Gm! You prolly should have started thawing your bird yesterday. š¦
[Welcome to Issue Number 44 ofĀ The House Brazeryen, where we break down the latestĀ #startup, #biotech, and #ScientistCEO-related news for you fortnightly, in roughly 5 minutes. Brought to you byĀ Brazen CapitalĀ andĀ brainsurgerydropout.]
Was this forwarded to you? Mash this subscribe button, homie.
RE: canāt not talk about Sam
by W. Shawn Carbonell, MD, PhD ā I spent so much time reading about this real-time Silicon Valley tech drama that I didnāt have much time to write about it. To recapā¦
FRI: Sam was fired by the OpenAI BOD.
SAT: Investors (and others) revolt.
SUN: Uno reverse cardāBOD appoints Emmet Shear as new interim CEO.
MON: Sam joins Microsoft?!!?!?
TUE: OpenAI employees both presentāAND PASTāmake demands.
And, as if that wasnāt enough of a rollercoaster, shocking abuse allegations by Samās younger sister have resurfaced in parallel (also hinted at in a major September profile).
BRAZEN BREAKDOWN
Goddam. This is the most compelling show Iāve ever watched. QED
Brazen Manifesto: One Year Laterā¦ š„
Last fall, we published our Scientist-CEO Manifesto in the new journal GEN Biotechnologyā¦ How does it hold up 13 months later?
āWe predict that this top-down status quo way of doing things in biotech will be disrupted over the next decade from the bottom up. Scientist-CEOs will take matters into their own hands and bring their technologies to the world.ā āCarbonell & Reinhardt, 2022
Like fine wine. š·
BRAZEN BREAKDOWN
Missed it the first time? Download the manifesto HERE (pdf).
VC CORNER: Negotiatingā¦ The Rest
byĀ Scott Alpizar, PhDĀ āĀ Weāve hit juuuust about everything in terms of negotiating your term sheet. If youāre just jumping in, weāve already talked about what I consider to be most of the big ticket terms that you should know and be negotiating: valuation, option pools, board of directors and voting rights, liquidation preference, and vesting.
So, whatās left? While some of these may not even need a second thought if theyāre presented as they should be, I do think theyāre worthy of a double check!
BRAZEN BREAKDOWN
Some final terms that I think are worth looking at in your term sheet:
Pro-Rata Rights. This allows an investor to maintain their equity percentage and to invest more money in future rounds. These rights are usually seen as a way for your investor to participate in and benefit from your future success as a reward for taking the risk on you in the first place. Generally, at the early stages, this is a standard term and not usually controversial. Just make sure the investor doesnāt have a āsuper pro rataā, or an ability to take more than their pro-rata share in the new round.
Dividends. These are the distribution of a companyās earnings to its shareholders. Investors will set the specifics in terms of amount (usually 5-15%) and timing (annual, monthly, etc.). These are also a typical term sheet component, but what you want to be careful of are cumulative dividends, which are paid automatically (non-cumulative dividends are voluntary). There can also be some complicated accounting with cumulative dividends that could make it challenging for you to ever see a payout.
Anti-Dilution. Iāve mentioned anti-dilution before, but only weighted average. That is the more typical type youāll see (though still not without its problems ā why do VCs need to take advantage of startups in down rounds?!), but there is another type: āfull-ratchetā or ābroad-basedā. In full-ratchet, all of the investorās shares get re-priced to the new share price in a down round, unlike the āmeet in the middleā approach of weighted average. This is not a market term and you do not want this! I also wouldnāt be me if I didnāt say that if you ever see NON-dilution in a VC term sheet, run.
Of course, there will likely still be something that I missed, or that someone has a difference of opinion onāthat happens! One final note is that there may be multiple voices in your ear as you go through this process. Lawyers, advisors, and other founders or investors may all tell you different things. Aside from watching for predatory terms, make sure you consider the term sheet in the specific context of your company. Think about what is best for it and for you, communicate with your potential investors, and youāll make a deal in no time!
š BRAZEN SNAX
š± Neural bluetooth? Long distance extrasynaptic neurotransmission
š¦ Mechanisms for the continued propagation of the Thanksgiving Myth
š§ Female brain health initiative just launched (since 95.5% of data is male)
š <5% of embryos grown on the ISS survived: āMammals can thrive in space" lol
š§¬Ā Does the CNS offer structural opportunities for functional pluripotency? NO?
š¤ Arguing against the need for a PhD (whilst going out of oneās way to get one)
š«” Speaking ofā¦ On What Self-Awareness Really Is (and How to Cultivate It)
š¦ Re-re-re-re-refresh your supply ofĀ FREE COVID testsĀ (thanks reg capture)
ā° TikTokCrak:Ā Biomechanics of the perfect volleyball jump #MyaAllen
šŖ CARVEOUT
Fantastic discussion between The Hubes andāone of our favorite IG OGsāNatalie Crawford, MD on the Huberman Lab Podcast: āFemale Hormone Health, Fertility, & Vitalityā. Useful info not just for the ladies (e.g., *sperm*)!
šš½ A DOSE OF GRATITUDE
We are grateful for all of YOU, of course. Happy Thanksgiving! š
š BRAZEN MEME
āļø FEEDBACK
Leave a comment and letās continue the conversation on X:Ā @brazencapital
W newsletter edition.