Thank you to all who participated in the Technology Leaders Forecast Survey that we posted last month. As posted earlier, on October 7, DLA Piper hosted its 2014 Global Technology Leaders Summit, where technology leaders, influential innovators and policymakers convened to discuss the future of innovation. In connection with the Summit, DLA Piper released the results of the survey, which was developed with PitchBook. The results concluded that: “With a thriving tech economy, ballooning valuations and an IPO market humming at a level unseen since the dot-com
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Take the Technology Leaders Forecast Survey
On October 7, DLA Piper will host the Technology Leaders Summit, where technology leaders, influential innovators and policymakers convene to discuss the future of innovation. At the Summit, DLA Piper will release the results of its fourth, semi-annual Technology Leaders Forecast Survey, which will gauge the perspectives of leading technology and venture capital executives regarding the business climate and operating environment for technology companies.
We invite you to participate in the survey (on or before September 22). In appreciation, respondents will receive a copy of the final report
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What is Micro-Venture Capital?
Over the past few years, a new funding source for seed stage startups has developed and quickly become an integral part of the startup ecosystem. This newer brand of investor is typically labeled a seed venture or micro-venture capital fund (a Micro-VC).
Micro-VCs are smaller venture firms that primarily invest in seed stage emerging growth companies, often have a fund size of <$50M and typically invest between $25K to $500K in a given company. While many Micro-VCs are managed by former venture capitalists, former entrepreneurs and/or super angels, many larger
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Angel Investment Trends: Q1 2014 Halo Report
The Q1 2014 Halo Report has been released by the Angel Resource Institute, Silicon Valley Bank and CB Insights. The Halo Report analyzes angel investment activity and trends in the United States. Here are a couple interesting Q1 2014 highlights:
- The median angel round size jump to $980K (up from $750K in each of Q1 and Q4 2013);
- The median round size was $1.65M when angel groups co-invest with other types of investors;
- The median seed stage pre-money valuation increased slightly to $2.7M;
- Angel groups continue to
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Equity Compensation Alphabet Soup – ISO, NSO, RSA, RSU and more
CONTRIBUTED BY
Rachel M. Perkins
rachel.perkins@dlapiper.com
Startups and public companies alike often use equity to help attract, retain and incentivize talented employees and other service providers. The different forms of awards have proliferated in the past several years, though, leading to a confusing “alphabet soup” of jargon that often frustrates both the recipients of grants and the company itself. Many angel and venture capital investors continue to prefer seeing stock options and restricted stock awards in their portfolio private companies, as these are the most common and simplest to administer. Other forms of awards can also be challenging for startups because there is no public market to easily set a contemporaneous per share stock price or provide liquidity for the award recipients. However, while stock options—both nonstatutory (NSO) and incentive (ISO)—and restricted stock awards (RSAs) remain the most popular and most recommended form of equity compensation, other forms—such as restricted stock units (RSUs) and stock appreciation rights (SARs)—are gaining popularity in certain markets, and we are being asked more and more frequently about these alternatives.
Adding to our previous discussions of adopting your first equity incentive plan, NSOs vs. ISOs and options for issuing employee equity in LLCs, we have put together the below quick reference charts, which are intended as high-level summaries of the most common equity incentive awards as well as some of the other less common awards available. The following charts highlight some of the key features and tax consequences of each type of award, as well as some of the potential drawbacks associated with each:
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Seattle Office Real Estate Market Review for Q2 2014
Compliments of Jason Smith of Kidder Mathews, attached is a Seattle-area office real estate market review for Q2 2014. As the report notes, so far in 2014, the only major surprise in the office market was Boeing expanding into over 600,000 s.f. of space in Bothell and the I-90 Corridor, single-handedly dropping the vacancy rates in those submarkets by 300-400 basis points (bps) each. The rest of the market trends are holding steady; leasing activity is improving across the region and the lack of large contiguous spaces in the
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Pacific Northwest Investment and Exit Report
CB Insights recently released its Pacific Northwest Investment and Exit Report, which analyzed private company investment and exit activity over the past five years. The report collected data from all activity sources, including venture capital, private equity, strategic corporate investments, corporate venture investors, angels, incubators and accelerators. Here are a few highlights from the report:
- Since 2009, the number of deals closed per year has increased 144% (195 deals in 2009 vs. 475 deals in 2013), with the total annual investment amount increasing 81% ($780 million dollars invested in
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You think your merger is too small for antitrust laws to apply…think again: Top 10 tips in non-reportable transactions
Article prepared by and republished courtesy of our colleagues Steven Levitsky and Paolo Morante; originally published here: http://www.dlapiper.com/en/us/insights/publications/2014/05/merger-enforcement-actions-below-the-hsr-threshold/.
