The “Series A Crunch,” which is the significant decline in the number of startup companies per quarter that are completing their first equity financing, appears to be deepening.
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We are often asked by founders what they need to include in an executive summary that will be sent to prospective investors and what legal issues are involved.
When starting a new company, it’s easy to focus entirely on the business you are building, but it’s also important to make sure that you see the big picture . Here are three areas to keep covered…
Bitcoin is a hot topic in the startup ecosystem and Perkins Coie remains at the forefront of providing legal service in this space. Check out the latest post on our Virtual Currency Report blog that includes a link to our International Virtual Currency Tracker, a regularly updated chart that provides a quick snapshot of the status of virtual currency regulation in countries around the world.
A nondisclosure agreement (or “NDA”) is a contract illustrating how confidential information will be shared and protected by two or more parties.
The Double Edged Sword: Why Founders and Investors Should Avoid Fixed-Multiple Change of Control Premiums in Convertible Note Financings
In a convertible note financing (or an increasingly popular SAFE financing), the change of control premium—the benefit given to a lender if the company has an exit before the notes convert—is an easily overlooked term. This is because it is rarely applicable, especially when the financing is a seed-type investment.
Unfortunately, too often I hear founders say things like “I promised her options for 2% of the company,” or worse, we see statements to that effect in employee offer letters or other agreements. In the worst cases, founders will even expressly agree to issue an investor or service provider a “fixed percentage” of the company’s ownership going forward.
The American Bar Association’s M&A Market Trends Subcommittee of the Business Law Section has just published its biannual Private Target Mergers and Acquisitions Deal Point Study. This edition of the Study analyzes 136 publicly filed transactions that closed in 2012. This is a valuable resource for those that are negotiating transaction terms as it provides some empirical data to inform what constitutes “market” for a particular issue.
Nearly every start-up begins in a garage, basement or home office. Some of today’s largest technology companies fall into that category, including Google, Apple, Hewlett-Packard and Amazon. But, at some point hopefully, the start-up outgrows its humble beginnings and needs to lease office, retail or storage space in order to meet consumer demands.
Thinking About Raising Capital Through a “General Solicitation”? Make Sure You Understand the Hidden Costs
The passing of the JOBS Act created much fanfare, especially given the relaxation of the securities laws with respect to the use of “general solicitations.” Notwithstanding the excitement from the blogosphere, the revised rules also come with some hidden costs that make using a “general solicitation” in fundraising less attractive.