Weebit Nano (ASX:WBT): Interview with CEO Coby Hanoch

We spoke with CEO Coby Hanoch about Weebit Nano’s recent capital raise that brought in four Israeli institutional investors, which we believe is a big milestone.

Read the full interview transcript below.

 

Read our original report on WBT here

 

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Transcript:

 

Marc: Hi, and welcome to Stocks Down Under. Today we are joined by Coby Hanoch CEO of Weebit Nano. Good morning, Coby.

Coby: Hi, Marc.

Marc: So big news the other day, a capital raise with institutional investors coming on board, so that’s very significant, I think. Let’s kick off this interview with the question about the actual cash in the bank that you have. Why are you raising capital when you still had 19 million, I think, in the bank at the last 4C announcement because, you know, you raised quite a substantial amount. Can you talk us through the reasoning for that?

Coby: Well yeah, you’re absolutely right. We did have the money and we didn’t really have to do the raise at that point, I guess. But on the other hand, I’m with the company already over four years and one of the key questions that I get every time I talk to investors is, why aren’t there Israeli companies, or Israeli people, Israeli entities that are investing in Weebit? You guys are a startup nation. You guys, you know, they should know the technology, they should be aware of you guys. And why don’t we see that and why don’t we see institutions coming in and investing? So that question kept coming up. You need to understand it’s not easy today for Israelis to invest in the ASX. Actually the banks don’t really have that option and institutions, these guys that came in now, they really didn’t invest in Australia before. This was quite a challenge for them to just do it the first time, we have to get them the SRNs and stuff.

So when they came to us, and that was the key thing, you know, they came to us and said, “Listen, we’ve been following you guys. We’ve been seeing that you guys deliver. You told us you will have a commercial agreement. You told us you will make this technical progress, etc. And, you know, we’re impressed by what’s going on, so we want to come in and want to do it now, and we have the money here.” So at that point we basically looked at it and said, well, we always will need more money. When you go down to the smaller geometries, everything becomes more expensive. And I think just the mere fact that you’re getting this vote of confidence from institutions, from Israeli institutions that are coming in and, you know, Meitav Dash is becoming a significant shareholder. I think that was a very important thing for us and I’m very glad that they came in.

Marc: All right. And so, can you tell us a little bit about these institutions because I think the announcement talks about they’re familiar with the semiconductor industry, but it’s probably good to get a sense of who they are.

Coby: Meitav Dash who really put in the significant amount in this race is one of the top Israeli pension funds. I think, you know, in Israel they are…I don’t know if to say they’re one of the top three, but they’re definitely there and they’re very well-known. So, you know, when they came and said they wanted to come in, it was great. These guys, just so you understand, they manage over $65 billion. I think that’s in, you know, Aussie about AU$90 billion. So it’s a very big fund. They manage a lot of money. They do a lot of investments. They have people who know the semiconductor space that they have in-house. Outside, you know, they consult with people. So again, this was a great vote of confidence when they came in. And these guys, the big thing for me is, these guys are long-term shareholders.

One of them actually told me, “Listen, when we come into the company, we don’t look at the screen for another five years, you know, we’re in there and that’s it, which was great, you know, kind of a nice message to get. They also insisted that the other funds that came in will commit to be long-term holders. They didn’t want to have people who will come in and flip the shares in a month or two. So this is really, you know, a very nice group of funds that are coming in and I’m really, really proud to have them onboard.

Marc: All right, good stuff. So you’ve got an additional $34 million, I think, before the cost of the placement. So that’s a lot of money, add that to the 19 million you already had in bank, so that’s a big chunk of money, right? So what’s the plan with that? What can you do with it that you couldn’t do previously? And is there anything else that was sort of on the back burner that now sort of can come into focus?

Coby: Well, I think Weebit is showing a track record, you know. Last year when we did the raise, people were asking what’s the money going to be used for and I think you could see the results. We hired three amazing VPs. You know, these guys are really, each one of them is top-notch in his domain. They started up so much activity and so much parallel work, so they really enabled us to do so much more than, you know, I was thinking, you know, two years ago and that’s great. Now that we have this additional boost, we can just do a lot more and, you know, try to do things faster and just better.

