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

Megan Muir

Posts by Megan Muir

Canadian Anti-Spam Regulatory Activity

Posted in For Entrepreneurs and Companies, IP/Privacy/Social Media, Startups

From our colleagues Kelly Friedman, Tamara Hunter and Jim Halpert

This fall, more than a year after Canada’s anti-spam legislation (CASL) came into force, it is abundantly clear that the regulator, the Canadian Radio-television and Telecommunications Commission, is taking its new responsibilities very seriously.

In the latest developments, the CRTC recently issued an Enforcement Advisory and further Guidance on Implied Consent.

The CRTC’s message is loud and clear – it will impose penalties, regardless of good intentions.

Find out more about CASL and the key messages for business in the latest CRTC guidance.

Read more here.

Electronic Signatures – New European Union Regulation

Posted in For Entrepreneurs and Companies, For Investors and Fund Managers, IP/Privacy/Social Media, News and Recent Events

From our colleague Michael McKee

The EU has adopted a new regulation, which will introduce a new legal framework for electronic signatures, seals, time stamps and electronic documents.

These rules aim at creating a uniform regime across EU for the mutual recognition of electronic identification between member states. This new regulatory framework (910/2014/EU) was published in the Official Journal of the EU on 28 August 2014 under the name “Regulation on electronic identification and trust services for electronic transactions in the internal market” (commonly referred as “e-IDAS” Regulation).

It will apply from 1 July 2016 replacing the Directive on Electronic Signatures (1999/93/EC).

Read more here.


Posted in For Entrepreneurs and Companies, News and Recent Events, Startups

From our colleagues Lucas V. Muñoz, Margaret Keane, Ben Gipson and Daniel Lac

Beginning July 1, 2015, employers in the State of California are required to provide employees with paid sick leave (PSL) under the California Healthy Workplace Healthy Family Act of 2014. In short, every employee who works at least 30 days in a year is entitled to accrue PSL at a rate of at least one hour of PSL per 30 hours worked, up to 24 hours per year.

Simple enough? Not really. As employers implement new PSL plans, or modify existing paid time off (PTO) plans to comply with the law, new questions are raised.

To help you understand the ways the Paid Sick Leave Law may affect your company, our colleagues in the Employment Group at DLA Piper have put together a list of 10 points to consider as you strive to comply.

See them here.

Three Trends in 2014 Venture Capital Funding

Posted in For Entrepreneurs and Companies, For Investors and Fund Managers, Fund Managers, Fundraising, VC & Private Equity

Contributed by our colleague Mark Radcliffe

2014 was a great year for startups seeking funding.  Two of the leading reporting companies, PitchBook and CB Insights, report similar trends (both of these reports focus on funding by traditional financial venture capitalists and corporate venture capitalists, but the numbers differ because PitchBook also includes some angel investments). The key points are:

1.  Significant Increase in the Amount of Funding:  The funding in 2014 increased dramatically from 2013: according to PitchBook,  funding increased almost $20 billion from $39.4 billion to $59 billion http://blog.pitchbook.com/5-takeaways-from-pitchbooks-2015-u-s-venture-industry-report/ (see chart below).  This total is the largest since 2000. CB Insights has slightly lower numbers $47.2 billion but the trends are the same, with a sixty two percent (62%) increase over 2013 https://www.cbinsights.com/venture-capital-2014.

*Chart from PitchBook

2.  Larger Deals:  According to PitchBook, the number of deals declined from 6,124 to 5,160, a drop of 16%. On the other hand, CB Insights shows a slight increase in the number of deals (8%) to 3617.  According to PitchBook, this drop reflects a significant increase in the size of later stage financing: the proportion of capital invested in rounds that raised more than $25 million was sixty four percent (64%). These deals also reflect a trend to delay exits and the rise of “unicorns” (private companies worth more than $1 billion). According to Fortune, over 80 technology startups are unicorns and we are beginning to see the rise of “decacorns” (companies worth $10 billion). Fortune now counts eight decacorns.  The reason for the difference in the numbers is difficult to determine (I have talked with both PitchBook and CB Insights), but is probably due to the angel deals counted by PitchBook.

