Article prepared by and republished courtesy of our colleagues in the Intellectual Property and Technology practice group of DLA Piper; originally published here: http://www.dlapiper.com/obama-moves-to-curb-patent-trolls/.
President Barack Obama has announced a new executive and legislative initiative aimed at curbing patent infringement suits by "patent trolls," who generate revenue through extortionate litigation, not real innovation.
CONTRIBUTED BY
Asher Bearman
asher.bearman@dlapiper.com
Interesting tax update courtesy of Bruce Thompson, a Senior Policy Advisor with DLA Piper. He continues to see momentum for comprehensive tax reform and wrote the following summary of what that might mean for fund managers and partnerships:
"The Chairmen of the Tax Committees in the House and Senate---Rep. Dave Camp and Sen. Max Baucus---are committed to moving a major tax reform bill, and the House leadership has reserved HR 1 for the tax reform bill.
CONTRIBUTED BY
Asher Bearman
asher.bearman@dlapiper.com
This article is appearing simultaneously on The Venture Alley and on Startup Law Blog.
The below flowchart may be helpful to you in answering the question whether you qualify for the exemption for “venture capital funds” under Section 203(l) of the Investment Adviser’s Act of 1940 ( the “Advisers Act”), pursuant to the final rules promulgated by the SEC.1 In all cases you should consult with an attorney. For more detailed information regarding the federal exemption, check here. Note that the Washington State Department of Financial Institutions (DFI) has proposed rules that are going to require many fund managers to register with the State as investment advisors. We plan to prepare a separate flowchart to help you understand those rules once they are finalized.
CONTRIBUTED BY
Asher Bearman
asher.bearman@dlapiper.com
As readers of this blog know, Washington State is proposing new rules that will require more fund managers to become registered investment advisers. These rules were originally proposed in the second half of last year and, in response to preliminary comments, the Securities Division of the Washington State Department of Financial Institutions (DFI) proposed new rules for comment by May 21, 2013. Quoting from the DFI's Notice to Interested Parties dated March 27, 2013:
In August 2012, the Securities Division circulated an early draft of rule amendments to the interested parties list. We also conducted a small business economic impact survey. In response to comments received from interested persons, and in response to the results of the small business economic impact survey, the Securities Division made certain changes to the proposed rules compared to the earlier draft...
The Securities Law Committee of the Business Law Section of the Washington State Bar Association, representing attorneys practicing in this area throughout Washington State, submitted formal comments to the DFI's request. Their comment letter is included below. Full disclosure, I'm not a member of the Committee, but they asked me to help them in drafting their formal response with respect to how the rules relate to private fund advisers.
CONTRIBUTED BY
Megan Muir
megan.muir@dlapiper.com
Congratulations to Vanessa Fox, one of the Women in Tech we've profiled in the past. Vanessa has joined forces with RKG, a search and digital marketing agency, combining her enterprise-level search analytics platform with the fast growing agency. Some of the press around the deal can be found on Geekwire, Business Wire and RKG’s Blog.
CONTRIBUTED BY
Asher Bearman
asher.bearman@dlapiper.com
This article is appearing simultaneously on The Venture Alley and on Startup Law Blog. Readers may feel free to re-post this content elsewhere as well.
The world is changing for venture funds and similar funds in Washington State, and not necessarily for the better. It used to be the case that managers of venture or other private funds did not need to file anything with the SEC or state securities regulators (other than Forms D incident to their fundraisings). Dodd-Frank changed all that – but provided that investment advisers solely to venture capital or other small private funds may be exempt (based on Congress’ belief that these funds posed no systemic risk to the nationwide financial system).
There are now SEC regulations that define the new exemptions for the managers of venture funds (discussed in more detail here) and for the managers of private funds with less than $150M management (discussed in more detail here). Even if exempt, however, managers of venture funds and private funds with AUM of less than $150M now must publicly report certain high-level information, which becomes publicly available. For example, here is the exempt reporting adviser Form ADV for Union Square Ventures.
These rules settled out a few years ago. Right now, the bigger issue is with state regulators. State regulatory regimes need to be updated in order to conform to Dodd-Frank. The North American Securities Administrators Association (NASAA) created model rules for state regulators to follow, which adopted the same venture capital and private fund exemptions. Many states, including California, have now adopted the NASAA model rules.
Article prepared by and republished courtesy of our colleagues in the White Collar, Corporate Crime and Investigations practice group of DLA Piper; originally published here: http://www.dlapiper.com/investigative-crises-surviving-until-help-arrives-05-02-2013/.
The first minutes and hours after the government executes a search warrant, serves a subpoena, or otherwise lets you know you’re under investigation can be critical in determining the investigation’s eventual outcome. A company’s immediate response may make the difference between an investigation that goes nowhere and one that leads to the company’s demise.
This handbook outlines the key do’s and don’ts for company executives and in-house counsel during the initial period before counsel arrives. It covers in the most basic terms what to do when:
CONTRIBUTED BY
Megan Muir
megan.muir@dlapiper.com
The 2013 Private Equity Survey of McGladrey, done by the research unit of SourceMedia, indicates growth and optimism in the PE sector although the funds remain cautious about the broader economy.
Some findings of the 2013 survey:
Download the full survey report here.
CONTRIBUTED BY
Megan Muir
megan.muir@dlapiper.com
Investor and serial entrepreneur Jonathan Sposato has seen enough startup pitches in his day to know what he likes. In this Geekwire post from earlier this year, he shares his three favorite things to hear from founders seeking an investment. One key piece of advice from Joanathan that is simple and straightforward: your investors want to know their money is going to be put to good use.
With that in mind, he advises founders to “speak provocatively and ambitiously about their concept,” to share names of other well-respected investors who are already on board, and to provide a detailed plan for using the funds they are requesting.
