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Seniority Matters
By Dan DeWolf
There is little doubt that activity in the trading of secondary shares of private companies remains robust. Private companies are staying private longer and there seems to be an unlimited demand to buy into the newest “Unicorn” anointed each week. As the market for secondary shares stays strong, valuations seem not to matter much to most buyers. Additionally, many buyers seem to pay little attention to whether they are buying senior preferred stock at the top of the stack, as compared to junior securities or common stock sold by many former employees. But as we all know, things that can’t go on forever, don’t. And, as Warren Buffet once famously said: only when the tide goes out do you discover who has been swimming naked.
Do You Really Own Your Employee's Knowledge?
By Jen Rubin
So it may seem like a ridiculous question. Who can own a thought? But it is a bit more difficult to answer this question from a legal perspective than you may think.
Why You Should be Using a Board of Advisors and How to Get the Most Benefit From It
By Jeremy Glaser and Jen Rubin
Start-ups can use all the sound advice they can get, especially if they can get it for free. One source of “free” advice is an advisory board made up of people who can add value to your business.
What is Venture Capital?
By Dan DeWolf
Most of us go through our lives down a certain path. We grow up in our house or apartment; we go to school; we get a job; and eventually we grow up (one way or another) and live out our lives: sometimes happily, sometimes not so happily, and most times a little bit of both. In the course of this journey, many of us dream about starting something new, such as a new business based on a new concept or new paradigm. For many of us it is just a daydream. But for some, it is a call to action. Time and time again, an individual figures out a new way to look at things. Then from a scrap of an idea, and against great odds, this individual begins to build a new business.
Trademarks and Surnames: Why Can’t I Use My Own Name?
By Susan Neuberger Weller
There are many “myths” that float about in the general public about what can and cannot function as a trademark. Under US trademark law, a mark which is “primarily merely a surname” cannot be protected as a trademark without proof that it has “acquired distinctiveness.”
What is a Term Sheet?
By Dan DeWolf
When a venture capital firm is interested in a company it will meet with the management team numerous times to understand fully the business model and to learn more about the management. At some point in the process, the venture capital firm will decide that the investment is worth pursuing and will present a Term Sheet to the company. The Term Sheet (which is a nonbinding letter of intent) sets forth the basic terms and premises upon which the venture capital firm would be willing to invest.
What Makes a Good Business Plan?
By Dan DeWolf
The way most businesses are initially funded is by the three Fs. That is, by "friends, family, and fools." After all, who else would provide the initial seed capital to start a new enterprise? But self-funding (or relying on friends and families) will only take you so far in building out your new business.
IRS Tax Section 1202: Excluding Your Gains on Small Business Investments
By Dan DeWolf and Rachel Gholston
2016 promises to be another very good year to invest in start-ups because of the extension of significant tax breaks for investors who invest in early stage companies. Investors who invest in small businesses can realize exclusions on capital gains if they choose the right type of company.
The Top 5 Reasons an Employer Will Enforce Your Non-Compete Agreement
By Jen Rubin
Non-compete agreements are a common part of the business world these days. But just because you sign a non-compete agreement doesn’t mean your employer will enforce it (or try to enforce it) after you leave your current job. I’m an employment lawyer and one of the questions my individual clients ask me most frequently is not whether a non-compete agreement is enforceable (which is typically a fairly complex legal question to answer) but whether the former employer will try to enforce it.
The New Section 4(a)(7): More Than a Codification of Section “4(a)(1½)”
By Samuel Effron and Cliff Silverman
On December 4, 2015, the Fixing America’s Surface Transportation Act (the “FAST Act”) was signed into law by President Obama. Although the FAST Act is primarily a transportation bill, buried in this legislation is a new statutory exemption under Section 4(a)(7) of the Securities Act of 1933 (the “Securities Act”) that explicitly permits private resales of restricted securities. This new exemption may increase investor liquidity by facilitating the development of secondary markets in private securities.
When Can You Claim A Color As Your Trademark?
By Susan Neuberger Weller
In its decision in Christian Louboutin S.A. v. Yves Saint Laurent America, Inc., the Second Circuit held there was no “per se rule that would deny protection for use of a single color as a trademark in a particular industrial context.”
Your Executive Summary is the Key to Attracting the Attention of Investors
You have raised your friends and family/angel round, built out the beta of your product and have a few early paying customers. Now it is time to raise the money you need to grow from institutional investors. How do you get their attention when so many companies are in the same boat as you? Your executive summary – a one to two page teaser – is the crucial document you need to stand out among the noise and get noticed.
Why Does a Company Issue Stock Options?
By Dan DeWolf
One of the critical keys to a successful venture is aligning the interests of the employees and management with the interests of the shareholders/investors. After all, perhaps the greatest asset of a company is its people. Without a competent and motivated workforce, a venture is unlikely to succeed no matter how great an idea or business concept is involved.
What App Users Care About When Sharing Personal Data: Permissions
By Cynthia Larose and Jane Haviland
A Pew Research Center Report relayed useful information regarding application users’ concerns with sharing personal data. Ninety percent of app users indicated that how their personal data will be used is “very” or “somewhat” important to them, and influences their decision to download an app. Sixty percent of users decided against downloading an app when they saw how much personal information they would need to share. Android 6.0, or Marshmallow, should abate users’ concerns.
The (Best) Method to the Madness Behind Choosing a Company Name or Mark
By Susan Neuberger Weller
The Wall Street Journal ran a print article on July 18, 2013 titled “What’s Behind Those Quirky Startup Names?” in which the author Lindsey Gellman discussed the derivation behind unique startup names such as Mibblio, Kaggle, Shodogg, and Zaarly. One of the reasons for these types of names and spellings, she says, is the need for short, recognizable .com web addresses in a space where more mainstream domain names are no longer available
Software Audits: Strategies for Licensees
By Julie Korostoff and Joseph DiCioccio
If you have received a software audit request from your software vendor or one of the industry trade groups representing software publishers, such as the Software & Information Industry Association (“SIIA”)1 or the Business Software Alliance (“BSA”)2 you are not alone. Over the past five years, 3 software audits have become an increasingly common revenue-leakage recovery tool for software vendors.
FTC Takes Action Against Retail Tracking Start-Up Nomi Technologies
On April 23, 2015 the FTC settled deception charges against start-up Nomi Technologies, Inc. related to Nomi’s in-store, sensor-based, tracking technology.[1] This is the first FTC enforcement action against emerging retail store–based tracking technologies.
Don’t Make These Ten Mistakes When Selling Your Business
Over my three decades of practicing corporate law, I have helped hundreds of founders sell their businesses. In the process of helping them achieve a successful transaction, I have noted ten common mistakes that can cost the founders money by way of a lower sale price or higher expenses and that can delay or prevent the successful closing of the sale transaction. If you want to maximize your chances of closing your transaction on time and on the best possible terms, avoid making these common mistakes
Starting a startup as CTO / Head of Product
By Lauren Mosenthal of Gust.com
After less than a year, Glassbreakers is now a team of 10, we have thousands of active users on our free product, we’ve expanded into enterprises with paying customers and raised over a million in seed funding. After a few of my Glassbreaker matches inquired, I started to reflect on what it’s like to build a startup as a CTO / Head of Product. I wanted to share my journey, advice and insights to others who are starting out as product leaders.
Peeling the Onion, or How Top Investors Value the Startups They Invest In
By Keyvan Firouzi of Gust.com
Early-stage technology company valuations are generally a crap-shoot. Bill Payne did a great post about this in October 2011. This post builds on top of his work, and attempts to shed additional light on the valuation process.
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