3.  California Retains Its Lead:  According to CB Insights, California widened its lead over other states in 2014.   California based companies raised $6 billion more of venture capital funding than all 49 other states and Washington D.C. California-based companies raised $26.84 billion across 1631 deals while companies based outside of the California raised $20.46 billion across 1986 deals. https://www.cbinsights.com/blog/california-venture-capital/.  PitchBook’s most recent infographic on the geography of venture investments is focused only on the Bay Area, but suggests a similar continued dominance with the Bay Area taking 29% of venture funding  http://blog.pitchbook.com/vc-by-region-in-2014-bay-area-nyc-pnw-europe/.

These numbers reflect the fundamental nature of the changes taking place in economy: business is becoming more digital, driven by software, big data and mobile platforms.

What Exactly Do You Mean By “Reseller” Agreement?

Posted in For Entrepreneurs and Companies, IP/Privacy/Social Media, Startups

A useful note from our colleague Sanjay Beri, originally posted at Technology’s Legal Edge.

I was recently reminded that the term “reseller” agreement can often mean different things to different people.  Misunderstandings about these types of relationships creates the potential for miscommunication and wasted time drafting the wrong terms.

A client recently asked me for a form of reseller agreement to engage resellers to help distribute the client’s software based product.  “You know, just grab something off the shelf that will work” went the common refrain.  As I talked to the client about the type of arrangement he was seeking, however, it became clear that the client was still in the process of making a number of business decisions that would greatly impact pulling the right “form” or, more likely, drafting the right terms.  Given this discussion, I thought it might be useful to impart a few high level questions that I found useful in guiding the conversation.  For ease, I’ll simply refer to my client from the conversation above as the “licensor” and the ultimate user of the product as the “end customer”:

(i) What type of relationship will the reseller have with the end customer (for example, will the reseller be entering a negotiation with the end customer or merely be passing through terms dictated by the licensor)?

(ii) Will the licensor need a direct contractual relationship with the end customer or need rights to prevent the end customer from taking particular actions with respect to the licensor’s product?

(iii) Will the reseller be modifying or bundling licensor’s product in any way for redistribution?

(iv) Will the reseller or licensor have direct support obligations with the end customer?

Having precise discussions and clarity around these points is crucial for both the lawyer and the client.  By having these basic discussions, the parties can save lots of drafting time, and unintended delays in ensuring that the terms provided match up with the business objectives of the client.


Posted in For Entrepreneurs and Companies, For Investors and Fund Managers, IPOs & M&A, News and Recent Events

Megan Muir

From our colleagues Paolo Morante, Steven E. Levitsky, and Laura Kam

In accordance with the 2000 amendments to the HSR Act, the Federal Trade Commission has announced its annual revision to the jurisdictional thresholds under the Act. The new thresholds will go into effect 30 days after publication in the Federal Register, which is expected in the next few business days.

Under the new thresholds, no transaction will be reportable unless, as a result of it, the acquiring person will hold voting securities, assets, or noncorporate interests of the acquired person valued above $76.3 million.

Find out more.

New student data privacy laws: top points for school contractors and K-12 education sites, apps and online services

Posted in For Entrepreneurs and Companies, IP/Privacy/Social Media, Uncategorized

Megan Muir

From our colleagues, Michelle J. Anderson and Jim Halpert, originally published as a Data Protection, Privacy and Security Alert (US)

According to the Data Quality Campaign, 36 states considered 110 student data privacy bills in 2014, and 20 states enacted 28 such bills into law.  At least eight of these new laws may have significant implications for businesses that provide services involving student data to schools, and most of these laws have already taken effect.

IMPLICATIONS FOR VENDORS: Some of the new state student privacy laws specifically require that contracts with vendors include clauses that address the requirements of the new state law.  In most cases, the new state law will be directly applicable to vendors whether or not the contract warns them of the new requirements.

IMPLICATIONS FOR OPERATORS OF K-12 EDUCATIONAL WEBSITES, ONLINE SERVICES AND MOBILE APPS: In addition to new vendor contractor requirements , K-12 educational websites, online services and apps will be subject to various requirements regardless of whether they have a contract with a school.

See the full article (Data Protection, Privacy and Security Alert (US)) for information on steps to take and things to watch out for.

