Minority Equity Investing

Minority Equity Investing Background & Strategic Approach Investment Approach Air Products’ Principles and Guidelines APD Venture Investment Guidelines Funding Stage Start-up & Early Regional Area U.S. & Europe Sector Focus Structure Investment COE with oversight by board governance $500,000 to 5 Million Private Equity or approved VC Funds Preference Co-investment with Strategic Partners/VC’s Ownership <20% equity Governance  Existing growth business  New growth platform  Approved Growth Board initiative  Cross group synergy Strategic Materials, Medical & Energy Placement Horizon Strategic Fit Strategic Intent  Access enabling technologies to improve existing business positions  Identify emerging business opportunities / breakthrough technologies to create new market positions  Outsource R&D and technology development  Develop new applications to drive product demand 3-7 years No board seats, prefer observation rights Performance Technology Evolution Dominant Design emerges Pricing, cost and reliability Are key components of competition Idea Innovator New Technology New Market Rapid changes in Technology Growth in the market Time Copyright Ron Pierantozzi 2007 The Real Dilemma! Idea Innovator New Technology New Market Rapid changes in Technology Growth in the market Time Copyright Ron Pierantozzi 2007 Valuation Performance Dominant Design emerges Pricing, cost and reliability Are key components of Competition Potential Approaches to New Technology Performance Efficient manufacturing Product enhancements Customer service Partnerships with Universities Equity investments Establish IP Open Innovation Create Options Idea Innovator New Technology New Market Dominant Design emerges Pricing, cost and reliability Are key components of Competition Rapid changes in Technology Growth in the market Incubation of new markets Acquire technology Product development Establish manufacturing processes Time Copyright Ron Pierantozzi 2007 Fit vs. Objective Corporate Investment Objective Linkage to Capability Strategic Tight Loose DRIVING Advances our Strategy pace ENABLING Develop Skills in emerging area Financial EMERGENT Allows exploration of potential new businesses PASSIVE Provides financial Returns only Potential Applications of the Technology Corporate Investment Objective Strategic Bubble size is indicative of the Revenue potential Linkage to Capability Each bubble represents an Application of the technology Financial 4 1 2 Tight 3 7 8 10 Loose 9 5 6 11 When To consider Strategic Investment? For the Large Strategic Partner Start up has already demonstrate some product performance at customer site Insure that you have a value proposition for your existing business operation Clearly articulate your ability to create value beyond what start up is doing Assign resources to capture strategic value View this an as option to enter a new market or technology space For start up Articulate your needs for resources, market channels, technology etc. Do not do a strategic investment unless you are ready to go to market Do not do a strategic investment if all you need is cash! That is what VC’s are for Air Products Venture Investments We are active in corporate venturing and have strategically invested less than 3% of our capital budget in twelve companies & two VC funds Venture Business Opportunity Strategic Relevance Parelec  Low temperature conductive inks & pastes for electronic interconnects & advanced materials for circuit metallization  New market entry for Electronics Materials Quantum Clean  Semiconductor tool parts cleaning services to the global industry  New outsourced parts cleaning services business for Electronics E-Ink  Electronic ink technology & materials for paper-like displays  Expand presence of Electronic materials in emerging display industry psiloQuest  Proprietary CMP pad offerings for the semiconductor manufacturing market  Complementary products to DAN JV with DuPont for CMP slurry applications Elemica  Neutral, business-to-business emarketplace for the chemicals industry  Low cost alternative to pointto-point connection for ebusiness & SAP applications Air Products Venture Investments Continued……. General Hydrogen Venture Business Opportunity Strategic Relevance  Hydrogen fueling systems & hydricity packs to enable deployment of fuel cell powered vehicles  Fuel cells & hydrogen dispensing/generation equipment H2 Gen  Low cost, high purity small scale hydrogen generators to enable fuel cell powered vehicles & power generation  Fuel cells & low cost small SMR equipment APJet  Low temperature atmospheric plasma technology for etching, cleaning, decontaminating or coating  Semiconductor deposition, barrier coatings in plastic & optical coatings Nanotechnologies  High-performance nanoparticles via proprietary pulsed plasma technology  Transparent coatings, antimicrobial products, and Electronic materials Solicore  Thin flexible polymeric solid-state battery technology & materials  Advanced Materials battery electrolytes & polymers NGEN Fund  $70 MM Venture capital materials science fund with an early stage focus  Access enabling/emerging materials technologies  $125 MM SBIC industrial technology fund with a later stage focus  Access enabling/emerging industrial technology Inverness Capital Partners Fund Role of the Venture Investment Board (VIB) The VIB provides oversight & administration of our equity investments across the corporation, including participation in external VC funds VIB Oversight & Administration Investment Governance VIB Membership  Executive Sponsor  Venture Investments  SBU  Technology  Legal Department   Deal Review & Approval Portfolio Management & Performance Corporate-wide Linkage VI Manager    Owns the Venture Investment process Maintains COE, best practices & linkage to SBU’s & CDO Monitors portfolio performance SBU’s & CDO  Allocate capital, resources & skill base Define strategic needs Evaluate & execute deals Strategic Business Unit & Corporate Development Office   Controllership External Advisor VC Funds    Fund Secondees  Provide proprietary deal flow Lead investment rounds Provide co-investment opportunities Identify strategically relevant opportunities Direct relevant deal flow to SBU’s & CDO  Influence fund focus for co-investment 