This document provides a summary of key legal considerations for launching a digital media startup. It discusses implementing structures that facilitate raising capital and liquidity events like acquisitions or IPOs. Some of the main points covered include choosing the right legal entity and location, capitalization, intellectual property protection, employment compliance, and regulatory issues. The document emphasizes the importance of being prepared for diligence from investors or acquirers by having documentation like financials, capitalization tables, and contracts in order.
Impact of the JOBS Act on the IPO Market (Series: THE JOBS ACT - A RETROSPECT...Financial Poise
Regulatory burdens associated with “going public” and thereafter with “being public” are major hurdles facing smaller issuers considering the prospects of an initial public offering (“IPO”). The JOBS Act has impacted that consideration principally in two ways. For the IPO process, the JOBS Act established an “IPO On-Ramp” benefitting smaller issuers by easing certain restrictions for a newly defined class of issuer known as an “emerging growth company” (EGC) that previously hampered the determination by those issuers whether even consider taking on the burden and expense of an IPO.
This webinar explores, for example, the opportunity created by the JOBS Act for EGCs to “test the waters” prior to embarking on the process, and the opportunity for confidential SEC filing and early regulatory assessment of the offering’s viability. For the EGC that succeeds in an IPO, the JOBS Act “on-ramp” significantly reduces the regulatory burdens under the Securities Exchange Act reporting requirements, for example, for a five year period. An equally significant impact of the JOBS Act on determinations by smaller issuers regarding the IPO market is the ability of private companies to avoid becoming a public company subject to Exchange Act Section 12 registration requirements and the panoply of regulatory requirements triggered by that registration. The JOBS Act significantly increased the threshold number of shareholders a company may have before triggering the registration requirement, thus permitting smaller companies to remain private longer.
This webinar episode also tackles these elements of the JOBS Act that directly impact IPO determinations by smaller issuers, and provides practical insights and tips in making these important business decisions.
To view the accompanying webinar, go to: https://www.financialpoise.com/financialpoisewebinars/on_demand_webinars/impact-of-the-jobs-act-on-the-ipo-market/
Presentation given to the participants of the Launchpad program run by NDRC in Dublin's Digital Hub, including updated links to NVCA term sheet and guidance on retaining professional advisers
From the point of choosing the appropriate business structure to the scope and extent of necessary contracts, there are numerous legal issues to address when starting a company. While certain legal issues may even bring a start-up to a grinding halt if neglected, there are many others that are possible to be handled with ease, provided you have the right information to make timely decisions. Given their importance across sectors, the following issues and details will be covered in “Legal For Startups”.
• Legal Aspects for Starting Up:
• Contractual safeguards:
• Employees and workplace regulations:
• Data Protection
Choosing the appropriate legal structure is a crucial decision for any startup.What are the basic forms of doing business and their relative benefits? Essential procedures and prerequisites of each form of business.
Contractual safeguards: How do we limit contractual liability? Relevant stakeholders (promoters/co-founders; employees; consultants; clients and vendors) and the respective contract liability mitigating strategies.
Data Protection: How do we protect the competitive value of data in our business? Data protection is distinct from IPRs, and therefore, we must understand the legal framework of protecting data and the relevant international trends in this regard.
There are numerous pitfalls to launching a startup: losing intellectual property rights, overcomplicating the financing, failing to establish the ground rules with co-founders, and more. Fenwick partner Andy Albertson shares tips for planning and building a successful business in this presentation given at UW CoMotion. Topics include IP rights, employment contracts, formation best practices, initial capitalization issues, compliance with securities laws, retaining founders and key employees, and building a strong board.
Impact of the JOBS Act on the IPO Market (Series: THE JOBS ACT - A RETROSPECT...Financial Poise
Regulatory burdens associated with “going public” and thereafter with “being public” are major hurdles facing smaller issuers considering the prospects of an initial public offering (“IPO”). The JOBS Act has impacted that consideration principally in two ways. For the IPO process, the JOBS Act established an “IPO On-Ramp” benefitting smaller issuers by easing certain restrictions for a newly defined class of issuer known as an “emerging growth company” (EGC) that previously hampered the determination by those issuers whether even consider taking on the burden and expense of an IPO.
