THE HOUSE BRAZERYEN: 01AUG2023 🐉

everyone wants to be a VC

Gm! ELON ❤️ CANADA.

[Welcome to Issue Number 36 of The House Brazeryen, where we break down the latest #startup, #biotech, and #ScientistCEO-related news for you fortnightly, in roughly 5 minutes. Brought to you by Brazen Bio, Brazen Capital, and brainsurgerydropout.]

Was this forwarded to you? Mash this subscribe button, homie.

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RE: what’s wrong with many bio VC funds

by Shawn Carbonell, MD, PhD — [Besides the fact they are primarily financial arbitrage machines sold to LPs with bio-flavored marketing.]

Anyhoo, our favorite Silicon Valley tech bro venture capitalists [All-In podcast] were discussing the present VC surplus, especially the perils of the first-time “Gen Z VC” and how venture capital is something a lot of undergrad/grad students are interested in pursuing straight out of school (bc it’s “cool”). David Sacks encapsulated it best:

More so for biotech.

BRAZEN BREAKDOWN

Biotech is a special beast. First, it’s biology… which is the sum of the interaction of all elements, genes, proteins, cells, organs, systems, and your drug/product. Then you add validation, complex manufacturing processes, quality control, indication selection, clinical development, and federal regulation and you have something that is hard to really comprehend unless you’ve done it with your bare hands (ahem, like Monica and this bald guy). We’re a fund for scientist-CEOs, by scientist-CEOs.

This is not to say there won’t be outliers—especially for those lucky enough to work with experienced GPs—and indeed, Brazen Capital wouldn’t have a Junior Venture Fellow (JVF) program if we didn’t believe. In fact, we are quite bullish on our first three JVFs and look forward to the next crop.

Anyway, did I pre-meditate a tweet based off a great podcast quote in order to screenshot it for use in this post to promote why Brazen Capital is differentiated?

ofc.

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Top YC Bio Companies by Revenue?

The Champagne of startup accelerators, Y Combinator, released a list of the top 25 YC companies by revenue. Of those, FOUR were bio-related. These included obvious picks like the publicly traded Ginko Bioworks and—sponsor of Brazen Summit 2022—Benchling.

But the list also included diagnostics-focused Lucira Health and a company we’re embarrassed to admit we’ve never even heard of before, women’s wellness wearable company, Bellabeat.

BRAZEN BREAKDOWN

Unfortunately, since most are still privately-held, there are no actual numbers presented and, thus, the companies are listed alphabetically. Boo.

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VC CORNER: Let’s Get Between the (Term) Sheets

by Scott Alpizar, PhD — After last issue, you’ve now heard of a term sheet. You also did your homework and read the NVCA’s model term sheet… right? RIGHT?! If you didn’t, pause here and get to it! If you did, and if any or all of it looked like gibberish, have no fear! That’s why I’m here. You were savagely kept from a breakdown last time, so let’s not delay today.

BRAZEN BREAKDOWN

What terms are important? Well, honestly, all of them. But some can have a much larger impact on the future of your company, so you should know and understand those. They’re also some of the ones you may be able to negotiate!

1. Valuation. How much is the company worth? This will be broken down into before (pre-money) and after (post money) the investment.

2. Investment Amount. How much money are the investors putting in? Pretty straight forward.

3. Equity Percentage. What percentage of the company will the investor own after the transaction? It’s based on valuation (post) and amount invested.

4. Pro-Rata Rights. Do investors get to participate in future rounds to maintain their equity? Some will, some won’t, but most want the option.

5. Dividends. What net income distributions will your investors be entitled to? This can describe both the amount and the timing.

6. Voting Rights. How much say do investors have over the operations of the company? Is there anything they cannot vote on? Some of their rights could overpower yours!

7. Protective Provisions. What else is your investor protected from? Are there things you can’t do without their permission?

8. Drag-Along Clause. This enables a majority shareholder to force a minority shareholder to join the sale of the company. Sound bad? Not always!

9. Liquidation Preference. How will things work if the company gets sold? Basically, this explains what order everyone gets paid out.

This is still pretty high level, I know. And I’m sure some people have differing opinions or think I excluded something important. But there’s still plenty to work through with these—knowing what they are is only the first step. What you really need to know is what’s good and what’s not! So, stick around for more!

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😋 BRAZEN SNAX

• 🦖 Technology enabling Jurassic Park horrors get a major boost

• 🦠 A case for heterologous vaccine boosters (brought to you by Novavax)

• 💊 40% of supplements tested didn’t actually contain the supplement

• 🐀 Absolute dream job: tickling and playing hide and seek with lab rats

• 🐒 Perhaps these aren’t the lessons we should take from EXTINCT hominids?

• 🫣 Gary Vee was right: social media doesn’t change us, it exposes us

• 💸 Why impact-oriented employees accept less pay to carry the mission

• 🤑 Quest (and others) cashing in on amyloid drugs with… amyloid diagnostics

• ⏰ TikTokCrak: Enrico Vasaio and the Calzone of Fire

🔪 CARVEOUT

Great founder lessons from the CEO of WHOOP: “TWiST1786: The Quantified Self movement, product design, & more”

🙏🏽 A DOSE OF GRATITUDE

We are grateful for the newest LPs in our upcoming Brazen Capital close.

🙃 BRAZEN MEME

✍️ FEEDBACK

Feel free to tweet all thoughts, questions, and insults to us. Bring it. No, really. COME👏🏽AT👏🏽US👏🏽BRUH👏🏽

And let’s continue the conversation on LinkedIn: @brazencapital and @brazenbio.