Had the chance to be a judge for the UW Business Plan Competition yesterday.  Some terrific companies.  Out of 104 entries, the initial screening team narrowed it down to 38 companies.  Those companies spent yesterday pitching to 280 “judges”, trying to convince each judge of the merits of their idea, their business plan and their ability to execute on their plan.  As judges, we had $1,000 of pretend money to “invest” in the companies.  The 16 companies who received the highest investment amounts now move on to the next round of the competition (plus two alternates).  There was a wide variety among the contestants – with medical device ideas, e-commerce, cleantech and a couple of potato-related companies (no kidding).2010 Winner Brown.jpg

Darien Brown, CEO of last year’s winner YongoPal, was in attendance and served as a judge (shown at right with Rob Salkowitz (left), writer and social technology consultant with MediaPlant, and this contributor, Megan Muir).

All of the advancing companies are listed after the break, together with a short description of their business plans.Continue Reading Seattle Startup Sweet 16 – UW Business Plan Competition

Earlier this week, in connection with a visit by President Obama to Facebook’s offices in Palo Alto to participate in a Facebook Townhall, the National Center for Women & Information Technology (NCWIT) announced a new startup alliance focused on women in tech – the Entrepreneurial Alliance.  Ping Fu, founder of GeoMagic, writes about the event and the new alliance on the White House Office of Science and Technology Policy blog.  The alliance aims to help startups hire more technical women, retain them, and…
Continue Reading New Entrepreneurial Alliance Aims to Increase Numbers of Women in Tech

pic-asher.jpgCONTRIBUTED BY
Asher Bearman
asher.bearman@dlapiper.com

Our first installment in our newest series Understanding VC Financing terms addresses a hot issue at the moment – transaction costs and attorney fees.  Much has been written about this topic in recent months.  For example, with respect to seed round financings, Fred Wilson recently called for attorney fees to be $5,000 for such deals.  Bill Carleton responded with his thoughts on GeekWire.  In typical series priced round of newly issued preferred stock (i.e., Series A, B, C, etc.), however, the transaction agreements are more complex and it’s almost always the case that a VC firm will want to perform some level of legal diligence.  For example, before investing a few million dollars in a tech company, a VC typcially will want to confirm that the company owns its intellectual property, which can require patent searches, open source code analysis, review and invention assignment agreements, and/or more.  Accordingly, the costs of these preferred rounds tend to be much greater than the costs of doing a seed round.

The Sinking Dollarphoto © 2008 Reuben Whitehouse | more info (via: Wylio)It is customary for the company to pay for the legal costs incurred by VCs in a series financing, so entrepreneurs are often sensitive about both their own counsel’s fees for a preferred financing as well the possible fees of the investor’s counsel.  Often, this can be stated as the “reasonable” costs; however, the distinction is not much different in practice.  What is important is that often the parties negotiate a cap – or a maximum amount – that the company must pay.  In our experience, the range can be dramatic.  For example, a follow-on round with little diligence and few changes to the existing agreements can be done for $15,000-$25,000 if everyone is on the same page throughout in terms of keeping the process streamlined.  Alternatively, I’ve also seen complicated financing deals that were heavily negotiated throughout that cost $40,000-$50,000 and, in cases where the diligence was particularly extensive or turned up problems that had to be cured prior to the closing, the amounts can easily exceed $100,000 (all the more reason to spend a little up front to make sure that your documenation is in order before going into a financing).Continue Reading Understanding VC Financings – Transaction Costs and Attorney Fees

Welcome to the Venture Spotlight, an occasional column in which we will profile startups, VCs, entrepreneurs, and technologists, and within these groups, women in tech.  Please email your suggestions of people doing interesting things in technology and in the venture world, plus your suggested questions for them.  Who do you want to read about and what do you want to ask?

Vanessa Fox.jpgWomen in Tech

It seems that every year or so, there is a burst of articles or surveys about the lack of women in technology, with a slew of them coming out just this past month:

Despite the issues, there are many women actively and successfully contributing to the startup and technology ecosystem.  This series of profiles is just a small step to recognize some of the women in our community who are working in the world of technology, startups, and venture capital.  First up is Vanessa Fox.Continue Reading The Venture Spotlight: Vanessa Fox, Organic Search Expert

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

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

pic-asher.jpgCONTRIBUTED BY
Asher Bearman
asher.bearman@dlapiper.com

Some concerning news for supporters of the Start Up Visa Act of 2011 coming out of the Economist Innovation Summit in Berkeley, last week that could spell the death of the Startup Visa, at least for the next year couple of years.

Many in the startup community have been actively following the Startup Visa bills, which have been supported by the National Venture Capital Association and proposed off and on for a couple of years now; most recently in the Senate on March 14, 2011.  The Startup Visa effort is designed to relax visa restrictions and foster entrepreneurship.  Essentially, the Startup Visa bill would allow foreign entrepreneurs extended visas to stay in the U.S. provided that their companies are adequately funded and creating jobs.  More background on the bill is available here:  Start Up Visa Act of 2011 Introduced in Senate.Continue Reading StartupVisa 2011 – Dead on Arrival?

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)