Dearest Brazeryens: Happy Anti-Valentineâs Day! đ€đ„
[Welcome to Issue Number 50 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.]
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RE: Carta Fired Brazen Capital (PHEW!)
by W. Shawn Carbonell, MD, PhD â I shat a little [figuratively] when I received the email that Carta was terminating our contract for admin services of our VC fund.
But as I thought about it more, I began to feel great relief. Not because I shat myself [figuratively], but because I realized it was actually great news!
VC Funds for Dummies
When we began fund creation activities back in 2021, we had no idea where to start.
After a little digging, we realized we had a couple options:
either use our luxury law firm who was very experienced and would charge us SIX FIGURES just to establish the fund (ongoing maintenance would be extra) or
sign up with AngelList or Carta who recently began offering full-service venture packages to smaller funds including SAAS (software as a service) products for a monthly fee.
Overall, starting a venture fund from scratch seemed like a very intimidating process with the SEC filings, FINRA registration, legal agreements, accounting, compliance, establishing multiple entities and a separate bank account for each, custodian account, etc. This, of course, was largely according to a fund lawyer⊠who in retrospect was probably just trying to scare us into hiring them.
Ultimately, we chose Carta. I had used their cap table management product (now there are better alternatives) at my first startup, so I was already familiar with their platform. Plus, they would establish our fund for only $10K upfront!
Hereâs the catch: we would have to sign a multi-year contract for their SAAS venture product* and services at cost of around $1,000/month. We thought that was pretty steep, but compared to the old way (an immediate SIX FIGURE luxury law firm fee) it seemed a no brainer.
*What is this SAAS venture product? Basically, stuff that could easily be done for free in Google Sheets and an iPhone app that was just a Carta wrapper on a generic messaging service.
The Olâ Bait and Switch
We realized at the beginningâdue to the relatively small size of our fundâthese fees would potentially get in the way of our ability to launch and operate successfully (i.e., early cash flow issues). To their credit, Carta listened and offered reduced and deferred fees for the first year.
But the deferment came and went and the greater macroeconomic environment got worse. To add insult to injury, our account rep emailed out of nowhere thatâOOPSIEâthey realized we didnât have an engagement for administration of our management company⊠that the current plan only included servicing the other two entities (n.b., VC funds are made up of THREE different companies).
Oh, and donât worry they âwill not back charge for previous work done.â
My first reaction was âwhat previous work done?â Weâve decided as a fund to take ZERO FEES for the first few years so the management company literally didnât do shit. Hereâs the kicker:
âA management co with this scope would normally be priced at $10K/year. In honor of your relationship with Carta and the state of the Fund, I was able to advocare [sic] for discounted pricing on your behalf, and we would be able to service at a cost of $6.5K/year.â
WTF, Brah? Suddenly raising our fees by 50% to do nothing?
Makes sense given all the latest news.
Carta has been a naughty one lately⊠like the super shady (possibly illegal) shit Carta did in secondary sales that came to light last month, the toxic boys club culture concerns of last year, and the baffling CEO response which only made things worse.
mmmBye.
It Ainât Brain Surgery
Having ran the active fund for the past 18 months, I realized the majority of the work was really in the fund creation and that the maintenance and compliance was intermittent and fairly straightforward. Most definitely NOT worth $1,500-2,000/month for the 5 year term of our contract⊠because most months they literally do NOTHING (this is not to say it doesnât make sense for larger funds with more activity/complexity).
The best news is I also realized that for a fund of our size, this work could easily be done by a freelance fund accountant for an order of magnitude less cost.
BRAZEN BREAKDOWN
Brazen Capital is looking for an experienced freelance fund accountant to service us for an order of magnitude less than Carta (plus stock options)! Apply within (referrals welcomed)!
GLOWING PLANTS: From Failed $484K Kickstarter to USDA Clearance
A decade after the successfulâbut DOOMEDâKickstarter campaign by the now defunct Taxa Biotechnologies (YC S14), we may finally grow (faintly) glowing plants at home thanks to a new biotech based in Sun Valley, Idaho.