Top 10 Pitfalls in Managing Employment Contracts as You Go Global

Posted in For Entrepreneurs and Companies, Startups

Megan Muir

From our colleague, Ute Krudewagen

The CEO of an emerging growth company called me a while ago, a bit shocked after having seen the employment contracts that had just been issued to a couple of new hires in Hong Kong.  “How could they be longer than mine!?  Are you sure that is the approach we should take as we expand our operations?”

This CEO, like many US executives, employment lawyers and HR representatives, is accustomed to one- or two-page US-style at-will offer letters. But in many jurisdictions around the world,. detailed employment agreements are not only customary and best practices, but are simply required.  In fact, as foreign companies expand into the US, we see the reverse phenomenon – foreign companies rolling out foreign-style employment agreements to US-based regular employees, thus losing the benefits of the unique concept of at-will employment in the US. 

Against this background, here are ten important pitfalls to be aware of as you develop your global employment documentation:

1.  You don’t use a contract.  Outside the United States, your employees will expect a contract – and might sue if they don’t get one! Written employment agreements are best practices and they can incorporate crucial terms such as probationary periods, termination grounds, or working time provisions.  In fact, many jurisdictions require written employment agreements.  In China, for instance, a company that fails to issue a written employment agreement within one month of the commencement date will be subject to double wage claims.  In the European Union, under Directive 91/533/EEC[1], an employer is required to inform its employees of all relevant terms of the employment relationship within two months of commencement of employment; commonly, this information is provided in the employment agreement.  Several EU member states have more stringent requirements.

2. You fail to protect your company by including probationary periods and proper termination provisions.  Given the lack of at-will employment, probationary periods are crucial outside the United States.  Each country has different rules on the maximum duration of a probationary period, whether renewals are permissible, etc. (e.g., Germany permits a six-month probationary period, China six months for open-term contracts, but only one month for fixed-term contracts of less than one year, and two months for contracts longer than one year).  If you include a probationary period, make sure to make any termination decisions before expiration of the probationary period.  In various jurisdictions, termination provisions are crucial as well.  While they may not always give a company full protection (since ultimately, it is statutory restrictions that determine in which instances terminations are permissible), they often give a company at least a good starting point to enforce a termination (e.g., in case of violation of company policies such as a code of conduct).

3. You don’t think strategically when it comes to employment contracts.  One size does not fit all. Before you embark on drafting employment agreements for your international operations, think through the strategy you want to use.  The most common approach is to prepare a local-law-compliant employment agreement in line with best practices and the standard approach of the specific jurisdiction where you hire.  Some companies feel strongly about global consistency, though, and would rather create a “global” template that would only be localized as necessary under local laws.  One hybrid approach is to agree on company-specific clauses (such as references to specific global policies and commission plan or bonus language – keeping in mind that internationally, once granted, variable compensation is hard to take away or amend) to include in any agreement globally, while otherwise working off local templates. 

Also consider the interrelationship between your contract and policies.  In some jurisdictions, it is advisable to incorporate relevant handbook policies in the contract (e.g., in the UK you need to mention disciplinary and grievance procedures). Having policies incorporated (e.g., data protection) can also often protect the company if claims are brought to show the employee was aware of procedures.  Finally, do not forget data privacy considerations.  Consider, for instance, whether you need consent to the transfer of personal data in the employment agreement, or a standalone data privacy notice.

4.  You don’t properly address assignment of intellectual property.[2]  Keeping your intellectual property safe starts from day one. Have you considered how to address IP assignment?  If there is a standard proprietary information and inventions assignment agreement (PIIA) you want to use, this must be localized under local laws.  Sometimes, specific policies and procedures are required.  In China, for instance, absent company rules on payments made for employee-created patents, a company will end up paying an amount determined under statutory rules.  In Russia, trade secrets must be specifically outlined in a company trade secrets regime or those trade secrets will not enjoy protection.

5. You use the wrong employing entity.  Make sure your employees (and the government and courts) know who’s the boss. A common mistake is to print the employment agreement on the parent company’s letterhead, or to include the parent company as employer of record in the contract.  This is only accurate where that company in fact acts as the employing entity (which is not feasible in some jurisdictions, like Brazil, Mexico or Russia).  Where you have set up an international structure of local subsidiaries, these should be expressly indicated to be the employing entity, or you risk joint employer liability and permanent establishment exposure of the employing entity, thus obliterating all the tax planning the company has done.  One exception to this rule: if stock option grants are made in a parent company, that company should be issuing the stock award documentation.

