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

CONTRIBUTED BYMegan Muirmegan.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... 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 BYMegan Muirmegan.muir@dlapiper.com  On May 24th, the University of Washington Foster School of Business Center for Innovation and Entrepreneurship held its annual Business Plan Competition. The competition is open to teams that include students currently enrolled in a degree program in the state of Washington. Out of 101 teams that applied, the final round of judging by various local venture capitalists and entrepreneurs selected the winners.  UrbanHarvest (pictured below) won the grand prize of $25,000 as well as the Best Clean-Tech Idea (which came with a prize of $2,500).  UrbanHarvest, founded by two students from the Foster School of Business at the UW,... More

CONTRIBUTED BYAndrew Ledbetterandrew.ledbetter@dlapiper.com In today’s age of social media success stories, there is something superficially interesting about crowdfunding as a high-level idea.  There has certainly been no shortage of attention to crowdfunding in the press and from business people.  But in looking at the new JOBS Act exemption for crowdfunding, I see lots of reasons why many companies will avoid it.  While this list could be expanded – and will need to be revised as the SEC adopts rules to implement the new exemption – to get things started I offer up these ten reasons:... More

CONTRIBUTED BYMegan Muirmegan.muir@dlapiper.com  Join us for a complimentary webinar regarding the Jumpstart Our Business Startups Act (the "JOBS Act").  This one-hour webinar for venture capital investors, private equity firms, startup entrepreneurs, late stage companies and management of portfolio companies will cover the following provisions of the Act: The IPO “on-ramp” Reduced initial and ongoing reporting requirements for “emerging growth companies” Confidentiality of SEC registration statements Easing of restrictions on issuance of research reports by participating underwriters Private offerings Relaxation of prohibition on general solicitation in private offerings to accredited investors Increased stockholder thresholds before public company reporting requirements are triggered New... More

On March 27th, the US House of Representatives overwhelmingly passed the Jumpstart Our Business Startups Act (JOBS Act) with the Senate's recent amendments. Next stop is the President's desk for what is anticipated to be speedy signature. The legislation is intended to improve the ability of emerging growth companies to access capital by relaxing certain rules in private offerings as well as in the period following a company's initial public offering.  Read the details in this summary by our colleagues Christopher C. Paci, Edward Batts, Ann Lawrence, Jason C. Harmon, Christopher B. Edwards, and Andrew D. Ledbetter.... More

CONTRIBUTED BYMegan Muirmegan.muir@dlapiper.com  Yesterday (March 22), the Senate passed the Jumpstart Our Business Startups Act (JOBS Act), which could make it easier for startups and other small businesses to raise capital.  The bill now goes back to the House, which passed a similar bill two weeks ago, for the reconciliation process, which may occur as early as next week.  Some of the proposed changes to federal securities laws in the bill would: Exempt, for up to five years, “emerging growth companies” (those with under $1 billion in annual gross revenues) from certain financial reporting obligations, auditor attestation of internal controls,... More

CONTRIBUTED BYMegan Muirmegan.muir@dlapiper.com  Steve Blank's post yesterday - with its eye-catching title of "Killing Your Startup By Listening to Customers" - makes some very good points about how to use information gathered from potential customers.  He summarizes it as "understanding who to listen to and why." His main points: Getting out of the building is a great first step Listening to potential customers is even better Getting users to visit your site and try your product feels great Your job is not to make every possible customer happy Pick the customer segments and pricing tactics that drive your business model Read Steve's... More

CONTRIBUTED BYMegan Muirmegan.muir@dlapiper.com  Former entrepreneur and current venture capitalist Mark Suster has an interesting post on his blog "Both Sides of the Table" about his hiring suggestion to early stage companies.  His “ideal team” at the seed or Series A round (assuming 6 people) is made up of a CEO who doubles as head of product management and 5 engineers.  That’s it, no one else.  However, his recommendation to startups about who they should hire after they have a product built and shipped and have raised that first $2-3 million is somewhat surprising: Your first hire after that first round... More

CONTRIBUTED BYMegan Muirmegan.muir@dlapiper.com  Here is the second half of The Venture SpotLight interview with Rebecca Lovell, the Chief Business Officer of GeekWire, the tech news site based in Seattle.  You can find the first installment of our talk with Rebecca here. Biggest mistake you have made in your career/business?  Staying in a comfortable job for too long back in my corporate days. What did you study as an undergraduate at Carleton College?  I designed my own American Studies Major: sort of history-based with a little English and religion and women’s studies all mashed up.  I was absolutely set to go into a... More

CONTRIBUTED BYMegan Muirmegan.muir@dlapiper.com  The Venture SpotLight turns to Rebecca Lovell today, with the first installment of our interview with her.  Among the many hats she wears, Rebecca is the Chief Business Officer of GeekWire, the tech news site based in Seattle.  In that role, she oversees advertising, sponsorship, planning GeekWire events and generally helping GeekWire connect with the Pacific Northwest technology community.  Some the other roles Rebecca fills: mentor for TechStars and The Founder Institute; community advisor to Startup Weekend; professor of a class on venture capital investing at the University of Washington Foster School of Business; board member of the... More