This webinar explores, for example, the opportunity created by the JOBS Act for EGCs to “test the waters” prior to embarking on the process, and the opportunity for confidential SEC filing and early regulatory assessment of the offering’s viability. For the EGC that succeeds in an IPO, the JOBS Act “on-ramp” significantly reduces the regulatory burdens under the Securities Exchange Act reporting requirements, for example, for a five year period. An equally significant impact of the JOBS Act on determinations by smaller issuers regarding the IPO market is the ability of private companies to avoid becoming a public company subject to Exchange Act Section 12 registration requirements and the panoply of regulatory requirements triggered by that registration. The JOBS Act significantly increased the threshold number of shareholders a company may have before triggering the registration requirement, thus permitting smaller companies to remain private longer.
This webinar episode also tackles these elements of the JOBS Act that directly impact IPO determinations by smaller issuers, and provides practical insights and tips in making these important business decisions.
To view the accompanying webinar, go to: https://www.financialpoise.com/financialpoisewebinars/on_demand_webinars/impact-of-the-jobs-act-on-the-ipo-market/
Presentation given to the participants of the Launchpad program run by NDRC in Dublin's Digital Hub, including updated links to NVCA term sheet and guidance on retaining professional advisers
From the point of choosing the appropriate business structure to the scope and extent of necessary contracts, there are numerous legal issues to address when starting a company. While certain legal issues may even bring a start-up to a grinding halt if neglected, there are many others that are possible to be handled with ease, provided you have the right information to make timely decisions. Given their importance across sectors, the following issues and details will be covered in “Legal For Startups”.
• Legal Aspects for Starting Up:
• Contractual safeguards:
• Employees and workplace regulations:
• Data Protection
Choosing the appropriate legal structure is a crucial decision for any startup.What are the basic forms of doing business and their relative benefits? Essential procedures and prerequisites of each form of business.
Contractual safeguards: How do we limit contractual liability? Relevant stakeholders (promoters/co-founders; employees; consultants; clients and vendors) and the respective contract liability mitigating strategies.
Data Protection: How do we protect the competitive value of data in our business? Data protection is distinct from IPRs, and therefore, we must understand the legal framework of protecting data and the relevant international trends in this regard.
There are numerous pitfalls to launching a startup: losing intellectual property rights, overcomplicating the financing, failing to establish the ground rules with co-founders, and more. Fenwick partner Andy Albertson shares tips for planning and building a successful business in this presentation given at UW CoMotion. Topics include IP rights, employment contracts, formation best practices, initial capitalization issues, compliance with securities laws, retaining founders and key employees, and building a strong board.
Legal Considerations for Technology EntrepreneursFenwick & West
Fenwick partner Dan Dorosin reviews the legal issues tech entrepreneurs face along the road from idea to successful enterprise. Learn more about when a lawyer typically gets involved and why and the key steps in a startup’s corporate life cycle—including company formation, founding team considerations, equity allocation, founder equity arrangements and the financing process.
Selling a Private Company: An Executive Guide to Help Prepare and Manage a Pr...Fenwick & West
In this presentation, Fenwick & West partner Kris Withrow highlights the process and negotiation strategies that drive value and the key steps and hot-button issues that ensure there are no skeletons in the business that could leave your team or counsel flat-footed.
Forming a Company: How to Start a Business (SERIES: One Hour Law School 2018)Financial Poise
To view the accompanying webinar, go to: https://www.financialpoise.com/financialpoisewebinars/view-webinar/?id=266157173&slides=Zexv5CoEVKZsN
Starting a business can be an exciting time but requires careful planning to avoid foreseeable pitfalls. Careful drafting of formation documents can provide stability as the business launches and can also prevent many future issues. However, there is no one-size-fits-all entity that works for all businesses.
Be it a corporation, limited liability company, partnership, or solo proprietorship, numerous factors must be considered to ensure as the correct entity is chosen for your new company. Chief among these considerations are tax implications (pass-through vs. corporate taxation), personal liability (limited vs. unlimited), and the ability to maintain control of the business. Additionally, founders should be educated on the rules regarding capital raising, as well as what, if any, fiduciary duties they owe and to whom. This webinar provides guidance on each of these considerations.
