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...more
I had a chance to sift through Pitchbook’s U.S. VC Valuations Report for the first quarter of 2024. The data point that really jumped out at me was the increase in down rounds. The number of flat and down rounds as a...more
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...more
3/18/2024
/ Accredited Investors ,
Broker-Dealer ,
Capital Formation ,
Corporate Issuers ,
Early Stage Companies ,
Financial Industry Regulatory Authority (FINRA) ,
Finders ,
Investment ,
Investors ,
Securities and Exchange Commission (SEC) ,
Securities Regulation ,
Startups ,
Venture Capital
Process still matters. That’s the main takeaway from the Delaware Court of Chancery’s 200-page opinion striking down Tesla’s 2018 incentive package awarded to Elon Musk. The court rescinded the incentive package mainly...more
2/9/2024
/ Board of Directors ,
Compensation & Benefits ,
Controlling Stockholders ,
Corporate Governance ,
Corporate Officers ,
Elon Musk ,
Executive Compensation ,
Incentive Compensation ,
Publicly-Traded Companies ,
Stock Options ,
Stocks ,
Tesla ,
Venture Capital
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...more
1/8/2024
/ Anti-Money Laundering ,
Beneficial Owner ,
Corporate Transparency Act ,
Financial Crimes ,
FinCEN ,
Ownership Interest ,
Regulatory Requirements ,
Reporting Requirements ,
SAFE ,
Startups ,
Venture Capital
In the world of venture capital, there are certain investor rights that ensure the smooth execution of exit transactions. The primary such mechanism is the drag-along provision, under which one group of stockholders agrees...more
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been ongoing legislative, regulatory and market initiatives to reform capital markets by targeting unreasonable or outdated impediments to capital formation to make it easier for...more
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...more
4/3/2023
/ Banking Crisis ,
Capital Raising ,
Depository Institutions ,
Emerging Growth Companies ,
FDIC ,
Investment Opportunities ,
Loans ,
Receivership ,
Silicon Valley ,
Startups ,
Venture Capital
“Never in my career have I seen such a complete failure of corporate controls and such a complete absence of trustworthy financial information as occurred here”. Such was the lament of John Ray, the legendary restructuring...more
12/20/2022
/ Commercial Bankruptcy ,
Corporate Governance ,
Crypto Exchanges ,
Cryptoassets ,
Cryptocurrency ,
Directors ,
Financial Services Industry ,
Investment ,
Popular ,
Securities and Exchange Commission (SEC) ,
Venture Capital
Just last week, special purpose acquisition company The Music Acquisition Corporation (“TMAC”) called a special meeting of its stockholders. It wasn’t the special meeting it originally envisioned. TMAC was launched in...more
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...more
The Securities and Exchange Commission just proposed new rules to protect investors in private investment funds. The proposed rules would require private fund advisers to disclose certain information and avoid certain...more
2/22/2022
/ Accredited Investors ,
Investment ,
Investor Protection ,
Investors ,
Private Equity ,
Private Funds ,
Regulatory Oversight ,
Regulatory Reform ,
Rule 506 ,
Securities and Exchange Commission (SEC) ,
Securities Regulation ,
Venture Capital
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...more
On May 3, 2021, blockchain-based trading platform operator INX Ltd. announced it had completed its initial public offering of digital tokens, raising approximately $85 million in the IPO from over 7,200 institutional and...more
6/14/2021
/ Blockchain ,
Cryptocurrency ,
Digital Currency ,
Distributed Ledger Technology (DLT) ,
Form F-1 ,
Initial Public Offering (IPO) ,
Popular ,
Regulation A ,
Securities and Exchange Commission (SEC) ,
Token Sales ,
Venture Capital