6.  You use the wrong template.  Which template to use is not determined by the employing entity, but by the jurisdiction in which the employee performs his or her services.  While most jurisdiction recognize the principle of choice of applicable law, this is usually overridden by considerations of public policy, and employees are almost always deemed protected (for example, see Article 8 of the Rome Convention[3]).  Accordingly, an employee in France should receive a French law-governed employment agreement, even if the employee works for a UK employing entity.  Otherwise, the employee could enjoy the best of both worlds (in this example, UK contractual rules, plus French statutory rules).

Also, templates for specific individuals or situations should be used where appropriate, such as fixed-term employment agreements (where permissible), managing director or entrustment agreements (e.g., in Germany or Japan for certain individuals in corporate roles), or agreements with specific working time provisions depending upon level of the employee.[4]

7.  You fail to translate your contract.  No surprise, but employees should be able to understand their agreement or it will not be enforced against them.  It is always fascinating when employees who used to be fluent in English during their entire employment relationship seem to have lost their ability to communicate in that language when it comes to bringing a termination lawsuit.  Indeed, many jurisdictions (such as Belgium, France or Poland) require employment agreements to be in the local language, even for an employee fluent in a foreign language.  Absent that, the agreement will not be enforceable (at least not against the employee).

8.  You insert unenforceable non-compete provisions.  You may think US state-to-state rules are confusing, but it gets much more interesting abroad. Rules on post-termination restrictive covenants vary significantly from jurisdiction to jurisdiction, with many following a general reasonableness approach (as in Australia, the United Arab Emirates or the UK), others prohibiting them outright (e.g., India, Mexico and Russia) and yet another set of jurisdictions requiring specific payouts for post-termination non-competes (e.g., China, France and Germany).  If you include such provisions in your employment agreement or PIIA, ensure that you understand the legal requirements.  For instance, in Germany, once included, a post-termination non-compete can only be terminated with a one-year advance waiver, or the company will end up paying the mandatory 50 percent post-termination non-compete compensation even if it has no desire in enforcing the provision.

9.  You don’t issue your contract on time.  Often, some delay is not a big deal, but there are jurisdictions (most often in the common law context) in which a valid contract is predicated not only on offer and acceptance, but also payment of a consideration, and these actions must happen within the proper timeframe. For example, if an employee in Canada receives his or her employment agreement after having commenced employment, then that employee will not be technically bound by the agreement, since no additional consideration was provided for the contractual restrictions set out in the contract.  Ongoing employment is not sufficient.

10.  You let your contracts become stale.  Last but not least, keep in mind that laws change, as do your company’s practices.  Implement a process to regularly review your template agreements and make sure they still provide you the best protection possible.

[1] See it here.

[2] See this post on the blog International Employment Lawyer.

[4] See this post on International Employment Lawyer.

Accredited Investor Verification under Rule 506(c)

Posted in For Entrepreneurs and Companies, For Investors and Fund Managers, Fundraising, News and Recent Events, SEC, Startups, VC & Private Equity

Megan Muir

Bill Carleton has a good post regarding the recent comments from Keith Higgins, the Director of the Division of Corporation Finance, who spoke at the 2014 Angel Capital Association Summit.  Higgins discussed the SEC’s principles-based approach with respect to meeting the requirements of new Rule 506(c). 

Since the SEC’s adoption of new Rule 506(c) in September 2013 allowing general solicitation by issuing companies in certain circumstances, angel investors have been concerned about the accredited investor verification standards set forth in those new rules.  The debate has centered around what actions are required by an issuing company to satisfy the requirement of taking “reasonable steps to verify” the accredited status of its investors when utilizing general solicitation as now permitted under the rule.  The rule itself provides a number of safe harbors that the SEC has determined will satisfy the standard, but many of those require detailed financial information about the investor to be provided to an issuing company or third party.  The Angel Capital Association has been out in front of this issue, advocating on behalf of angel investors in the SEC comment process and publishing its own guidance on verification of accredited investor status using membership in an established angel group (with various criterion spelled out).

