Loan Backed by Magic Leap, Inc. Equity Shares and/or sales of shares

Industry

Technology

Company Type

Augmented Reality / Virtual Reality / Technology

Location

USA

Size

$15 million

Investment Type

Debt/Equity

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Helping Great Companies Grow

Overview

ML Holdings LLC (“MLH”) is seeking either +/-$15 million for the sale of private shares of Magic Leap, Inc., or senior debt backed by the shares.

Senior Loan

  • Estimated LTV: 20%
  • Term: up to four years
  • Origination Fee: 3%
  • Interest Rate: 15 20%
  • Prepayment Fee: 10 15% of the amount received by MLH in excess of repayment of the loan amount and interest

Sale of Equity Shares

  • Sale of 750k common shares of ML at an attractive valuation
  • Estimated value of $27 per share based on previous Rounds D and E

ML is one of the most exciting startups in the past decade

  • Raised $3.0 billion+ since 2014 including the largest B Round in Silicon Valley history
  • Investor group is unprecedented and a Who’s Who of preeminent investors who believe ML technology is superior to competition
  • Very little secondary market for ML shares given the next funding round may be an IPO, this capital raise may be the only way to get pre IPO ML shares
  • ML develops augmented reality devices that layer digital imagery over the real world, for users wearing goggles, eyeglasses and other hardware
  • Scott Hassan and Google hold large stakes
  • Management team consists of entertainment, technology, and media experts with deep industry knowledge and executive experience
Magic leap
Helping Great Companies Grow

Opportunity

  • Artificial reality is an emerging new industry – the integration of digital information with the real time environment of the user
    • technology has the potential to be integrated into many industries
    • could be used for activities ranging from gaming, engineering, medical tech, and other uses in the workplace
  • Virtual Reality/Augmented Reality global market is estimated to be $27 billion in 2020, and projected to climb to $571 billion by 2025
    • Hardware – estimated $14 billion market in 2020 and projected to grow faster than the software market in early years as consumers make large upfront purchases. Initial product pricing projected to be high with narrowed gross margins to encourage adoption.
      • console & PC gaming
      • gear virtual reality
      • digital video streaming
      • enterprise
    • Software – estimated $13 billion market in 2020 based on high volume and wide gross margins to offset research and development costs
      • initial focus on video games – quality content will be key driver
      • later years will expand to other verticals
Magic Leap
Helping Great Companies Grow

Solution/Strategy

  • Founded in 2011, ML develops augmented reality devices that layer digital imagery over the real world, for users wearing goggles, eyeglasses and other hardware
    • ML developed and markets a virtual Reality/augmented reality headset called “Magic Leap One” that enables users to digitally interact with their environment
    • Headset has unique design and technology which weaves natural light waves together with softly layered synthetic light fields
  • Creative launch June 2018 – 6,000 units at $2,300 per unit
  • Consumer launch slated for June 2020 – at $1,000 – $1,500 per unit
  • ML is one of the most exciting startups in the past decade
    • no down rounds – raised an unprecedented $3.0 billion+ since 2014 including the largest B Round in Silicon Valley history
    • in 2019, ML completed what may be the largest C-round of financing in history at $793.5 million
    • with the closing of E Round, an IPO may occur in the next 20-24 months
    • this capital raise may be the only way to get pre-IPO ML shares
    • sizable amount of ML shares (>4 million) are available from the advisor group who traded stock for cash and are interested in some liquidity
  • Investor group is unprecedented and a Who’s Who of preeminent investors who believe ML technology is superior to competition (Microsoft, Samsung, Facebook, Apple, HTC​)
    • Scott Hassan, the third founder of Google, was the seed investor and remains a large investor
    • Peter Jackson, George Lucas and Steven Spielberg are investors – Peter has one of the first few headsets already
  • Attractive possible acquisition target for strategic investors
    • Mark Zuckerberg (Facebook owns Oculus), made an offer to buy the company for $2.2 billion during the B Round
    • ML could be highly attractive to Google, Apple, Microsoft, Sony and others to integrate into their video game
Magic Leap
Helping Great Companies Grow

Management

Mark Curcio - square

Mark Curcio

Principal

Media and entertainment expert. Seasoned corporate advisor, principal investor, senior executive and board member. Advising Executive for Business and Strategy Development and Advisory Board Member for Magic Leap, Inc. One of the two founding Partners of Bain and Company’s Los Angeles office in 1995 and was one of the original Partners in Bain’s Private Equity Practice in San Francisco. Since 2001, has been engaged by Bain Capital on multiple long-term assignments as well on short-term due diligence projects for private equity and hedge funds.  Served for over five years as a board member for Spectra Science, Providence based technology company, as it grew and then went public on the AIM in July 2011. Previously served as CEO of Artisan. Prior head of acquisitions and strategy development for the Studio Assets for The Walt Disney Company. Prior partner at LEK consulting. MBA from Carnegie-Mellon University. BS in Chemical Engineering from the University of Pittsburgh (Summa Cum Laude).

Russell Burke -square

Russell Burke

Principal

Entertainment, technology and digital media expert with deep executive experience in operations and strategy.  Senior advisor for Magic Leap.  Built and led high-performing global finance, HR, legal and IT teams and developed talent strategies and organizations from the ground up. Previously held senior roles and scaled high-growth at early start-ups including Pressplay and Magic Leap.  Successfully led multiple financing initiatives at Magic Leap including a record-breaking Series B round of over $540 million. Prior executive at Price Waterhouse (now PwC), Sony and private and public companies including Mandalay Media. Previously served as Global Executive Board Member for Weight Watchers. Graduate of the University of Newcastle.

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CONTACT US

Hi. We're not around right now. But you can send us an email and we'll get back to you, asap.

Thanks, Ken

Ken Margolis | Managing Partner Castle Placement, LLC
1460 Broadway Street, Rte 400
New York, New York 10036
(212) 418-1188 | C: (516) 712-7784
kmargolis@castleplacement.com

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