Jonathan’s suggested approach in one sentence:
Please tell me: How you’re going to crush it, who else agrees with you besides me, and how you are going to spend my money.
Compliments of Jason Smith of Kidder Mathews, attached is a Seattle-area office real estate market review for Q1 2013. As the report notes, the first quarter included a quiet encore of the performance seen near the end of 2012. Leasing activity was modest, but positive, tenants showed renewed interest in the middle of the Seattle central business district (CBD), Amazon leased any large space that came available in the CBD, and investors continued to be bullish on the Seattle office market.
The performance of the office market is especially encouraging in light of the fact that general economic indicators continue to vacillate. One example significant to the office market is that after six quarterly increases in forecasted 2013 job growth, the March 2013 Puget Sound Economic Forecaster reduced the growth rate to 2.6%. It was a minor adjustment, reflecting the inability of the national economy to gain consistent momentum and the likely effects of the sequester. Nonetheless, the overall performance of the office market is still expected to be similar to that seen in 2012.
CONTRIBUTED BY
Karen Katz of DLA Piper's Venture Pipeline
The Global Corporate Venturing (GVC) group has released its first quarter report making clear that there is a consolidation of traditional financial venture capital and the growth of corporate venture capital. GE's investment of $105M in Pivotal is a great example. What this means for both the early stage company community and the venture capitalists is a need to truly focus on the customer - early and often. Corporates provide customer access and when a new company can demonstrate that its offering provides true customer value, high growth and bigger exits will follow.
These findings highlight for me Harvard Business Review’s May 2013 recent article outlining the lean start up framework. Lean start-ups are iterative, customer focused and the wave of the future. They require early partnership and interaction with customers, buyers, strategics and financing sources all at the same time.
Check out these two reports showing this convergence around the customer in the links below: here is a link to the GVC report; and here is one to the HBR article called "Why the Lean Start-Up Changes Everything" by Steve Blank.
CONTRIBUTED BY
Asher Bearman
asher.bearman@dlapiper.com
Choosing the best type of entity for a company can be a challenge. C corporations are the norm for most emerging growth businesses, particularly those raising money from investors. However, LLCs are becoming more widespread, even for operating businesses. Founders may want to have the tax benefits of LLCs, which are not subject to a company-level tax (as is the case with C corporations) and may enable more tax deductions.
This potential for tax savings does not, however, come without a cost. LLCs tend to be more complicated and expensive to setup and manage, particularly for operating businesses. LLCs can become even more tricky for businesses that want to issue equity to incentivize employees or other service providers. This article addresses some of the ways LLCs can use equity to incentivize service providers, and the implications of each option (pardon the pun).
Here is an first-hand account of Karen Katz of DLA Piper's Venture Pipeline:
Nearly every physical point of the Massachusetts start up community has been touched by the Boston marathon bombing and on-going manhunt. Back Bay, where the marathon concludes, hosts Flybridge, HLMVP, Partners Innovation Fund, Excel Medical, Siemens Medical, Encandle, and many others. Events after Monday, have spread fear further.
Yesterday’s shootings and death of an MIT police officer are tragic. The ecosystem of MIT’s start-up community – at a most basic level - is predicated on safety and the proximity of like-minded individuals. Today, justified fear bolsters the police advisory that Cambridge residents – and those in nearby Watertown, Newton, Waltham (Home of the 128 Technology Belt), Belmont, Allston and Brighton remain in-doors. All public transit is shut down. Businesses have been asked not to open.
On Monday, I was visiting colleges with my high school senior. I learned of the initial events on Twitter and Facebook minutes after they happened. These timely communications give me hope that, despite this terrorist attack, our technological advantage, innovative knowhow and community will continue to come together. I’m on-line at 6 am EST after a scared night – but am connecting nonetheless. Meet-ups have been re-scheduled, not cancelled. While businesses may not be physically open, start-up business will continue.
CONTRIBUTED BY
Trent Dykes
trent.dykes@dlapiper.com
The Angel Resource Institute, Silicon Valley Bank and CB Insights recently released their angel group update 2012 year in review, the Halo Report. The Halo Report analyzes angel investment activity and trends in the United States. Here are a couple interesting 2012 highlights:
A copy of the full report can be found here and the infographic can be found here.
CONTRIBUTED BY
Trent Dykes
trent.dykes@dlapiper.com
If you are reading this post, then you probably share my belief that one of the best things our government can do to spur economic and job growth is to support the startup community. In recent years, government entities ranging from state (See Maryland’s proposed tax credit to support investment in cybersecurity industry) to federal (See JOBS Act: What matters most for startups and VCs) to the IRS (See Fiscal Cliff Bill to renew 100% QSBS tax break) have enacted programs designed to enable more and easier investments into startup companies (in the US). However, many commentators have argued that such efforts are not enough.
One country that appears dedicated to its startup community, and that has a very interesting and seemingly effective model for facilitating growth, is Israel. Last week I met with Daniel Marcus of the Israeli law firm Amit, Pollak, Matalon & Co. to discuss emerging growth and venture capital markets and I took the opportunity to ask Daniel more about Israel’s government funding model via its Office of the Chief Scientist (OCS). Luckily, Daniel and his colleague, May-ad Katz, had previously written a great article titled “Exporting technology from the ‘start-up’ nation” summarizing the OCS funding system and related encumbrances.
The Venture Alley is a blog about business and legal issues important to entrepreneurs, startups, venture capitalists and angel investors. The Venture Alley is edited by Asher Bearman, Trent Dykes and Megan Muir, corporate and securities lawyers at DLA Piper. Contributing authors to The Venture Alley...
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