The Very Basics: Forming the Business (Series: The Start-Up/Forming the Busin...Financial Poise
So, you are an entrepreneur and want to start your own business (or you are an attorney, accountant, or other professional advisor working with one). One of the first decisions required is to choose a legal structure for the business and the jurisdiction of entity organization. What factors should be taken into consideration prior to selecting a legal structure and jurisdiction? Does a sole proprietorship, partnership, limited liability company or corporation (C- or S-corp) make the most sense? This webinar focuses on business formation and the pros and cons to the different legal structures, and includes tips on how to keep one’s personal assets safe from the claims of future creditors of the business.
To view the accompanying webinar, go to: https://www.financialpoise.com/financial-poise-webinars/the-very-basics-forming-the-business-2021/
What Every Founder/Entrepeneur Must Know (Series: The Start-Up/Small Business...Financial Poise
Congratulations. You are a founder of a company and you have just been given an hour to ask several experts anything you want about the subject. Some questions will certainly focus on IP, since intellectual property is so important to so many businesses. Some questions will touch on outsourcing- perhaps of manufacturing, perhaps of certain other functions. Formation, capital raising, and HR are also fair game. And since the panel includes two attorneys, you can be sure that the conversation will cover both the business and legal aspects of the various topics discussed. The panel will also discuss planning for incremental growth; and, while pandemic continues, the availability of PPP loans and governmental assistance.
To view the accompanying webinar, go to:https://www.financialpoise.com/financial-poise-webinars/what-every-founder-entrepreneur-must-know-2021/
Business Breakups (Series: Common Commercial Conflicts)Financial Poise
As any entrepreneur will attest, starting and operating a business comes with unique challenges. These challenges are a key reason that, by some estimates, half of the companies that are founded today will not exist four years from now. It can be argued that the effort and attention needed to find success precludes business owners from planning for failure. This webinar focuses on the realities of a failing business from the owners’ perspective. Join our panel of experts as they discuss the various considerations that should be given at the outset of start-up negotiations and through business breakup, including dispute negotiation and litigation.
To view the accompanying webinar, go to: https://www.financialpoise.com/financial-poise-webinars/business-breakups-2019/
Crowdfunding is a popular way to raise money quickly for a cause or a product. What about using crowdfunding to raise money for your law practice? Potential ethical trap?
Cultural Issues In Asia Private Equity and Venture Capital TransactionsPamir Law Group
This presentation applies ancient Chinese wisdom to 21st century cross-border Venture Capital & Private Equity transactions.
For more information about our Private Equity and Venture Capital services, please visit http://www.pamirlaw.com/en/services/legal/private_equity_venture_capital
TIP on Tax: New rules may ease burden for small shareholders in tech acquisit...Grant Thornton LLP
This is the fourth installment of TIP on Tax, a series from Grant Thornton LLP’s Technology Industry Practice (TIP). The series introduces key tax issues for dynamic technology companies. In our first article, we explored strategies for managing net operating losses (NOLs) generated in the startup phase. More at: http://gt-us.co/TIPonTax
Final top ten mistakes startups make 09.23.2014 (00046831x c0cb4)Roger Royse
LEARN FROM THE EXPERTS. EXPERIENCED CFO AND ATTORNEY WILL DISCUSS OBVIOUS AND AVOIDABLE MISTAKES COMMONLY MADE BY STARTUPS IN THEIR EARLY YEARS.
Financial and legal mistakes go hand in hand and often overlap. This interactive "conversation" between a CFO and an attorney will shed light upon these common mistakes, as well as provide solutions for avoiding common pitfalls. This webinar is geared towards current and future executives at startups, financial and legal advisors of startups, and students considering starting their own businesses.
Speakers: Lisa Chapman, Esq. - Royse Law Firm
Chris Chillingworth - Partner at CFOs2Go
Moderator: Fred Greguras, Esq. - Royse Law Firm
10 faq for foreign companies establishing operations in the united statesEliot Norman
THese Frequently asked questions (FAQ) cover corporate formation, protection of Intellectual property, contracts, visas, taxes and more. A checklist of what you need to consider before setting up a company in the USA.
Legal Considerations for Technology EntrepreneursFenwick & West
Fenwick partner Dan Dorosin reviews the legal issues tech entrepreneurs face along the road from idea to successful enterprise. Learn more about when a lawyer typically gets involved and why and the key steps in a startup’s corporate life cycle—including company formation, founding team considerations, equity allocation, founder equity arrangements and the financing process.
