The Venture Alley - A blog about business and legal issues important to entrepreneurs, startups, venture capitalists and angel investors.

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... More

CONTRIBUTED BYTrent Dykestrent.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: The median angel round size was $600K; The median angel round size was $1.5M when angel groups co-invest with other types of investors; The median pre-money valuation for early stage angel group deals was $2.5M; 63% of angel group deals were in companies with revenue; 56% of angel group deals were in new companies; 11% of 2012... More

CONTRIBUTED BYTrent Dykestrent.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... More

CONTRIBUTED BYTrent Dykestrent.dykes@dlapiper.com A great reminder compliments of our colleague Mark Radcliffe: On March 16, the US patent system will undergo a fundamental change from the current “first to invent” to a “first to file” system. By way of quick background, a “first to invent” system means that even if another party files a patent application on your invention first in the US Patent and Trademark Office, you will still be entitled to obtain a patent on your invention if you can prove you created the invention first. The new “first to file” system, which becomes effective on March 16, 2012, provides that you... More

Article prepared by and republished courtesy of Drew M. Young and Joseph H. Langhirt of DLA Piper; originally published here http://www.dlapiper.com/maryland-proposes-tax-credit-to-support-investment-in-cybersecurity-industry/. Maryland Governor Martin O’Malley’s recently released proposed Fiscal Year 2014 budget provides funding to support private investment in the cybersecurity industry. Most notably the budget proposal would provide US$3 million for a new refundable state tax credit, the CyberMaryland Investment Incentive Tax Credit Program, to generate investment in early-stage cybersecurity businesses in Maryland. The credit would be available for taxable years beginning after December 31, 2013 and would provide a 33 percent refundable tax credit (up to a maximum... More

CONTRIBUTED BYTrent Dykestrent.dykes@dlapiper.com Compliments of our colleague Christopher Paci, the Chair of DLA Piper’s US capital markets practice, below is a review of 2012 US equity and debt capital markets activity. Equity.  US equity and equity-related proceeds totaled $244.5B from 795 deals, a 32.7% increase compared to 2011. IPOs accounted for $40.9B, or 16% of the total, in 2012, up 18% from 2011 (excluding Facebook, down 27%). Follow-on equity offerings represented $182B, or 74%, of the total, up 45% from 2011. IPOs.  Overall, the IPO market was modestly more active in 2012, with 128 deals closed, up 2% from 2011. IPO activity consisted... More

CONTRIBUTED BYTrent Dykestrent.dykes@dlapiper.com Just a reminder to those who have Delaware corporations, your annual report and franchise tax payment are both due on March 1. At this point, you should have already received from Delaware your notification of annual report and franchise tax due, which is sent to a corporation’s registered agent in December or January of each year. Delaware requires these reports to be filed electronically. As you will notice, there are two methods that you can use to calculate the amount of Delaware franchise tax due for your corporation (i.e., the “Authorized Shares Method” and the “Assumed Par Value Capital... More

Compliments of Jason Smith of Kidder Mathews, attached is a Seattle-area office real estate market review for Q4 2012. As the report notes, the region’s office market continues its gradual overall recovery. Leasing was widespread, with all five submarkets reporting positive results for the first time in a year. The positive impacts of Amazon in the north end of the Seattle central business district (CBD) and various gaming and internet companies in the Bellevue CBD continued through the fourth quarter, joined by renewed leasing from more traditional sectors. The most recent beneficiary was the overall Class A category, which saw... More

CONTRIBUTED BYTrent Dykestrent.dykes@dlapiper.com A reminder to companies that had incentive stock option exercises in 2012, Section 6039 of the Internal Revenue Code requires a corporation to furnish a written statement to any employee or former employee who either exercised an incentive stock option during 2012 or during 2012 first transferred legal title to shares acquired under the corporation's Section 423 employee stock purchase plan. The corporation must furnish these statements on Forms 3921 and 3922 no later than January 31, 2013. These corporation must also file information returns providing the same information with the IRS. This requirement applies to both privately... More

CONTRIBUTED BYTrent Dykestrent.dykes@dlapiper.com Today the Angel Resource Institute, Silicon Valley Bank and CB Insights released their angel group update for Q3 2012, the Halo Report. The Halo Report analyzes angel investment activity and trends in the United States. Here are a couple interesting highlights: The median angel round size was $640K; The median angel round size was $1.59M when angel groups co-invest with other types of investors; The median pre-money valuation for early stage angel group deals was $2.6M; California was the most active region for angel deals, both in number of deals (21.4%) and total dollars invested (28.0%); and The top three... More