A new reality streaming television series called Unicorn Hunters debuted last week in which startups will pitch to a panel that includes Apple co-founder Steve Wozniak, and the panelists after some grilling of the...more
5/10/2021
/ Capital Formation ,
Crowdfunding ,
Early Stage Companies ,
Emerging Growth Companies ,
Offerings ,
Popular ,
Regulation CF ,
Rule 506 Offerings ,
Securities Regulation ,
Startups ,
Unicorns ,
Venture Capital
It’s pretty common for issuers in follow-on offerings to solicit investors from previous rounds first. Indeed, doing so is often mandatory when early investors have preemptive rights. ...more
2/16/2021
/ Accredited Investors ,
Capital Raising ,
Crowdfunding ,
Financial Regulatory Reform ,
JOBS Act ,
Regulation D ,
Rule 506 Offerings ,
Rule 506(c) ,
Securities and Exchange Commission (SEC) ,
Securities Regulation ,
Venture Capital
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...more
1/25/2021
/ Biden Administration ,
Capital Raising ,
Crowdfunding ,
General Solicitation ,
Offerings ,
Regulation A ,
Regulation CF ,
Regulatory Freeze ,
Regulatory Reform ,
Securities and Exchange Commission (SEC) ,
Securities Regulation ,
Testing-the-Waters Communications ,
Venture Capital
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...more
Last month, The Securities and Exchange Commission passed sweeping reforms of the rules governing exempt offerings (the “2020 Reforms”) to make it easier for issuers to move from one exemption to another, to bring clarity and...more
This past June, autonomous vehicle technology startup Zoox agreed to be acquired by Amazon for a whopping $1.3 billion. Time for the common stockholders to pop the champagne, right? Not exactly, according to a complaint...more
8/26/2020
/ Bonuses ,
Business Judgment Rule ,
Carve Out Provisions ,
Compensation & Benefits ,
Controlling Stockholders ,
Corporate Sales Transactions ,
Fiduciary Duty ,
Initial Public Offering (IPO) ,
Preferred Shares ,
Purchase Price ,
Venture Capital
It’s no shocker that the Coronavirus pandemic has slowed down venture capital investment dramatically, with 2020 now on pace to be well below the high levels of the past couple of years. According to Pitchbook, VC deal flow...more
The impact of the Coronavirus and COVID-19 on venture capital investment will likely be similar to what we saw in the aftermath of the 2008 recession and the 2001 dot-com meltdown. VC investors will redirect their attention...more
Venture-backed companies did not receive the relief they had hoped for this past Friday, April 3rd, when the Small Business Administration (“SBA”) issued affiliation rule guidance on the Paycheck Protection Program (“PPP”)...more
The Securities and Exchange Commission is proposing to expand the definition of “accredited investor” to include additional entities that could bear the economic risks of investment and certain financially sophisticated...more
1/22/2020
/ 501(c)(3) ,
Accredited Investors ,
Broker-Dealer ,
Business Development Companies ,
Capital Formation ,
Comment Period ,
Corporate Issuers ,
Crowdfunding ,
Financial Regulatory Reform ,
General Solicitation ,
Investors ,
Limited Liability Company (LLC) ,
Offerings ,
Private Offerings ,
Registered Investment Advisors ,
Regulation A ,
Regulation D ,
Regulatory Oversight ,
Regulatory Requirements ,
Rule 144A ,
Rule 506 Offerings ,
Rulemaking Process ,
Rural Business Investment Companies (RBICs) ,
Securities and Exchange Commission (SEC) ,
Securities Regulation ,
Statements of Net Worth ,
Venture Capital
The corporate spectacle better known as The We Company IPO officially and mercifully came to an end September 30 when The We Company (“We Co.”), the corporate parent of WeWork, requested that the Securities and Exchange...more
10/7/2019
/ Anti-Dilution Terms ,
Business Valuations ,
Certificates of Incorporation ,
Corporate Governance ,
Dilution ,
Initial Public Offering (IPO) ,
Investment ,
Investors ,
Notification of Withdrawal ,
Office Space ,
Preferred Shares ,
Registration Statement ,
Share Price ,
Sharing Economy ,
SoftBank ,
Venture Capital