It remains to be seen what ultimately becomes standard accepted procedures outside of the safe harbor provisions set out by the SEC, but the angel community is actively engaged in addressing the issue.

Employers: 2014 Deadlines to Furnish ISO and ESPP Information Statements and Returns

Posted in For Entrepreneurs and Companies, News and Recent Events, Startups, Uncategorized

Megan Muir

Employers, from startups to public companies, need to be aware of the following requirements and take action by January 31st if they apply.  Section 6039 of the Internal Revenue Code requires a corporation to furnish a written statement to any employee or former employee who either (i) exercised an incentive stock option within the meaning of Section 422 of the Code (ISO) during 2013 or (ii) during 2013 first transferred legal title to shares acquired under the corporation’s employee stock purchase plan within the meaning of Section 423 of the Code (ESPP). This requirement applies to both privately held and publicly traded corporations. The corporation must furnish these statements on Forms 3921 and 3922 no later than January 31, 2014.

IRS return filing requirement for 2013 transactions

In addition to the employee information statements, corporations must file returns with the Internal Revenue Service on Forms 3921 and 3922 no later than February 28, 2014, if filed on paper, or March 31, 2014, if filed electronically.  These information returns, Form 3921 for ISO exercises and Form 3922 for initial ESPP share transfers, must be filed electronically by any corporation required to file 250 or more of a particular return and may otherwise be filed either electronically or in paper form.


Employee information statements for 2013 transactions must be furnished no later than January 31, 2014. Information statements may be furnished to employees electronically in accordance with requirements set forth in the General Instructions for Certain Information Returns.

Paper filings of Form 3921 and 3922 for 2013 transactions must be submitted to the IRS with transmittal Form 1096 for each type of return and are due no later than February 28, 2014. However, corporations required to file 250 or more of either type of form must file that form electronically following the procedures contained in Publication 1220. Electronic filings of Forms 3921 and 3922 for 2012 transactions are due no later than March 31, 2014.

For more information on the contents required to be provided in such information statements, as well as links to the relevant forms and IRS instructions, see this recent DLA Piper Client Alert by William H. Hoffman of our Employee Benefits and Executive Compensation Group.

Top Labor and Employment Law Issues When Taking your Start-Up Global

Posted in For Entrepreneurs and Companies, Startups

Our colleague Ute Krudewagen has put together a list of some key labor and employment issues to consider if and when you decide to take your US-based emerging company to overseas locations.

So you are ready to expand?

Your start-up is off the ground and running, U.S. offer letters and confidentiality agreements have been signed and compliance policies have been implemented.  It’s now time to hire your first employee outside the U. S.  This seemingly easy task is often easier said than done.  For many emerging companies, the road to a global workforce is paved with potholes.  How can you prepare for the Friday afternoon call from a frantic HR manager who wants to hire a salesperson who will go to a competitor if he doesn’t have an offer in his hands by Monday morning?  Can you afford to lose the candidate, and all the great opportunity that the candidate represents to the business?  How do you respond when asked about a sales representative who received an offer three months ago and has since then been working in Brazil, while being paid directly from the U.S.?  These issues are part of running an international business, however, with the right preparation and planning, these speed bumps can be leveled before they escalate.

The five issues Ute discusses for growing employers to consider before going global are:

  • Doing Business and Tax Considerations, Including Corporate Structure
  • Will you Expand by Hiring Employees, Independent Contractors, Third Party Agencies or Expatriate Employees?
  • Payroll & Benefits Processes and Costs, Including Witholding on Taxes and Social Charges (similar to Social Security)
  • Employment Agreements & Policies
  • Managing the Exit Strategy – Probationary Periods, Lack of At-Will Employment, Notice Periods and Severance

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New SEC Rules Disqualifying “Bad Actors” in Private Fundraising

Posted in For Entrepreneurs and Companies, For Investors and Fund Managers, Fund Managers, News and Recent Events, SEC, Startups

Megan Muir

Earlier this summer, together with some of my partners within DLA Piper (Christopher Paci, Jason Harmon, Darryl Steinhause and Wesley Nissen), I wrote an article about new SEC regulations concerning private offerings. The final rules issued in July 2013 by the SEC go into effect on September 23, 2013. Below is a summary of the changes with respect to the disqualification of certain “bad actors” in connection with private offerings.  Also, attached is a sample Rule 506 Covered Person Questionnaire seeking information about potentially disqualified individuals and entities. The full article also contains a discussion of new rules allowing general solicitation in certain private fundraising as well as a discussion of certain proposed private offering rule changes that are not yet final. That piece may be found here.

