annual costs by around 40 per cent, as it reports declining cash balances.

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Around $5.6m (£4.3m) of savings are being targeted, which included an agreement in December to “materially reduce” chief executive Jill Smith’s salary over two years. Ms Smith – who replaced founder Chris Silva in 2017 – will also defer payment of the balance of her salary into 2021, with any bonuses for 2019 and 2020 paid in shares rather than cash.

The investment specialist had cash balances of $50m at the end of December, down from $66m at the end of June, and $84.2m at the December 2017 year-end. Despite burning through cash at a fast pace, management said the company will have enough capital to continue funding its operations until 2021.  

The announcement came shortly after the news that activist investor Crystal Amber had built a stake of just over 2 per cent in the group.

After restructuring the group’s portfolio in 2017 – which included scrapping $147m in investments – Ms Smith has focused on bringing on strategic investors into funding rounds, in the hope of accelerating the commercialisation process.

Three of its top six companies – Spin Memory, Hawkeye 360 and Federated Wireless – are on track to start making money in 2019. However, securing commercial partners for SciFluor and Precision Biopsy has taken longer than expected, with Allied Minds and its largest shareholder, Woodford Investment Management, each stumping up £4.5m in bridge financing for the portfolio companies.