CONTRIBUTED BY
Asher Bearman
asher.bearman@dlapiper.com
This installment of how VC funds work illustrates a basic offshore venture capital fund structure for a fund that will make investments predominantly outside of the US (for example, China). Typically, we form these type of funds in the Cayman Islands due to its similarity with Delaware law and for tax planning purposes. Continue Reading How VC Funds Work – Structure Chart for Venture Capital Fund (Non-US Fund)
CONTRIBUTED BY
Andrew Ledbetter
andrew.ledbetter@dlapiper.com
As expected per the Dodd-Frank Act, the SEC yesterday proposed to add “bad actor” exclusions to Regulation D Rule 506. Similar to Regulation D Rule 505, Regulation A, Regulation E and state limited offering exemptions, the amendment would disqualify offerings from the use of Rule 506 if the issuer or certain persons involved in the offering have, during the relevant look-back period, faced criminal, civil or administrative orders involving a variety of securities or other financial services industry matters. If the proposed rule is adopted, entrepreneurs and investors will need to be even more careful when recruiting executives and directors to join the company. The company will also want to consider doing additional diligence regarding individuals or companies assisting them with sales of securities, as well potential significant investors.Continue Reading ‘Bad Actors’ May Limit Capital Raising Methods
CONTRIBUTED BY
Asher Bearman
asher.bearman@dlapiper.com
This week’s Venture Spotlight is Tim Porter, Investment Professional with Madrona Partners, one of the leading VC firms in the Northwest.
Tim serves on the boards of Appature, Corensic, PHP Fog, and Z2Live, and is a board observer for Apptio, ExtraHop Networks, Impinj, Skytap, Singlepoint, and Smartsheet. Tim is also a member of the three-person Investment Committee for the Alliance of Angels Seed Fund. For Madrona, Tim will look at new companies across all of Madrona’s investment areas but has an emphasis on the software, infrastructure, and wireless sectors. Of late, he has been particularly interested in SaaS, cloud computing, next-generation enterprise data centers, and opportunities created by new mobile platforms.
Prior to joining Madrona in 2006, Tim was a key member of Microsoft’s Corporate Development group, where he shared responsibilities for sourcing, structuring, and negotiating Microsoft’s acquisitions, strategic investments and joint ventures.
Tim received his bachelor’s degree in Mechanical Engineering from MIT and an MBA from the Stanford Graduate School of Business. Outside of work, Tim enjoys spending time with his wife and two young children. He is also a sports junkie and enjoys watching and playing basketball, despite having lost the step he never had.Continue Reading The Venture Spotlight – Tim Porter, Madrona Partners
CONTRIBUTED BY
Asher Bearman
asher.bearman@dlapiper.com
Some good news for the VC industry this morning as the NVCA released the Q4 2010 venture capital performance numbers from Cambridge Associates. According to their press release, venture returns improved at the end of the year in nearly every time horizon, marking the second consecutive quarter in which there has been meaningful improvement.
Mark Heeson of the NVCA believes, based on current exit market activity, that:
The venture industry is on a steady, upwards trajectory rather than experiencing a quarterly blip. In other words,
The National Venture Capital Association (NVCA) recently released their updated model legal documents for venture capital investments, which can be found here. The model documents were revised to include some new provisions to reflect recent Delaware Chancery Court decisions and the evolution of other terms.
Continue Reading Updated NVCA model documents for VC investments
CONTRIBUTED BY
Asher Bearman
asher.bearman@dlapiper.com
Interesting news today out of the SEC, which has hinted that it may delay the effectiveness of the Dodd-Frank Act, currently scheduled to go into effect July 21st of this year, until Q1 2012.Continue Reading SEC to Delay Implementation of Dodd-Frank?
Having a basic understanding of key venture capital terms and mechanics can be a great value to entrepreneurs looking to raise capital. In particular, it can be easy to get tripped up by the volume of foreign terminology and acronyms and the speed at which they are thrown around by venture capitalists and startup lawyers. This semantic minefield can put otherwise highly sophisticated entrepreneurs at a disadvantage in negotiating with venture capitalists and can cause them to enter into deals on unfavorable terms or force them to lean too heavily on their attorneys, increasing legal costs.
In this series, we have prepared a form of venture capital term sheet and will be providing commentary on the various deal points (i.e., what they mean, what is “market”, what to watch-out for, etc.).
We will be adding new posts with more detail regarding various key portions of these terms.
Readers may access a Word version of the sample term sheet here: Sample Series A Term Sheet.DOC
The National Venture Capital Association also has created its own form of term sheet.
Continue Reading Understanding VC Financings – Overview and Sample Term Sheet
This morning John Cook of GeekWire reported on the Q1 2011 DowJones VentureSource study indicating that US venture-backed company M&A activity is dropping. Here is a comment that I left on John’s post regarding our perspective on such trends:
Continue Reading M&A market trends; Seattle contrarian or lagging?
This post is part two of a two-part series and will focus on shareholder controls. Here is our prior post that focused on board of director controls.
Shareholder Controls: There are a number of mechanisms available to increase the control of one or more groups of shareholders, such as the founders or all holders of a certain series of stock (e.g., Series A Preferred shareholders). The most common ways are set forth below. Note that they are often used in combination.Continue Reading Financing Your Startup: Understanding Control and Voting Issues (Part 2, Shareholder Controls)
When negotiating a term sheet for an angel or venture capital investment, there is often tension between the founders and investors with respect to allocation of control over various future company actions and decisions. There are many different ways for a founder to retain, or a new investor to obtain, control over a startup. Below is a brief, but not exhaustive, outline of some of the most typical control features found in early stage financings.
Continue Reading Financing Your Startup: Understanding Control and Voting Issues (Part 1, Board Controls)