The Dodd-Frank Act, enacted in 2010, required the SEC to adopt rules to prohibit use of the Rule 506 exemptions under Regulation D for securities offerings in which certain “bad actors” are involved, whether or not general solicitation or general advertising are used in the offering. Rule 506 is the exemption from registration requirements used in many private offerings, including most startup financings. To fulfill this Dodd-Frank requirement, the SEC has adopted rules that disqualify an issuer from selling securities in reliance upon the Rule 506 exemption if the issuer, its board members, certain of its officers and its large shareholders, among others covered by the rule, have experienced a “disqualifying event.” This is similar to existing bad actor rules, such as those found in Rule 505 of Regulation D, which relies on the disqualification provisions set forth in Rule 262 of Regulation A.

Disqualifying events include criminal convictions in connection with sales of securities, certain SEC civil and administrative actions and certain other orders from financial service industry regulatory authorities. If the issuer or other covered person is deemed a bad actor under this rule, the Rule 506 exemption will not be available to the issuer.

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New SEC General Solicitation Rules Go Into Effect

Posted in For Entrepreneurs and Companies, For Investors and Fund Managers, Fund Managers, News and Recent Events, SEC, Startups

Megan Muir

Earlier this summer, together with some of my partners within DLA Piper (Christopher Paci, Jason Harmon, Darryl Steinhause and Wesley Nissen), I wrote an article about new SEC regulations concerning private offerings. The final rules issued in July 2013 by the SEC go into effect on September 23, 2013. Below is a summary of the changes with respect to general solicitation in such rules. The full article contains a discussion of other regulatory issues that should be considered and new “bad actor” rules, as well as a discussion of certain proposed private offering rule changes that are not yet final. That piece may be found here.

On July 10, 2013 the US Securities and Exchange Commission adopted much-anticipated amendments to its regulations on private offerings under Rule 506 of Regulation D of the Securities Act of 1933, as amended, that lift the more than 80-year ban on general solicitation and advertising for certain purchasers, as mandated by Section 201(a) of the Jumpstart Our Business Startups Act (popularly called the JOBS Act).

Beginning September 23, 2013, these changes will permit issuers to use advertising and other forms of mass communication to sell securities solely to “accredited investors” under Rule 506 of Regulation D. However, these amendments also include several new requirements and procedures. You will want to be aware of these changes before you launch a general solicitation campaign.

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Trados: Four Key Takeaways for Boards & Investors

Posted in For Entrepreneurs and Companies, For Investors and Fund Managers, IPOs & M&A, Startups

Megan Muir

As we mentioned in this post earlier this month, the Delaware Court of Chancery has issued its decision in the matter of In re Trados Incorporated Shareholder Litigation, C.A. No. 1512-VC (August 16, 2013), in which it addresses extensively a variety of issues that directors and investors will want to consider in similar circumstances.  In the opinion, by Vice Chancellor J. Travis Laster, the court found that although the preferred stockholders received all of the merger consideration in an end-stage transaction and the common stockholders received nothing, and although the Trados directors failed to demonstrate that they had followed a fair process, the transaction was still “entirely fair” to the common stockholders because the common stock had no monetary value before the merger.  You can read our detailed alert here by DLA Piper partners John J. Gilluly III and John Reed, which provides background for the case and includes additional detail regarding the four key takeaways from the opinion listed below.

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Corporate Venture Capital – Big Second Quarter

Posted in For Entrepreneurs and Companies, For Investors and Fund Managers, News and Recent Events, Startups, VC & Private Equity

Megan Muir

CB Insights has published summary data regarding Q2 2013 corporate venture capital investing, showing CVC investment in 126 deals with total funding of US$1.7 billion. This marks a large increase over the past two quarters (both at US$1.4B) and an even larger increase year-over-year (with Q2 2012 at US$1.2B).  The five most active CVC investors listed are: Google Ventures, Intel Capital, Qualcomm Ventures, In-Q-Tel and Novartis Venture Funds.  A full report is available to paid subscribers.

