One of the more interesting phenomena in early-stage investing is the recent emergence of initial coin offerings (“ICOs”), token generation events (“TGEs”), or similar distributed ledger or blockchain-enabled means for raising capital. Much has been written, including by many skilled lawyers in the technology sector, about whether the tokens issued in these structures involve “securities” – and, frankly, some of it is unhelpful. Hungry for something that seems like crowdfunding, but that actually works to raise meaningful capital for promising technology initiatives, many in the technology space really want these
Continue Reading

Much has been written recently on blockchain, Bitcoin, Ethereum, cryptocurrencies and initial coin offerings (ICO). Unfortunately, for non-computer scientists (like me), trying to understand these concepts and their potential implications can be a bit overwhelming. To help all of those non-technologists trying to get their heads around blockchain, Bitcoin, Ethereum, cryptocurrencies and ICOs, I pulled together the following list of resources that I have found useful. As an attorney who represents startup and emerging growth companies, it seems likely that these technologies will prove to be disruptive to how we do business, build new technology, fund startups and even think about employment – much like the initial proliferation of the Internet. Let’s start with a brief overview of these technologies and how they relate to each other.
Continue Reading

For some time now, corporate venture capital (CVC) has been a significant part of the funding ecosystem. According to Pitchbook, in 2016 alone over $20 billion was invested in 745 US venture deals in which CVC participated.  CVC is not a new phenomenon. In a post in April 2016, Pitchbook, noted that since the beginning of 2010, $125.57 billion has been invested in rounds involving CVCs. Over the past few years, much attention has been paid to the large investment amounts coming from CVCs and the growing
Continue Reading

Despite a recent cooling in the overall investment climate, the number of active U.S. venture investors in Canada has more than doubled over the past five years. This migration north coincides with a climb in overall venture investment activity in Canada, increasingly challenging pricing on U.S.-based deals and a lower Canadian dollar, which depreciated extensively over the same period. According to PitchBook, more than one-third of all venture-backed deals in Canada in 2015 involved foreign capital, and the number of deals that U.S. firms have participated in have more than tripled over the past five years from 44 in 2010 to 143 in 2015.

Canada 2016 VC


Continue Reading

From our colleagues Edward J. Johnsen, Wesley G. Nissen, David A. Goldstein, Jay Coogan and Robert B. Weiss

The Securities and Exchange Commission has announced that a private equity fund advisory firm and its owner have agreed to pay more than $3.1 million to settle charges that include engaging in brokerage activity and charging transaction-based fees without registering as a broker-dealer. In so doing, the SEC appears to have rekindled the fire under a long-simmering issue regarding the kinds of services that private fund advisers can provide
Continue Reading

CB Insights created the below infographic on October 26, 2015 illustrating the rise of unicorn companies since 2011. This graphic is particularly interesting when viewed together with CB Insights’ blog post this morning (January 7, 2016) that recaps FY 2015 venture financing data.  CB Insights’ recent data shows that while FY 2015 was a record-setting year for venture financings, there was a dramatic drop in the number of mega financings in Q4 2015 (which mega deals had previously been driving the record level).  In any event, the graphics
Continue Reading

The Q3 2015 Halo Report has been released by The Angel Resource Institute at Willamette University (ARI) and PitchBook.  The Halo Report analyzes angel group investment activity and trends in the United States.  Here are a couple interesting Q3 2015 highlights:

  • The median seed-stage valuation has hit an all-time high of $4M (up from $3M in 2014);
  • The median round size in deals with only angel investors was $725K and the median round size in deals when angels co-invest with non-angels was $1.71M (both up materially from Q3 2014);


Continue Reading

PitchBook just released its analysis of Q3 2015 venture capital activity by region, focusing on three key U.S. regions: the Bay Area; New York; and the Pacific Northwest. Below are the PitchBook infographics and a quick summary of the results:

Bay Area:

  • The median pre-money valuation for Q3 2015 was $61.8m.
  • The reported deals with the highest valuations were: Uber Series F pre-money at $51B; Stem Centrx Series G pre-money at $4.8B; Palantir Technologies pre-money at $4.9B; and Stripe pre-money at $4.9B.

3Q_2015_Bay_Recap-2New York metro:

  • The median pre-money valuation


Continue Reading

We have previously blogged about the SEC’s July 2013 rule change that disqualifies certain “bad actors” from using Rule 506. Thankfully, Rule 506 permits the SEC to determine, upon a showing of good cause, that it is not necessary under the circumstances to deny availability of Rule 506. The SEC has recently issued a policy statement explaining how it will evaluate whether a party seeking a waiver has shown good cause that it is not necessary under the circumstances that the exemptions be denied.

Background

Other securities offering exemptions, including Rule 505 and Regulation A, have had bad actor disqualifications for many years, and the SEC has also had the authority to grant waivers under these exemptions using a similar “good cause” standard. In fact, based on this interesting article from Urska Velikonja, the SEC granted waivers nearly 200 times between July 2003 and December 2014. However, because Rule 506 is so much more widely used in mainstream private securities offerings, significant attention to waivers of bad actor disqualifications emerged as the first waivers were granted under Rule 506 (such as those granted to Oppenheimer and H.D. Vest). The attention to the issue culminated in several SEC commissioners publicly expressing diverging views about the proper use of waivers, including in speeches by SEC Commissioners Daniel Gallagher, Kara Stein and Michael Piwowar and SEC Chair Mary Jo White. This ultimately led to the SEC issuing its recent policy statement to bring consistency to how such waivers are granted, whether under Regulation A, Rule 505 or Rule 506.
Continue Reading