Selling a Private Company: An Executive Guide to Help Prepare and Manage a Pr...Fenwick & West
In this presentation, Fenwick & West partner Kris Withrow highlights the process and negotiation strategies that drive value and the key steps and hot-button issues that ensure there are no skeletons in the business that could leave your team or counsel flat-footed.
Forming a Company: How to Start a Business (SERIES: One Hour Law School 2018)Financial Poise
To view the accompanying webinar, go to: https://www.financialpoise.com/financialpoisewebinars/view-webinar/?id=266157173&slides=Zexv5CoEVKZsN
Starting a business can be an exciting time but requires careful planning to avoid foreseeable pitfalls. Careful drafting of formation documents can provide stability as the business launches and can also prevent many future issues. However, there is no one-size-fits-all entity that works for all businesses.
Be it a corporation, limited liability company, partnership, or solo proprietorship, numerous factors must be considered to ensure as the correct entity is chosen for your new company. Chief among these considerations are tax implications (pass-through vs. corporate taxation), personal liability (limited vs. unlimited), and the ability to maintain control of the business. Additionally, founders should be educated on the rules regarding capital raising, as well as what, if any, fiduciary duties they owe and to whom. This webinar provides guidance on each of these considerations.
The Very Basics: Forming the Business (Series: The Start-Up/Forming the Busin...Financial Poise
So, you are an entrepreneur and want to start your own business (or you are an attorney, accountant, or other professional advisor working with one). One of the first decisions required is to choose a legal structure for the business and the jurisdiction of entity organization. What factors should be taken into consideration prior to selecting a legal structure and jurisdiction? Does a sole proprietorship, partnership, limited liability company or corporation (C- or S-corp) make the most sense? This webinar focuses on business formation and the pros and cons to the different legal structures, and includes tips on how to keep one’s personal assets safe from the claims of future creditors of the business.
To view the accompanying webinar, go to: https://www.financialpoise.com/financial-poise-webinars/the-very-basics-forming-the-business-2021/
What Every Founder/Entrepeneur Must Know (Series: The Start-Up/Small Business...Financial Poise
Congratulations. You are a founder of a company and you have just been given an hour to ask several experts anything you want about the subject. Some questions will certainly focus on IP, since intellectual property is so important to so many businesses. Some questions will touch on outsourcing- perhaps of manufacturing, perhaps of certain other functions. Formation, capital raising, and HR are also fair game. And since the panel includes two attorneys, you can be sure that the conversation will cover both the business and legal aspects of the various topics discussed. The panel will also discuss planning for incremental growth; and, while pandemic continues, the availability of PPP loans and governmental assistance.
To view the accompanying webinar, go to:https://www.financialpoise.com/financial-poise-webinars/what-every-founder-entrepreneur-must-know-2021/
Business Breakups (Series: Common Commercial Conflicts)Financial Poise
As any entrepreneur will attest, starting and operating a business comes with unique challenges. These challenges are a key reason that, by some estimates, half of the companies that are founded today will not exist four years from now. It can be argued that the effort and attention needed to find success precludes business owners from planning for failure. This webinar focuses on the realities of a failing business from the owners’ perspective. Join our panel of experts as they discuss the various considerations that should be given at the outset of start-up negotiations and through business breakup, including dispute negotiation and litigation.
To view the accompanying webinar, go to: https://www.financialpoise.com/financial-poise-webinars/business-breakups-2019/
Crowdfunding is a popular way to raise money quickly for a cause or a product. What about using crowdfunding to raise money for your law practice? Potential ethical trap?
Cultural Issues In Asia Private Equity and Venture Capital TransactionsPamir Law Group
This presentation applies ancient Chinese wisdom to 21st century cross-border Venture Capital & Private Equity transactions.
For more information about our Private Equity and Venture Capital services, please visit http://www.pamirlaw.com/en/services/legal/private_equity_venture_capital
TIP on Tax: New rules may ease burden for small shareholders in tech acquisit...Grant Thornton LLP
This is the fourth installment of TIP on Tax, a series from Grant Thornton LLP’s Technology Industry Practice (TIP). The series introduces key tax issues for dynamic technology companies. In our first article, we explored strategies for managing net operating losses (NOLs) generated in the startup phase. More at: http://gt-us.co/TIPonTax
Final top ten mistakes startups make 09.23.2014 (00046831x c0cb4)Roger Royse
LEARN FROM THE EXPERTS. EXPERIENCED CFO AND ATTORNEY WILL DISCUSS OBVIOUS AND AVOIDABLE MISTAKES COMMONLY MADE BY STARTUPS IN THEIR EARLY YEARS.
