All Money Is Not Created Equal

Chapter 1A Tale of Two Companies

To help you better understand the difference between venture capital and venture debt, I'm going to start with a fictitious case study about the choices two growing companies made for getting capital. Throughout this book, as much as possible, I'll be using lessons drawn from actual companies and my own experiences (even though I may be masking the actual identities of the companies/individuals involved).

For the sake of simplicity, I am inventing two fictional examples. We'll call them 4Paws and 19/39. (You'll be seeing more about these two made-up companies throughout the book. In some instances, it will not be appropriate to use actual financial details from real companies; in other cases, examples from real companies would make those companies too easily identified.)

Recently, biotech has been one of the hottest areas in VC, but it wasn't as hot in the first decade of the twenty-first century, when our two imaginary companies were founded. However, there were some big, real-life winners in those years: 23andMe, the popular genetics company, was started in 2006; Acceleron Pharma was founded in 2003, went public 10 years later, and was acquired by Merck & Co. in 2021 for $11.5 billion; and StemCentrx was founded in 2008, and less than 10 years later was sold to AbbVie for $5.8 billion.¹

Our fictitious companies, 4Paws Corporation and 19/39, Inc., were veterinary biotechs (19/39 took its name from the fact that cats have 19 sets of chromosomes ...