“Less is more” may be true in architecture, but in merger clearance law, “less” is still enough to trigger antitrust investigations and litigation and rescission of the whole transaction. By “less,” we mean less than the Hart-Scott-Rodino $75.9 million threshold.
The big case currently in the news underscoring this point is FTC v. St. Luke’s Health System. In January 2014, the Federal Trade Commission obtained a decision from the US District Court for Idaho ordering full divestiture of a non-reportable deal more than two years after the merger had been consummated.
But that result is actually old news. Contrary to popular opinion, the antitrust agencies have a long history of challenging deals well below the Hart-Scott-Rodino thresholds, even when the deals have already closed. And with the St. Luke’s case, they are warning again that no anti-competitive deal is immune from challenge, even if it is small.
What issues should you keep in mind to prevent a future disastrous challenge from the regulators? In this post, we briefly discuss the highlights of St. Luke’s and then close with 10 important points to keep in mind in upcoming M&A transactions.
Continue Reading You think your merger is too small for antitrust laws to apply…think again: Top 10 tips in non-reportable transactions
Reducing startup brain damage: Delaware moves to further streamline corporate processes for emerging companies
CONTRIBUTED BY
Ed Batts
ed.batts@dlapiper.com
Proposed amendments to the Delaware General Corporations Law (DGCL) for 2014 aim to significantly streamline routine questions that often prove vexing for emerging growth companies and newly formed subsidiaries of larger companies.
It is a fact of life that people leave jobs. They move to other cities, whether for family or lifestyle. They quit for perceived greener pastures. They retire. Or they are hit by the proverbial bus. Forming a company under Delaware law historically has had a pitfall: a “sole incorporator” (often a paralegal) forms the initial company, one assumes promptly appoints one or more directors and then, one further assumes, immediately resigns.
But sometimes that paperwork is lost, overlooked (particularly if creating a new subsidiary for a larger company) or forgotten in the midst of workloads, or a company founder without the benefit of legal counsel did the incorporation and neglected to resign. An existential crisis involving numerous lawyers scratching their heads can ensue if the resignation paperwork does not exist and the original sole incorporator cannot be located or refuses to cooperate.
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Startups seeking crowdfunding: Avoiding patent pitfalls
CONTRIBUTED BY
Blake William Jackson
blake.jackson@dlapiper.com
Many startup companies want to change the world with their great new ideas – but, in an effort to raise funds, some jeopardize their ability to protect those great new ideas with patents. This doesn’t have to happen. With a little foresight, startups seeking funding can avoid the patent pitfalls.
A typical startup story may go like this: A few entrepreneurs form a startup company because they have developed a great new idea for the next “must-have” product. To raise funds, the entrepreneurs ask relatives, take out a small loan or turn to a crowd-source funding program like Kickstarter. These crowd-source funding sites allow the startup to disclose its new ideas to the public and raise funds by allowing anybody to give money to the startup in return for some small benefit. Such small benefits can be anything the startup chooses, ranging from promotional items, to a beta product the startup is still developing, and even to pre-sale orders of the finished products whose development is being funded and that will eventually be mass marketed.
After its crowd-source funds dwindle, the startup then looks to more substantive investors to grow the business. It is at this point that startup entrepreneurs may first think about patent protection – often because of inquiries from potential angel and venture capital investors. It is also at this point that the startup may learn that it is too late to properly protect its great new ideas with patents. A startup that has reached this point without protecting its patents may pay the price in diminished support from potential angel and venture capital inventors, not to mention the long-term loss of protection that a patent portfolio could provide.
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