 CVC Q2 2013 - CB Insights sm.jpg

Angel Investment Trends: Q1 2013 Halo Report

Posted in For Investors and Fund Managers, News and Recent Events, VC & Private Equity

Megan Muir

The Q1 2013 Halo Report report has been released by The Angel Resource Institute (ARI), Silicon Valley Bank (SVB) and CB Insights.  The report, available for download here, is a a national survey of angel group investment activity.

Highlights of the Q113 report include the following:

  • Round sizes trended up to a median of $680K per deal, a 5 quarter high;
  • Pre-money valuations remained at $2.5 million; and
  • Internet, healthcare and mobile deals attracted the most angel interest (72% of Q1 deals, obtaining 64% of the angel dollars).

Interestingly, in Q1 2013, for the first time startups in the Southwest US received slightly more investment dollars than those in California.  Relative to Q1 2012, Great Plains and New York area companies saw the largest increase in angel group funded deals.  The survey also found, not surprisingly, that most angels invest in their home states.

Download the full report here


Recent Venture Capital Trends: CB Insights Q2 2013 Data

Posted in For Investors and Fund Managers, IPOs & M&A, VC & Private Equity

Megan Muir

CB Insights has published summary data regarding recent venture capital trends, together with a full report available to paid subscribers.  In terms of investments by VCs, the report indicates that US$7.0B was invested in 807 deals in the second quarter of 2013, representing a small increase in dollars invested (versus US$6.9B in first quarter) but a decrease in the number of deals of approximately 4%. The chart below shows quarterly dollars invested and deal volume going back to fourth quarter of 2010.  See the full release by CB Insights here.

CB Insights Q2 2013 VC TVA.png

SEC Issues Rules Lifting Ban on General Solicitation in Unregistered Fundraising

Posted in For Entrepreneurs and Companies, Fundraising, News and Recent Events, SEC, Startups

Megan Muir

Ban on General Solicitation Lifted with Respect to Accredited Investors

Today, the Securities and Exchange Commission (SEC) adopted new rules to lift the ban on general solicitation of funds or general advertising for certain private offerings of securities.  Once the rules become effective (60 days after publication in the Federal Register), provided that certain requirements are met, startups, fund managers and other companies will be able to utilize general advertising to offer to sell stock to “accredited investors” as defined in Rule 501 of Regulation D of the Securities Act of 1933 (typically wealthy individuals with liquid net worth in excess of $1 million or investment funds; see our discussion of the recently revised accredited investor standards here as well as information on the SEC’s site http://www.sec.gov/answers/accred.htm). 

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2013 Private Equity Survey Indicates Cautious Optimism

Posted in For Investors and Fund Managers, News and Recent Events, VC & Private Equity

Megan Muir

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:

  • Funds see “management capabilities and effective strategy and execution as primary drivers of successful portfolios.”
  • Outdated IT systems, under-qualified IT personnel and inadequate infrastructure become apparent following acquisitions, often impacting critical areas of the business.
  • Active integration leadership and experienced team members are important to success.
  • Firms frequently find weaknesses in financial reporting (including the frequency, accuracy and efficiency of reporting as well as the tracking of operational metrics).

Download the full survey report here.

Pitching Angel Investors: Advice from Jonathan Sposato

Posted in For Entrepreneurs and Companies, Startups

Megan Muir

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.

From MSFT to VC: Ted Kummert

Posted in For Investors and Fund Managers, VC & Private Equity, Venture Spotlight - Individuals in the News

Thumbnail image for Ted Kummert.jpgMegan Muir.jpgCONTRIBUTED BY
Megan Muir

Q&A: Why this former Microsoft exec wanted to become a venture capitalist  Ted Kummert announced on February 5th that he would be leaving his longtime position as a Microsoft executive to take a new role at venture capital firm, Madrona Venture Group. In this Q&A with John Cook of Geekwire, he answers questions about his experience and what caused him to take the leap into VC. “I…look forward to spending time, more broadly, across the Madrona portfolio of companies. I don’t tend to single out. I see so much opportunity, whether we are talking about consumer or we are talking about B2B — I think there is significant opportunity across all of that space,” Kummert said.

