Starting January 1, 2024, virtually all private companies will be required to report information about their beneficial owners to the Treasury Department’s Financial Crimes Enforcement Network “FinCEN”) under the Corporate Transparency Act (the “CTA”). But the CTA presents unique analytical and reporting challenges for startups and venture backed companies because of the special economic and governance rights negotiated with investors in early stage and venture funding rounds.Continue Reading Corporate Transparency Act Risks for Startups and Venture-Backed Companies
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What Can’t be Cured, Must be Endured: Delaware Limits Defective Corporate Act Ratification
A recent Delaware Chancery Court decision provides important guidance on what types of defective corporate acts may be ratified under Section 204 of the Delaware General Corporation Law (the “DGCL”), and what types may not. Paul Nguyen v. View, Inc. also underscores the importance of focusing on whether to opt out of the class vote…
Valuation Disconnect Leads to 2016 IPO Drought
2016 turned out to be a terrible year for IPOs, both in terms of number of deals and aggregate proceeds.
According to Renaissance Capital’s U.S. IPO Market 2016 Annual Review, only 105 companies went public on U.S. exchanges in 2016, raising only $19 billion in aggregate proceeds. The deal count of 105 IPOs was…
Seed Round Model Structures, Part II: Convertible Notes, KISSes and SAFEs
In Part I of this two part series on model structures for seed rounds, I explained how the dramatic decline in the cost of launching an internet-based startup over the last 15 years primarily due to the disruptive effects of open source software and cloud computing has led to a surge in seed stage investing…
2016 Trends in Convertible Note Deal Terms
Seed stage investment deals, i.e., those in a range of approximately $100,000 on the low end and around $1.3 million on the high end, are structured either as straight equity or as convertible loans. If straight equity, the company typically issues to the investor shares of preferred stock usually designated as Series Seed which includes…