#021 Loyal: Your Best Friend's (and Investor's) Favorite Company + How to Analyze a High-Technical Risk, Low-Market Risk Startup

Something I really appreciate about humanity is our openness to a good debate. We often see this in business. For example, in my last episode, some could say Wal-Mart’s cheapest pricing strategy prevented mom-and-pop general stores from being able to compete and wiped out many small businesses. On the other hand, I would say the cheapest prices model benefitted consumers most, which a free market optimizes for. As a result, more specialty mom-and-pop stores arose to counter-position themselves and compete, which also benefitted consumers. My point is that these claims can be argued. Loyal is perhaps the first company where I refuse to hear any argument that isn’t regarding how great this company is for the world.  Loyal is developing a safe and non-abusive longevity drug for dogs that will extend their lives by another year or two. How can you not root for this company?! That’s an incredible mission that everyone can get behind.  The largest dog breeds typically only live 8-10 years, medium 10-12, and smaller dogs a little longer. Dog owners know these pets can feel like family members, so how short their lives are is awful.  The three big questions facing Loyal now and in the future in investors minds are: How much of their drug can they sell while in the conditionally approved stage? Will they be FDA-approved? If not, the company may die or lose to a competitor.  If they are FDA-approved, how long will their monopoly continue?  All of these questions are extremely speculative for an outsider like me and, basically, anyone without direct connections to the company because no one outside the company knows how complex their drug is.  What I think is more interesting at the moment, or at least what I can write about, is how a seed-stage investor may have analyzed this company. After all, if Loyal successfully proves they can increase the lifespan of dogs, they will have a short-term monopoly on that market and likely generate significant cash flow. On the other hand, there were many places where their research could’ve failed, and Loyal could’ve gone out of business.  Therefore, this episode will include several scenario analyses that a seed-stage investor may have built when considering investing in Loyal back when it was just an idea. Throughout the episode, I frequently reference my YouTube video or Subtack post to view the analyses. You can find those links here: YouTube: https://youtu.be/AH2G4g7bHGY Substack: https://allthingsvc.substack.com/

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