In the world of early stage investing, there exists a range of structures from the most founder friendly to the most investor friendly.
The most investor-friendly structure involves some type of a priced round in which the investor receives shares of a class of preferred stock with a negotiated set of enhanced economic, management and
Identifying potential investors is one of the most difficult challenges facing early-stage companies. The range of amounts sought at this stage is typically greater than what could be provided by the founders and friends and family, but below what would attract a VC or a registered broker-dealer. The problem is even more acute in geographic
A major theme of this Blog has always been ongoing legislative, regulatory and market initiatives to reform capital markets by targeting unreasonable or outdated impediments to capital formation to make it easier for early-stage companies to raise capital. These impediments are not always obvious or direct. One such indirect impediment has been the venture capital adviser exemption under the Investment Advisors Act of 1940, the eligibility requirements of which disincentivize VC investment in secondary transactions and in other VC funds, thereby unnecessarily hampering liquidity in the innovation ecosystem. If a new piece of proposed legislation passed by the House Financial Services Committee becomes law, however, this impediment will be eliminated.Continue Reading Proposed Reform of Venture Capital Fund Advisor Exemption Will Boost Startup Investment and Founder Liquidity
The collapse of Silicon Valley Bank will have enormous repercussions for startups and VCs in ways seen and unseen. As for the unseen, SVB had deep relationships among the various players in the venture ecosystem. Founders and investors established banking relationships with SVB in part because of the opportunities SVB provided to network within the space. It will be difficult for other lenders who don’t have these deep relationships to replace SVB in this capacity and fill this valuable role.Continue Reading Bumpy Ride Ahead for Startups After Silicon Valley Bank Crash
Two startups with competing, equally compelling technologies at the same stage of development are pitching venture
capital investors for Series A funding. One startup is led by a serial entrepreneur founder, the other by a novice. Assume each will get funded. In all likelihood, the deal will happen quicker and the amount funded and pre-money
2021 was a spectacular year for the American venture capital ecosystem, with VC
investments, fundraising and exits all setting new highs. That according to the latest PitchBook-NVCA Venture Monitor, the self-described definitive review of the U.S. venture capital ecosystem. Nevertheless, it is difficult to predict how 2022 will turn out for the VC industry,
Perhaps the most vexing threshold issue faced by any company considering a capital raise is which securities exemption to pursue. The chosen exemption largely depends on the targeted amount of the raise, as well as the manner in which potential investors will be solicited and the type of disclosure to be provided. But this presents
For the second time in nine days, I recently drove ten hours round-trip to drop my son 
off at school for spring semester. The first time around, he ended up returning home with me the next day for unexpected oral surgery to remove his wisdom teeth after completing his mandatory one-day COVID quarantine at school.
A freeze on government regulation is generally perceived by most people as being a positive development for private enterprise. Not necessarily so, however, when the regulation being frozen is itself a reform of preexisting regulatory burdens.
Among the many Presidential Actions taken by President Biden on his first day in office was one entitled Regulatory
You just raised $1 million in your crowdfunding offering under Title III/Regulation CF. That’s the good news. The bad news? You now have over a thousand shareholders on your cap table, making it unwieldy, an administrative nightmare and likely to impede future funding. It means a huge challenge seeking consents for such things as director