NeXeption, Not The Rule: Another Twist On Asset-Based Financing

Venture firms that have begun experimenting with asset-based financing hope to reap returns from relatively quick, clean exits, some in the next year or two. But as many await the first outcomes of their strategies, which typically involve isolating assets in single-program virtual companies operated by an external entity, some find themselves in complex deals tied to options and other obligations, suggesting that the new models are anything but simple.

Moreover, good licensing targets remain scarce, with pharmas reluctant to hand them over to start-ups for development unless they retain an interest in their success. As a result, some firms...