Purinex

Analysis of alternatives

1. Venture Capital

If Purinex decided to raise a one time round of financing from a venture capital firm there would be a significant amount of restrictions. There would be preferences for things like board appointments, anti-dilution rights, liquidity, participation, and positive and negative covenants. If Purinix decided to go with a venture capital round they would first have to decide which type of venture capital they wanted for their one time round. In the case of Purinex company they are looking for mezzanine financing which is basically one step above ground floor, or start up financing. In terms of the amazing strides Purinex was making in the biochemical field, adding a venture capital firm would be sure to put a restriction on some of its process’. Going with a venture capital one time round would make Purinex an all equity firm that was still unable to make decisions without the approval of the venture capital firm.

2. Wait six months

If Purinex decided to wait six months to see if either deal for a partnership would go through it would put the company in a very risky position. This is because if neither deal went through the company would be forced into a down round. If however one of the deals went through it would put Purinex in an excellent position. For the purpose of the case lets say that one of the two deals did come through. What kind of position would that put Purinex in? first if the sepsis partnership came together Purinex looked to gain 5 million up front, milestone payment undiscounted at 108 million and royalties of 10 percent of revenues. Lets evaluate the deal with sepsis.