CONTRIBUTED BYTrent Dykestrent.dykes@dlapiper.com One provision included in the fiscal cliff bill (aka the Taxpayer Relief Act of 2012), but seemingly unnoticed by the general press, was the unexpected renewal of the 100% tax exclusion for capital gains on Qualified Small Business Stock (“QSBS”). This QSBS tax exemption, which had previously expired at the end of 2011, would be extended for investments made through the end of calendar year 2013 (and would be retroactively effective for investments made in 2012). A summary of the QSBS renewal provisions covered in the fiscal cliff bill can be found on Joe Wallin's blog here. For more... More

CONTRIBUTED BYTrent Dykestrent.dykes@dlapiper.com As the new year approaches, taxes will again be front and center in shaping strategy for both actions before year-end and 2013 financial planning.  This year is no exception, and in fact the prevalence of tax as a driver will be magnified given several major tax changes that are set to take place at year-end absent action by Congress.  Merrill Lynch did a nice job of concisely summarizing the major tax changes here (“Tax law changes call for careful planning in 2012”).  Also see our earlier post on this topic here.  At a high-level, these changes include:  A... More

Compliments of Jason Smith of Kidder Mathews, attached is a Seattle-area office real estate market review for Q3 2012. As the report notes, compared with the first half of the year the Seattle office market was very quiet in Q3, with the main difference between Q3 and Q2 that there were no new Amazon lease commencements. Not to say Amazon is the only driver in the local office market recovery, but it does point out just how big a role they have played, accounting for about half of the total net absorption in the past three years. Bellevue stands out among the... More

CONTRIBUTED BYTrent Dykes and Kerra Melvin Selling your company can be an exciting and overwhelming process. In addition to the complexity of negotiating the terms of your merger or asset sale, you will inevitably be bombarded with tons of deal-related jargon. Enter one such term, Internal Revenue Code (IRC) Section 280G (280G) or the “golden parachute payment” rules, a federal tax provision that comes into play when there is a change in control of a corporation. 280G impacts both the corporate entity and its executives, shareholders, and other “highly compensated individuals” associated with the corporation and imposes harsh tax consequences if not... More

CONTRIBUTED BYTrent Dykestrent.dykes@dlapiper.com I recently had lunch with John Sechrest to find out more about his latest project, the Seattle Angel Conference he founded. The Conference website describes its approach to angel investing as “a structured investor-driven investment conference” in which “Qualified Investors create an LLC, engage in due diligence in startups, and ultimately pool funds [~$200,000 in aggregate] to invest in one of the presenting companies.”  You can find more details about the Conference at www.seattleangelconference.com/. John is a relative newcomer to the Seattle startup scene, but has a long history of working in the angel investment community – such... More

Australia highly regulates employee stock incentive plans. Failing to adapt to applicable rules can lead to adverse consequences for employees and employers and ultimately can undermine the intended purpose of such plans. Compliments of our DLA Piper colleagues, here is an overview of some of the legal and tax issues US parent and Australian subsidiary companies should consider when including Australian resident employees in US-based employee stock incentive plans.... More

Compliments of Jason Smith of Kidder Mathews, attached is a Seattle-area office real estate market review for Q2 2012. As the report notes, the Puget Sound office market during the first half of 2012 was active on several fronts. Leasing was strong in both Seattle and Bellevue central business districts (CBD), rental rates showed some modest gains in the core markets, and the dollar amount of this year’s sales activity skyrocketed. New leasing activity was led by ecommerce companies and was focused on newer buildings in specific neighborhoods. It was in those neighborhoods that vacancy fell enough to tilt the market in... More

CONTRIBUTED BYTrent Dykes and Michael McClain One of the first major decisions the founder of a startup will need to make is regarding choice of entity. While there are numerous different forms of entities to choose from, the three most commonly utilized by startups are: limited liability company (LLC); C corporation; and S corporation. Each type of entity has its own advantages and disadvantages. Below are five items to consider when choosing your startup entity structure.... More

CONTRIBUTED BYTrent Dykestrent.dykes@dlapiper.com This post is part five of our five part series exploring various aspects of due diligence in the context of a merger and acquisition (M&A) transaction. Our prior posts discussed M&A due diligence generally and its objectives, described the due diligence process, outlined considerations when assembling your due diligence team of experts and the due diligence request list, and explained how to respond to a due diligence request list. This post will focus on the scope and process of a due diligence review and how the results of such review will impact the proposed M&A transaction.... More

CONTRIBUTED BYTrent Dykestrent.dykes@dlapiper.com This post is part four of our series exploring various aspects of due diligence in the context of a merger and acquisition (M&A) transaction. Our prior posts discussed M&A due diligence generally and its objectives, described the due diligence process and outlined considerations when assembling your due diligence team of experts and the due diligence request list. As indicated in our earlier post, the due diligence request list is the inventory of documents requested, provided and reviewed on the road to completing an M&A transaction. Once the seller and its counsel have had the chance to collect and... More