Financial and legal mistakes go hand in hand and often overlap. This interactive "conversation" between a CFO and an attorney will shed light upon these common mistakes, as well as provide solutions for avoiding common pitfalls. This webinar is geared towards current and future executives at startups, financial and legal advisors of startups, and students considering starting their own businesses.
Speakers: Lisa Chapman, Esq. - Royse Law Firm
Chris Chillingworth - Partner at CFOs2Go
Moderator: Fred Greguras, Esq. - Royse Law Firm
10 faq for foreign companies establishing operations in the united statesEliot Norman
THese Frequently asked questions (FAQ) cover corporate formation, protection of Intellectual property, contracts, visas, taxes and more. A checklist of what you need to consider before setting up a company in the USA.
India is the new start-up nation! With third highest start-ups launched in the world after US and UK in the year 2015. To build the investors’ confidence and brand reputation, to drive the top line growth and protect the bottom line, it’s imperative for any start-up to be ready! As startup our plan should focus all three aspects of a business i.e. Commercial, Financial and Compliance.
The rise in Startup Registration is not a mere coincidence but a result of various factors converging to create a conducive environment for startup registration.
Squared. Essential Guide for New Businesses in UKmondayfriday
Before Starting Up
Many people dream of running their own business.
In recent years this has become a reality for some who have been made redundant.
Others may decide to start their own business
in search of independence, to work for themselves
and be rewarded for their efforts financially.
Whatever the reason for considering setting up
in business, a number of challenges exist.
Despite considerable effort and financing which
may be poured into a venture, there is always a
risk of business failure.
Before you start your business, take some time spent to think through your plans as
this will minimise the risk of failure.
Think about the possible downfalls of being
self-employed. Certainty of income, both in
terms of quantity and regularity, disappears,
whilst fixed outgoings, such as mortgage
repayments, remain. Consider the loss of other
company benefits such as life assurance cover,
a company pension, medical insurance, a company
car, regular hours and holidays.
Consider the views of your family and friends.
Their support is essential. It is important they
understand that the administrative and financial
requirements of running a business can be time
consuming and stressful.
Success in business depends on many factors;
most importantly you need to critically review all
aspects of the business proposition before
progressing too far.
For easy reference, we have carved this guide
into 10 parts:
Part 1 | Selecting a Legal Entity for Your
Business
Sole Proprietorship
Partnership
Limited Liability Partnership
Limited Company
Business Structure – The Pros and Cons
Part 2 | Registering with the Tax Authorities
H M Revenue & Customs
H M Revenue & Customs – NI Contributions Office
H M Revenue & Customs - VAT
Tax Calendar
Part 3 | Accounting & Bookkeeping
Accounting Records and Record Keeping
A Word About Accounting Software Systems
Internal Control
Part 4 | Value Added Tax
Registration
Taxable Persons and Supplies
Tax Rates
Input VAT
Penalties
VAT Checklist
Money Laundering Regulations
Part 5 | Payroll Taxes
Helpful Publications
Do You Have Employees?
The Operation of a PAYE Scheme
Real Time Information
Benefits in Kind
Payroll Software
Part 6 | Income Tax and Corporation Tax
Which Accounting Year Should I Choose?
Tax Returns
Companies
Sole Traders / Partnerships
Tax Credits
Child Benefits
Part 7 | Cash Planning and Forecasting
Starting the Analysis
Cash Collections
Disbursements
Part 8 | Obtaining Credit and Financing
Your Business
How Do I Get the Money?
Business Plan
Financing Alternatives
Debt Financing Sources
Equity Financing Sources
Venture Capital Companies
Part 9 | Insurance
Required Policies
Commercial Liability Insurance
Property Insurance
Business Interruption
Fidelity Guarantee
Directors & Officers Liability
Key Person Protection
Identifying a Key Person
When is Key Person Protection Needed?
