• Choose a category
• All
• Classic-Fiction

By Root 913 0

a trim man in his forties, relaxed and athletic-looking, friendly in the usual San Diego manner. His firm was a private partnership, doing strategic investing in biotechnologies. A billion dollar fund, Derek had said. And they didn’t expect any return on their investments for four to six years, sometimes longer. They could afford to work, or had decided to work, at the pace of medical progress itself. Their game was high-risk, high-return, long-range investment. This was not a kind of investment that banks would make, nor anyone else in the loaning world. The risks were too great, the returns too distant. Only venture capitalists would do it.

So naturally their help was much in demand from small biotech companies. There were something like three hundred biotechs in the San Diego area alone, and many of them were hanging on by the skin of their teeth, hoping for that first successful cash cow to keep them going or get them bought. Venture capitalists would therefore get to pick and choose what they wanted to invest in; and many of them were pursuing particular interests, or even passions. Naturally in these areas they were very well-informed, expert in combining scientific and financial analysis into what they called “doing due diligence.” They spoke of being “value-added investors,” of bringing much more than money to the table—expertise, networking, advice.

This guy Bannet looked to Leo to be one of the passionate ones. He was friendly, but intent. A man at work. There was very little chance Derek was going to be able to impress him with smoke and mirrors.

“Thanks for seeing us,” Derek said.

Bannet waved a hand. “Always interested to talk to you guys. I’ve been reading some of your papers, and I went to that symposium in L.A. last year. You’re doing some great stuff.”

“It’s true, and now we’re on to something really good, with real potential to revolutionize genetic engineering by getting tailored DNA into people who need it. It could be a method useful to a whole bunch of different therapies, which is one of the reasons we’re so excited about it—and trying to ramp up our efforts to speed the process along. So I remembered how much you helped us during the start-up, and how well that’s paid off for you, so I thought I’d bring by the current situation and see if you would be interested in doing a PIPE with us.”

This sounded weird to Leo, like Indians offering a peace pipe, or college students passing around a bong, but Bannet didn’t blink; a PIPE was one of their mechanisms for investment, as Leo quickly learned. “Private Investment in Public Equity.” And for once it was a pretty good acronym, because it meant creating a pipeline for money to run directly from their cash-flush fund to Derek’s penniless company.

But Bannet was a veteran of all this, alert to all the little strategic opacities that were built into Derek’s typical talk to stockholders or potential investors. Something like sixty percent of biotech start-ups failed, so the danger of losing some or all of an investment to bankruptcy was very real. No way Derek could finesse him. They would have to come clean and hope he liked what he saw.

Leo gazed out the window at the foggy Pacific, listening to Derek go on. Unbroken waves wrapped around La Jolla Point and pulsed into the cove. The huge apartment block at the end of La Jolla Point blocked his view west, reminding him that big money could accomplish some unlikely things.

Derek finished leading Bannet through a series of financial spreadsheets on his laptop, unable to disguise their tale of woe. Bad profit and loss; layoffs; sale of some subsidiary contracts, even some patents, their crown jewels; empty coffers.

“We’ve had to focus on the things that we think are really the most important,” Derek admitted. “It’s made us more efficient, that’s for sure. But it means there really isn’t any fat anywhere, no resources we can put to the task, even though it’s got such incredible potential. So, it seemed like it was time to ask for some outside funding help, with the idea that the financing now would be so