Separate Llc, Prodi discussed on a16z

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Automatic TRANSCRIPT

Right i mean that's the that's and that's hard to do especially if you're stage company but a second way to do that is through innovative structures and so we've seen this in a couple of examples companies to establish an llc structure and they basically are able to save for investors that are really the believe in the the future of this platform and the productivity of the platform to not just develop an one drug acid but multiple drug acids over time that becomes sort of the parent company of the mother ship and then you have separate llc's under that that you basically say for drug asset a i'll bring a new investors new investors are essentially betting primarily on the success of that drug asset and so the the parent company is taking a much smaller piece of the economics but they can now replicate it many many times because they have the resources to invest in the platform so ensure that future prodi let's be clear why we do this a unveiled aided platform really doesn't have a lot of value and that's why there's on the first asset you know the whole company's value may be riding on this asset because not only is that asset itself valuable but it also validates the the efficacy and usefulness of the platform itself then you're kind of in this in this state where you might have to say well i am now a single asset bet because of my first acid from my platform fails well maybe i throw out a good platform with a bad asset or maybe i just have a bad bad form you know and a bad asset some of these other legal structures are kind of ways to to get around that but it doesn't get around this problem of hey the first asset validates the platform and its successor failure means a lot for this business going forward.

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