Partnership Protection
Shareholder Protection
Fee Pro
Andrew Gates and Larry Page just graduated from UC with a master’s dcheryllwashburn
Andrew Gates and Larry Page just graduated from UC with a master’s degree in Information Technology. They want to set up their own server building company to help make networking of businesses run smoothly in their municipality. The servers will play a key role in telephony, internet and intranet connections in corporate organizations and other institutions in the Hilton area. They know from independent investment research that IT businesses are striving and very profitable in the State of South Carolina where they want to locate the business. Andrew and Larry know that before they can invest their time and other resources in the project, they must obtain financing, which means that they must raise money to pay for the investment cost and other operating expenses. Because the company might not be listed in any capital market right away, they might not be able to raise equity funding publicly. Therefore, they are considering raising long term capital from various sources including
angel investors,
venture capital market,
bank/finance companies’
long-term loans
,
crowdfunding
, and
initial public offerings
(IPOs). They learnt in corporate finance course they took two years ago the advantages and disadvantages of different forms of business organizations (mainly sole proprietorship, partnership, limited liability, and corporation). They are worried about the legal concept of
limited
liability
and how it will affect their personal fortunes in the future in case the business fails. They are not very sure which form of business organization to set up to protect their personal liability and give them access to huge funding. Therefore, they are considering a partnership, a limited liability, or a corporation. A cash budget they prepared shows that $5 million seed money would be needed to hire programmers, buy computers, rent an office space, promote and market the business as well as to meet other business development expenditures. They have agreed to share profits and losses equally if they decide to form a limited partnership. The general partner will, however, be paid a fixed salary of $5,000 per month before taxes and other payroll deductions.
In order to make good and right decision, Andrew and Larry have approached you to help them understand the
advantages
and
disadvantages
of the various forms of business organizations and possible
sources of funding
for the business.
Give 2 advantages and 2 disadvantages of each of the following forms of business organization to Andrew and Larry:
partnership,
limited liability, and
corporation
Ultimately, what form of business organization would you recommend Andrew and Larry to consider. Why?
Based on your recommendation above, explain to Andrew and Larry if the following sources of raising long-term capital are appropriate for them:
angel investors (angels)
crowdfunding
venture capital
initial public offering, and
long-term debt
2. FINANCIAL STATEMENT ANALYSIS ...
How to Structure Venture Capital Term Sheets for a Win-Win Deal ideatoipo
T 4/13/21 How to Structure Venture Capital Term Sheets for a Win-Win Deal
7 PM to 8:30 PM Pacific Time (Online)
https://www.meetup.com/Silicon-Valley-Startup-Idea-to-IPO/events/276787604/
Advanced mobile phone, PC combined with web entrance has expanded ecommerce based business exchange as of late at an excellent speed. In this way every business person needs to have web presence currently like the physical presence which was significant in earlier times. Presently both presence (physical and online) is by all accounts need of current days particularly for youthful business visionary.
Have you ever wondered how search works while visiting an e-commerce site, internal website, or searching through other types of online resources? Look no further than this informative session on the ways that taxonomies help end-users navigate the internet! Hear from taxonomists and other information professionals who have first-hand experience creating and working with taxonomies that aid in navigation, search, and discovery across a range of disciplines.
This presentation by Morris Kleiner (University of Minnesota), was made during the discussion “Competition and Regulation in Professions and Occupations” held at the Working Party No. 2 on Competition and Regulation on 10 June 2024. More papers and presentations on the topic can be found out at oe.cd/crps.
This presentation was uploaded with the author’s consent.
Acorn Recovery: Restore IT infra within minutesIP ServerOne
Introducing Acorn Recovery as a Service, a simple, fast, and secure managed disaster recovery (DRaaS) by IP ServerOne. A DR solution that helps restore your IT infra within minutes.
Sharpen existing tools or get a new toolbox? Contemporary cluster initiatives...Orkestra
UIIN Conference, Madrid, 27-29 May 2024
James Wilson, Orkestra and Deusto Business School
Emily Wise, Lund University
Madeline Smith, The Glasgow School of Art
0x01 - Newton's Third Law: Static vs. Dynamic AbusersOWASP Beja
f you offer a service on the web, odds are that someone will abuse it. Be it an API, a SaaS, a PaaS, or even a static website, someone somewhere will try to figure out a way to use it to their own needs. In this talk we'll compare measures that are effective against static attackers and how to battle a dynamic attacker who adapts to your counter-measures.
About the Speaker
===============
Diogo Sousa, Engineering Manager @ Canonical
An opinionated individual with an interest in cryptography and its intersection with secure software development.