So as I started mentioning earlier, going down to smaller geometries is very expensive. Once you go down below the 28 nanometer mark, the mask sets are much more expensive. The work, the wafers, everything is, is more expensive. So there’s going to be…you know, this is really going to enable us. Now, this is going to give us the boost needed to go down into that domain, and I remind you that below 40 nanometers, you don’t really see embedded flash. So it’s an area where you have the most advanced designs, the most advanced applications, and they have a real need for non-volatile memory that we can go and address. So that’s going to be a big activity.

Going after discreet or standalone components is another one. You know, we made our announcements on the selector. We’re working now on growing that into an array and into larger and larger arrays, so that’s going to be a key activity.

And in general, this is…in semiconductors and in high-tech in general, you have to keep running forward. You have to constantly improve your technology. The work with Leti is going to continue, and even at a faster pace now in a broader way. We need to constantly improve the technology, get better retention, get better endurance, get lower speeds, improve the manufacturing process. You have to keep running forward, otherwise you fall behind. So the money, we have a lot of things that we want to do with it.

I remind you, it’s a $100 billion market. It’s a huge market. If you want to really grow and take a big chunk of it, you have to make that investment. And now we have the money, we can make that investment. We have the team, and we’re just all, you know, really pumped up going after that.

Marc: All right. Excellent. So it’s probably fair to say that the interest from Australian institutions has been fairly limited over the last few years with a few exceptions. And, of course, it makes sense from an institutional point of view. I mean, there’s certain market caps below which you really can’t invest or, you know, you might be too early stage. So it’s understandable until now, but it seems that, you know, we described what to do, especially, and now also with these large Israeli institutes coming in, some of the local one, the local institutes might be a bit more interested in Weebit Nano as well. What can you tell us about sort of the last few weeks and months since SkyWater basically, what the interest has been from local institutional investors?

Coby: I’ve had this challenge in Australia for four years and it’s been continuing also this year. You know, we talk to institutions, there’s some communication, but the key message from them has been we just don’t understand semiconductors. We just don’t understand this space. It’s very hard for us to invest here. And again, you know, why aren’t there any Israeli guys or U.S. guys coming in that know this domain that can give us better assurance on it. So it’s been this, I would say, quite frustrating situation that, you know, they keep saying it looks like a good company, it sounds good. Everything is nice, but we just need to have something that will give us, you know, a stronger feeling. We just can’t analyze this company ourselves. And I hope that now they have a good answer.

Marc: Yeah. Okay. Well, they should probably read our research more then if they don’t understand semiconductors. That’s a good step, I think.

Coby: I always recommend your research. I think you manage to do a good analysis of the domain.

Marc: Yeah. So, I understand technology is a fairly new sector for Australia and especially semiconductors, even more complicated. So I get where they’re coming from, but I think now, you know, with the Israeli institutes coming on board, it’s probably time for them to have another look at it. Now last question, Coby, I know it’s early days since the announcement described what to do, but I was just wondering how the technology transfer is going up until now.

Coby: Oh, it’s really going well, it’s really going well. We have a great partnership with them, the technical teams are talking on a regular basis, many times a week, and the work is going on. For the moment I’m happy to say no surprises, it’s moving along as expected, on plan and, you know, just, can’t wait to hear that it’s done already that we can start qualification.

Marc: Excellent. Okay. Well, thank you very much, Coby. Again, congrats on bringing in these four institutes. And yeah, there’s a lot of money in the bank now, so I think every shareholder or potential shareholder is eagerly waiting, you know, future updates. Again, thank you very much for your time and we’ll catch up soon.

Coby: Yeah, thanks. And the shareholders, obviously, it was very important for me to make sure that we’ll have the entitlement offer to give our existing shareholders the opportunity to participate. I think this is a good opportunity for me to thank the existing shareholders that have been with us through some rough times, you know, highs and lows and whatever. It’s very important for me that they get their chance, so thank you, and thanks, Marc.

Marc: No problem. Thank you, Coby.