He added that his interest is especially drawn towards innovation in the cloud, explaining that “The cloud is really one of those things that is going to change things for the enterprise.” As he moves on from a long career at Microsoft, most recently as head of the company’s Data Platform group, Kummert is looking forward to becoming part of Seattle’s flourishing startup ecosystem. “It is just a fantastic thing to be a part of.”

Women in Tech: Dr. Eve Riskin, Professor and Assoc. Dean of Engineering

Posted in For Entrepreneurs and Companies, Venture Spotlight - Individuals in the News

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Megan Muir

Dr. Eve Riskin is one woman in tech who is actively working to “change the ratio” by increasing the number of women faculty in science, technology, engineering and mathematics (STEM).  As Associate Dean of Academic Affairs for the University of Washington College of Engineering, Professor of Electrical Engineering, and Director of the ADVANCE Center for Institutional Change, she is a leader and a mentor for other women considering academic STEM careers (or second careers, following work in industry).

Eve received her bachelor’s degree in Electrical Engineering from MIT and her graduate degrees in EE from Stanford.  She joined the EE Department at the University of Washington (UW) in 1990.  As Director of UW ADVANCE, Eve works on mentoring and leadership development programs aimed to increase the participation of women faculty in STEM fields.  Her research interests include image compression and image processing, with a focus on developing video compression algorithms to allow for cell-phone transmission of American Sign Language.  Eve was awarded a National Science Foundation Young Investigator Award, a Sloan Research Fellowship, the 2006 WEPAN University Change Agent award, the 2006 Hewlett-Packard Harriett B. Rigas Award, and the 2007 University of Washington David B. Thorud Leadership Award.  She is a Fellow of the Institute of Electrical and Electronics Engineers

Read on as Eve discusses her career path, provides advice for young women interested in STEM fields and shares her suggestion that you find a “ventor.”

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Women in Tech: Jenny Lam, Award Winning Designer

Posted in For Entrepreneurs and Companies, Venture Spotlight - Individuals in the News

Megan Muir

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Jenny Lam is a co-founder of Jackson Fish Market, a small software startup focused on making beautiful software experiences. The company has shipped over 20 software products in the past 5 years. Their latest product is A Story Before Bed – the first (and only) service that lets parents, grandparents, and children record video of themselves reading children’s books and play it back as often as they like on the Mac, PC, or iPad.

Before Jackson Fish Market, Jenny worked at Microsoft from 2001–2007 as Creative Director of the Windows User Experience team. When she isn’t running her startup, she serves on the board as Experience Director of the AIGA Seattle chapter (the professional association for design) and works with national and local organizations to foster the next generation of creative design talent headed for the tech industry. She was named one of the Top 100 Most Influential Women in Technology by the Puget Sound Business Journal and was awarded Seattle 2.0 Best Startup Designer in 2010.  You can follow Jenny on Twitter (@helveticagirl).

In this piece, Jenny answers our questions about her work, how she wound up doing what she does so well and her thoughts about women in tech.

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Take our Survey – 2012 Tech Leaders Forecast

Posted in For Entrepreneurs and Companies, For Investors and Fund Managers

DLA Piper is currently fielding its 2012 DLA Piper Technology Leaders Forecast Survey, which examines the thoughts and opinions of technology, private equity and venture capital leaders on a range of critical issues impacting the technology sector.  The survey includes these topics:

  • Who will win the Presidential election? 
  • What impact will the election result have on policy and the tech economy? 
  • What impact could the “Fiscal Cliff” have on the global economy? 
  • How will China’s role in the technology industry evolve? 
  • What are the most promising and challenging areas for the tech economy?

DLA Piper is seeking to offer insights on these and other critical questions.  We invite you to share your thoughts with us by filling out this brief survey – click here to take the survey.  In return, we will provide you with an advance look at the results right here on The Venture Alley in early October.  The full DLA Piper Technology Leaders Forecast Report will be issued on October 9th.