Multiple exit opportunities

Many virtual startups are built with the goal of selling them to a larger company. In fact, that goal is clearly stated in the missions of the Atlas and CMEA development groups formed in recent years. At Atlas Venture Development Corp., the VC firm's partners have formed two companies packaged with potential buyers based on the achievement of milestones.

It makes sense. Virtual companies would likely face the need for additional staff to pull off an initial public offering, Tioga's Collinson said. However, IPOs aren't off the table for companies that focus on one or two assets. For instance, Puma Biotechnology recently revealed its intent to seek a listing on the New York Stock Exchange, with much of the value in the company based on its key HER2 drug licensed in from Pfizer ($PFE).

NovaCardia, for instance, had filed an S-1 to go public and had gained commitments for the IPO before Merck ($MRK) swooped in and acquired the largely virtual biotech for $350 million in 2007, according to Collinson. "I think we could have gone out with NovaCardia" and completed the IPO "but the company was acquired."

Multiple exit opportunities

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