Specifically, a white petunia (Petunia hybrida).
They are being marketed as âFirefly Petuniasâ even though the glow gene is not firefly luciferase, but from a bioluminescent mushroom. đ
USDA examined and cleared the technology last year and the first 50K plants are slated to ship this spring.
BRAZEN BREAKDOWN
Pre-order yours now for only $29 (plus $25 shipping đ”) from light.bio (n.b., be prepared to be totally creeped out by the visualsâespecially the YouTube teaserâtherein).
VC CORNER: Tech Transfer (Pt.2)⊠The Bayh-Dole Act
by Scott Alpizar, PhD â Last issue I broke down the push towards supporting scientific research in the US after World War II. While it was a positive decision, the policies surrounding what would happen with inventions that resulted from this research were lacking.
This was slightly overcome in 1968, when the Department of Health, Education, and Welfare began providing âInstitutional Patent Agreementsâ (IPAs) to non-profit grantee institutions. These agreements allowed the institutions to obtain assignment of patentable inventions made with federal funding. However, not every government agency provided an IPA.
This was frustrating to universities who received funding from those government agenciesâso frustrating that two Senators, Birch Bayh of Indiana and Robert Dole of Kansas heard of these issues and agreed to collaborate on a bill to fix them.
BRAZEN BREAKDOWN
What became known as the Bayh-Dole Act was passed in 1980. It provided a much-needed uniform patent policy for many federal agencies that fund research while also defining guidelines around disclosing and patenting these inventions. When federal funding to a university leads to an invention, hereâs what happens:
Universities retain ownership of any inventions (there can be exceptions where the government would own the technology, but this must be communicated up front).
If an invention is created and disclosed by the researcher, the university has two months to disclose that information to the appropriate federal agency. The university also has to pursue patent protection on the invention.
In addition to patent protection, the university must attempt to develop and commercialize the invention. If they donât, the government can take control of it. This is whatâs referred to as the government's "march-in" rights.
The university must share a portion of the royalties with the inventor.
The university must provide the government with a nontransferable, irrevocable, paid-up, nonexclusive license to use the invention.
When granting a license to use the invention, the university should prioritize small businesses and maintain the inventionâs fair-market value.
If the license is exclusive, the university must ensure that the invention will be manufactured substantially in the US.
This act was crucial in motivating universities to set up the tech transfer offices that we know and (donât necessarily) love today. Itâs made a tremendous impact, but forty years later, it may need a little bit of reworking to keep up with the speed of innovationâŠ
đ BRAZEN THOUGHTS
âIt is not that we have a short time to live, but that we waste a lot of it.â
âSeneca (Roman Stoic philosopher)
đ BRAZEN SNAX
đš AI GodfatherâAndrej KarpathyâOUT at
OpenAI (again)đ€ The Bill Gates Problem. No, not THAT one⊠the other oneâŠ
𧏠A memory B cell driving allergic reactions has just been identified!
đ° Become a Brazen Capital LP! Rich folks need only apply (no really! itâs the law)
đ€ ChatGPT now remembers past interactions⊠like killing literally everyone
đŠŸ Novel prosthetic provides phantom thermal sensation to amputee
âđœ Best practices on how to deal with
Shawna condescending colleagueâ° TikTokCrak:Â this cat video guarantees tears (unless you are a psychopath)
đȘ CARVEOUT
CONSENSUS is a FREE AI search engine powered by GPT4.0 for peer-reviewed scientific research! Fairly decent results in our limited testing. Main thing to consider is research quality is not assessed (i.e., garbage in, garbage out) so basic science literacy is still necessary for proper use. Move over Google Search⊠we can now harness the power of AI to ruthlessly annoy our doctors!
PS: Donât forget to also check out Consensus Copilot for drafting science content. Hurry before your school bans it.
đđœ A DOSE OF GRATITUDE
We are grateful for Carta terminating our fund administration services contract. The savings will allow us to invest in SEVERAL more scientist-CEOs! đ
đ BRAZEN MEME
âïž FEEDBACK
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