0x01 - Newton's Third Law: Static vs. Dynamic Abusers
Birthing Unicorns: A Practical Guide to Legal Aspects of Launching Digital Media Startups
1. Pillsbury Winthrop Shaw Pittman LLP
Birthing Unicorns:
A Practical Guide to Legal
Aspects of Launching
Digital Media Startups
Ron Fleming
Partner, Head of Emerging Companies
Pillsbury Winthrop Shaw Pittman LLP
December 8, 2015
2. Defining Success
The “Shiny Red Apple” approach
Implement legal and financial structures that do not impede your
ability to raise capital in a timely and expedient fashion, grow the
business or execute a sale or IPO process
Optimize for attracting capital and talent and facilitating liquidity
Key questions--What is company’s timeline? Capital needs? Plans to
issue equity to employees and other advisors?
Allow potential investors/acquirers to focus on the merits of the
business and the quality of the team, and not be distracted by
background noise
1 | Birthing Unicorns: A Practical Guide to the Legal Aspects of Launching Digital Media Startups
3. Being Opportunistic
Most M&A exits of digital media companies do not
result from an orchestrated, investment-banked
process, but instead opportunistically arise
The bonanza deals are virtually always
companies that are “bought, not sold”
Buyers approach, and transactions can happen
fast (sometimes as quickly as a few weeks)
2 | Birthing Unicorns: A Practical Guide to the Legal Aspects of Launching Digital Media Startups
4. Choose the Right Co-Founder
--Carefully select co-founder the way one picks any partner—be highly
discerning
--Enter into equity vesting arrangements to ensure that co-founder forfeits equity
if leaves prior to the fourth anniversary of joining team
--Only an “at will” employment offer letter
Carefully limit board rights, other governance provisions
3 | Birthing Unicorns: A Practical Guide to the Legal Aspects of Launching Digital Media Startups
5. Chose the Right Form of Entity
As a general rule, digital media companies should be organized as a
Delaware “C” corporation if the plan is to raise institutional funding in
next 12 months
LLCs are becoming more commonplace, particularly if no near-term
plans to raise capital. Note that many VCs can’t or won’t invest in
LLCs, and will condition investments on conversion to C-corp
LLCs have complexities involving options, K-1 reporting, etc. that
generally make them less than ideal vehicles for media/tech high
growth company
Ambiguous case law, poorly drafted statutes and the lack of IRS
guidance, practitioners are often on their own to determine the tax
consequences of compensatory partnership options
4 | Birthing Unicorns: A Practical Guide to the Legal Aspects of Launching Digital Media Startups
6. Trials and Travails of the Wrong Entity
Type
Consider drawbacks to using S-corp structures including major diligence
process by acquirer/investors seeking to ensure compliance with numerous
technical requirements
Catastrophic if S--corp characterization fails – end up with taxable income in
corporation. Note that 338(h)(10) election fails if you have a bad S, so
intense scrutiny
Examples of technical requirements we see:
Ineligible stockholders - LLC that is treated as partnership because more
than one holder, so not disregarded
Non-proportional distributions to stockholders
Loans to stockholders that aren’t documented as loans, shareholder using
the company as a checkbook
5 | Birthing Unicorns: A Practical Guide to the Legal Aspects of Launching Digital Media Startups
7. Set up In the Right Location
Delaware, Delaware, Delaware…If in doubt, Delaware is the right locale for organization.
It’s virtually malpractice to incorporate in New York-- NY and NY alone has a very
entrepreneur/investor unfriendly provision --Section 630(a) of the New York Business
Corporation Law (applicable only to privately held corporations, not to LLCs or investment
companies) renders the ten largest shareholders personally liable for employee
compensation
It covers not just wages and salaries, but other types of monetary compensation as well,
including overtime, vacation, severance pay, contributions to insurance or welfare benefits,
pension or annuity funds.
The stockholders are liable jointly and severally. This means that the employees can
choose to go after one stockholder for the whole amount instead of all ten. The law allows
that shareholder to seek pro rata contributions from the other largest stockholders.