CONTRIBUTED BYMegan Muirmegan.muir@dlapiper.com  At the recent GeekWire Meetup in Seattle, Rich Barton (co-founder of Zillow, founder of Expedia, and co-founder of various other startups) participated in a Q&A session with John Cook, co-founder of GeekWire.  (Video available here.)  Among other things, Barton encouraged entrepreneurs to aim big and “go for the home run.”  Continuing the baseball analogy, Barton said: Look, you have an at bat, and it takes just as much energy to swing for the fences as it does to bunt.  OK.  So, why bunt?  Why bunt?  Why not swing for the fences?  I would argue that it is just as likely... More

CONTRIBUTED BYMegan Muirmegan.muir@dlapiper.com  Today Dow Jones VentureSource reported that venture capital firms invested $8.4 billion in Q3 2011, 29% more than in Q3 2010.  Additionally, the total of 765 deals is an 8% increase over the third quarter of 2010. Jessica Canning, global research director for Dow Jones VentureSource, noted that: Venture investment rose in the third quarter, putting the industry on pace to near pre-recession investment levels by the end of the year.  While it’s unclear how long venture capitalists can continue at this pace given the weak fund-raising and difficult exit environments, the increase in deal activity, especially among early-stage... More

CONTRIBUTED BYTrent Dykestrent.dykes@dlapiper.com Earlier this week, I attended the TechNW 2011 conference organized by the Washington Technology Industry Association (WTIA). The conference was very informative and full of interesting presenters and topics. The corporate development panel discussion moderated by Tom Huseby (General Partner and founder of SeaPoint Ventures) was particularly interesting for startups (and relevant to my practice). The panelists were Neeraj Arora (Principal, Corporate Development at Google), Ryan Aytay (VP of Corporate Development at Salesforce.com), Ryan Cooper (Corporate Development Director at Microsoft), and Amin Zoufonoun (Director of Corporate Development at Facebook), all companies that have grown a great deal through partnerships... More

CONTRIBUTED BYTrent Dykestrent.dykes@dlapiper.com One of the more confusing parts about forming a startup is sorting through the dozen or so documents that may come into play. Below are the basic organizational documents to consider when forming your startup. Which documents are applicable to your startup may differ, depend on your startup’s specific circumstances (e.g., number of founders, alignment of founder expectations, financing plans, whether or not there will be non-founder employees, tax elections, etc.), but these are the versions we typically see.... More

CONTRIBUTED BYAndrew Ledbetterandrew.ledbetter@dlapiper.com For a variety of reasons, many emerging companies are not in a position to easily identify venture capital funds, banks, or angel investors from whom to raise money or to identify a potential acquirer for their business.  Publicly soliciting investors in a registered offering might involve prohibitive costs and an uncertain outcome.  The entrepreneur may not have adequate personal wealth to fund the company, not be fortunate enough to have rich relatives or friends, or not be looped in to the right circles to meet financially sophisticated potential investors.  Such small businesses sometimes turn to “finders” to... More

CONTRIBUTED BYMegan Muirmegan.muir@dlapiper.com  Venture capitalist Fred Wilson recently published a guest post on his blog from Giant Robot Dinosaur about “Minimal Viable Personality”, what Fred refers to as "voice".  Giant Robot Dinosaur, a/k/a “The Grimster”, explains why personality is a critical aspect of a successful product.  This is true for products of venture-backed companies or those funded in other ways.  I am including it here because I think it is particularly important for startups - as they usually get just one chance to succeed with an initial product - and because I love the drawing of bread versus bacon. As The Grimster explains in... More

CONTRIBUTED BYMegan Muirmegan.muir@dlapiper.com  Canadian futurist Richard Worzel recently posted a piece entitled 9 Trends in Innovation on his blog, FutureSearch. His "trends" list is made up of approaches he believes will lead to innovation and success. From his list, I’ve pulled some sections that struck me as particularly applicable to a tech startup with the goal of significant long-term growth. Read the entire piece here. Exclusivity is overrated; fanaticism is more valuable Worzel acknowledges that “creating fanatics is not easy. It takes years of work, meticulous attention to detail, and outstanding customer service.”  Fanatical customers are not only frequent purchasers of your products, but they... More

CONTRIBUTED BYMegan Muirmegan.muir@dlapiper.com  Good news for budding entrepreneurs located in (or willing to relocate to) Seattle, Boston, Boulder and New York.  As reported on Geekwire and TechCrunch, TechStars has raised an additional $24M to enable the startup incubator/boot-camp to offer the companies in its summer-long program $100,000 in convertible debt.  This additional funding should enable the TechStars entrepreneurs to focus on building their early-stage companies a little longer before launching into the time-consuming fundraising process.  The new funding comes from Foundry Group, IA Ventures, Avalon Ventures, DFJ Mercury, SoftBank Capital, SVB Financial Group, RRE Ventures, Right Side Capital Management, TechStars Alumni and several individuals. ... More