It’s never easy to take an entire business day out of the office, but the annual Cornell Entrepreneurship Summit is well worth it. The 2014 edition, dubbed “Beyond the Horizon”, was no exception. One thing that struck me about this year’s summit was that, unlike previous years, none of the entrepreneur speakers were Cornell alums,
Are VCs incentivized to lose money?
Are VCs incentivized to lose money? This is the provocative assertion made recently (and again) by Kaufman Foundation Senior Fellow Diane Mulcahy in the Harvard Business Review. Some of us who are interested in this issue probably recall the equally incendiary piece she co-authored in 2012 for KF boldly entitled “We Have
Will Your Demo Day Presentation Violate the Securities Laws?
Your company is invited by a local meetup group to present at demo day with other startups, and you accept. The group announces the demo day lineup of startups in an e-blast, on its website, on its Facebook page and through banner ads on a tech e-zine. On demo day, the room is packed and
Why Valuation is Overvalued, Part II: Liquidation Preferences
In Part I of this two-part series, I explained how a favorable pre-money valuation can be undercut by a large option pool baked into the pre-money cap table. In this Part II of the series, I will concentrate on one other deal term that can serve to undermine a negotiated valuation: liquidation preferences. Failure to
Why Valuation is Overvalued, Part I: The Option Pool
In any seed or early stage round negotiation between a company and a VC, one of the first and most contentious issues to be negotiated is valuation. A company’s pre-money valuation will determine how much equity will need to be issued to the investor for any given amount of investment, and thus on its face
Accelerator Mentoring and Money: On-Ramp for Startup Success
Building a successful startup is challenging. But the chances of success could be greatly enhanced through participation in a startup accelerator program. Entrepreneurially minded universities and research institutions have run incubators on or near campus where startups receive office space, shared facilities and services, but no capital. Over the last several years, a new breed
To Improve Small Company Liquidity, SEC Chairman Announces Tick-Size Pilot
SEC Chairman Mary Jo White gave her state of the Commission speech on Friday at the “SEC Speaks 2014” conference in Washington, D.C. But if you were distracted for a moment by the sight of hoodie-clad Mark Cuban live-tweeting at the conference, you may have missed this one paragraph in the speech:
“In 2014
SBA Initiatives and Twisted Business at SBIA Northeast Private Equity Conference
My partner Steve Melore and I braved the latest New York snow storm to attend the Small Business Investor Alliance’s Northeast Private Equity Conference on January 22, of which Farrell Fritz was a sponsor. The SBIA is the leading professional organization for lower middle-market investment funds and the LPs that invest in them.
The
FINRA Priorities for 2014: IPOs, General Solicitation, Crowdfunding Portals and Microcap Fraud
On January 2, 2014, the Financial Industry Regulatory Authority (“FINRA”) published its annual priorities letter for 
2014, chief among which will be IPOs, general solicitation in private offerings, crowdfunding portals and microcap fraud.
IPOs
In the area of IPOs, FINRA intends to focus on “spinning,” a practice in which an underwriter allocates “hot” IPO shares