6 | Birthing Unicorns: A Practical Guide to the Legal Aspects of Launching Digital Media Startups
8. Get Your House in Order
Anticipate the diligence process for various
capital raising, strategic or liquidity
transactions by keeping an updated virtual
dataroom – you need it for venture
financings, exits, your audit and your IPO
7 | Birthing Unicorns: A Practical Guide to the Legal Aspects of Launching Digital Media Startups
9. Get Your House in Order (cont’d)
Be prepared:
Audited Financials
Capitalization – make sure cap table is clean and correct
Clean corporate governance (board minutes/stockholder actions)
409A – make sure equity grants been done properly and well
IP - does your company own it? Make sure all employees signed up
proprietary info agreements
Salaries to employees - withheld/liability to directors
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10. Aggressively deal with potential litigation
Deal with nasty grams from competitors
related to IP
Address allegations that you poached
confidential info/solicited employees etc.
Obtain releases from terminated employees
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11. Corporate Controls
Implement a system of good/clean controls and
systems
Hire known national or regional auditors
Experienced finance staff including a CFO with
transactional background
Having financial statements prepared in
accordance with GAAP
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12. Clean Capitalization
Control your equity issuances
Get equity issued “early” when fmv is low
Ensure compliance with IRC Section 409A
Get independent 409A valuations on a periodic basis once
you are an established company, and tie granting thereto
Have one person in charge of capitalization table even if its
outside accountants or lawyers
Do not issue warrants or other documents promising equity
as an evergreen percentage, but rather a fixed number of
shares
Ensure warrants terminate on an exit?
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13. Protect your IP
Patents and trademarks – make sure filings are in order
Assignment of inventions – all employees, consultants,
contractors, make sure company owns what he it believes
it owns
Confidentiality agreements
Trade secrets
Domain names
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14. Sales Tax
There is no greater hot button issue than
compliance with the ever changing quagmire of
state sales tax rules
Trying to assert nexis over internet sales and SAAS,
very aggressive re: taxing a provider based on the
presence of a user and saying that provider is present
in state or locality because user in state has
downloaded software or used SAAS
If you offer service on the net, have to make sure
managed sales and use tax exposure properly
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15. Employment Law Compliance
Properly classify exempt vs. non-exempt,
employee vs. contractor
Evaluate compliance with the overtime rules
under federal and state law
What does your offer letter say?
Confirm severance/release agreement up to date
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16. Prudent Contracting
Do your key customer/supplier (e.g., licenses) contracts have
change of control/anti-assignment provisions that will be triggered
by a sale?
Are there any funky provisions that will slow you down, e.g., many
strategics ask for rights of first or last refusal/rights of first
negotiation, etc., are you burdened by any of those?
Are you party to long term agreements that have unusual risk?
Any odd non-compete provisions?
Any long-term contracts that will burden the business, e.g., long
term lease that will prevent integration?
Does your investment banking letter have a tail or entitle bank to
special rights?
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17. Securities Law Compliance
Make sure you have valid securities law
exemptions for all equity issuances
Were Reg D and Blue Sky filings completed?
Are your investors accredited?
Have you gotten a primer on the new 506 Rules?
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18. Related Party Transactions
Make sure you’ve used good corporate
governance when dealing with related party
transactions
KISS principle applies—avoid complex
structures, e.g,. the founding team retaining
IP and licensing to company
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19. Regulatory Issues
Proactively attack regulatory issues (e.g.,
escheat laws, gift cards)
Deal with privacy landscapes here and
internationally—think Global
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20. Keeping the Band Together
Most investment or M&A transactions are
conditioned on keeping team in place
Consider impact of single/double trigger
change of control provisions, including
severance/acceleration
Design equity incentive plans to promote
retention post-closing
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21. JOBS Act Impact
Two key features of the Jumpstart Our Business Startups Act:
General solicitation in Rule 506 offerings—
Increased thresholds at which an issuer will be required to register
a class of securities under the Securities Exchange Act of 1934
(the “1934 Act”)
When combined with certain advantages already enjoyed by
issuers in Rule 506 offerings, opens up an entirely new category
of "publicly offered private offerings" that are largely exempt from
substantive regulation at either the federal or state level, by
issuers that will be able to avoid becoming public companies, for
practical purposes, as long as they wish.
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22. THE END GAME
Be prepared to facilitate being opportunistic
Keep your corporate and contractual records
clean and ready for prime time
Avoid burdensome contractual terms that affect
the biz or the process
Design equity plans and comp structures to keep
team incented to remain
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