In a typical bull market, private equity sponsors exit out of portfolio assets through IPOs, strategic sales and sponsor-to-sponsor buyouts. But the 2025 deal market has proven to be neither typical nor robust....more
7/14/2025
/ Business Strategies ,
Conflicts of Interest ,
Corporate Governance ,
Exit Strategies ,
Financial Markets ,
Initial Public Offering (IPO) ,
Investment ,
Investment Funds ,
Investors ,
Liquidity ,
Private Equity ,
Private Equity Funds ,
Valuation
Your company is invited by a local meetup group to present at demo day with other startups, and you accept. The group announces the demo day lineup of startups in an e-blast, on its website, on its Facebook page and through...more
6/30/2025
/ Capital Markets ,
General Solicitation ,
Investors ,
New Legislation ,
Proposed Legislation ,
Regulation D ,
Safe Harbors ,
Securities Regulation ,
Securities Violations ,
Startups ,
Venture Capital
Imagine you’re a private equity firm. You buy a company, and you want to retain and incentivize key employees, so you give them some equity in the form of incentive units. You also want to prevent them from running off and...more
Stockholders of Delaware corporations for many years have had the right to examine stock ledgers, stockholder lists and “books and records” for a “proper purpose” under Section 220 of the Delaware General Corporation Law. ...more
Before 2013, issuers were prohibited from using any means of general solicitation or advertising when raising capital in the private markets. The prohibition was perceived by many to be the single biggest impediment to...more
4/7/2025
/ Accredited Investors ,
Capital Raising ,
Crowdfunding ,
Investment Funds ,
New Guidance ,
Private Equity ,
Regulatory Requirements ,
Rule 506(c) ,
Securities and Exchange Commission (SEC) ,
Securities Regulation ,
Venture Capital
According to crypto platform Kraken, the aggregate market cap for all meme coins is over $70 billion. Five meme coins would be considered unicorns (market cap over $1 billion) if they were startups. Dogecoin’s market cap is...more
When negotiating convertible notes, parties typically focus on the terms of conversion upon an equity financing, most notably the discount and valuation cap. This is understandable inasmuch as the not-so-hidden secret of...more
I’m often asked whether employees should have access to the company’s cap table. The cap table is one of the most sensitive and critical documents in any startup. At its most basic level, it lays out who owns what –...more
The Wall Street Journal recently reported that xAI, the artificial intelligence startup founded by Elon Musk, completed a funding round of $5 billion at a pre-money valuation of $45 billion ($50 billion post-money). Rumored...more
I’m often asked by clients whether startups should have a separate stockholders’ agreement among the founders. The answer largely depends on whether they have or will have certain other startup documents in place....more
The board of directors of any Delaware corporation proposing to merge is required under Delaware law to adopt a resolution approving the merger agreement. In the real world of M&A practice, however, the version of the merger...more
On Tuesday, August 20, 2024, the United States District Court in Texas found the FTC rule banning non-compete agreements to be “arbitrary and capricious.”...more
9/3/2024
/ Arbitrary and Capricious ,
Competition ,
Confidential Information ,
Employer Liability Issues ,
Employment Contract ,
Federal Trade Commission (FTC) ,
Final Rules ,
Hiring & Firing ,
Intellectual Property Protection ,
Non-Compete Agreements ,
Restrictive Covenants
In the world of early stage investing, there exists a range of structures from the most founder friendly to the most investor friendly.
The most investor-friendly structure involves some type of a priced round in which...more
I had a chance to sift through Pitchbook’s U.S. VC Valuations Report for the first quarter of 2024. The data point that really jumped out at me was the increase in down rounds. The number of flat and down rounds as a...more
Last month, the Federal Trade Commission voted 3-2 along party lines to impose a general ban on non-competes, claiming these arrangements stifle innovation, limit employee mobility and suppress wages. I blogged about the...more
5/20/2024
/ Competition ,
Confidential Information ,
Employer Liability Issues ,
Employment Contract ,
Federal Labor Laws ,
Federal Trade Commission (FTC) ,
Final Rules ,
Hiring & Firing ,
Innovation ,
Intellectual Property Protection ,
Labor Reform ,
Non-Compete Agreements ,
R&D ,
Restrictive Covenants
There are generally two ways you can control a corporation. One is by owning a majority of the stock, in which case you control the board of directors. The other is to secure control contractually, through agreements and...more
Identifying potential investors is one of the most difficult challenges facing early-stage companies. The range of amounts sought at this stage is typically greater than what could be provided by the founders and friends and...more
3/18/2024
/ Accredited Investors ,
Broker-Dealer ,
Capital Formation ,
Corporate Issuers ,
Early Stage Companies ,
Financial Industry Regulatory Authority (FINRA) ,
Finders ,
Investment ,
Investors ,
Securities and Exchange Commission (SEC) ,
Securities Regulation ,
Startups ,
Venture Capital
Process still matters. That’s the main takeaway from the Delaware Court of Chancery’s 200-page opinion striking down Tesla’s 2018 incentive package awarded to Elon Musk. The court rescinded the incentive package mainly...more
2/9/2024
/ Board of Directors ,
Compensation & Benefits ,
Controlling Stockholders ,
Corporate Governance ,
Corporate Officers ,
Elon Musk ,
Executive Compensation ,
Incentive Compensation ,
Publicly-Traded Companies ,
Stock Options ,
Stocks ,
Tesla ,
Venture Capital
Starting January 1, 2024, virtually all private companies will be required to report information about their beneficial owners to the Treasury Department’s Financial Crimes Enforcement Network “FinCEN”) under the Corporate...more
1/8/2024
/ Anti-Money Laundering ,
Beneficial Owner ,
Corporate Transparency Act ,
Financial Crimes ,
FinCEN ,
Ownership Interest ,
Regulatory Requirements ,
Reporting Requirements ,
SAFE ,
Startups ,
Venture Capital
The Securities and Exchange Commission recently brought its first two enforcement actions against issuers of non-fungible tokens (NFTs), resulting in cease-and-desist orders, penalties and other remedies, finding that the...more
10/2/2023
/ Blockchain ,
Cease and Desist Orders ,
Digital Assets ,
Enforcement Actions ,
Howey ,
Investment Contract ,
Investment Opportunities ,
Non-Fungible Tokens (NFTs) ,
Offerings ,
Section 5 ,
Securities Act of 1933 ,
Securities and Exchange Commission (SEC) ,
Securities Regulation ,
Securities Transactions ,
Securities Violations ,
Smart Contracts ,
Unregistered Securities
Judge Analisa Torres’ greatly anticipated Order in the SEC’s lawsuit against Ripple is a split decision. The Order basically finds that Ripple’s digital token XRP is a security when sold privately to individuals and...more
7/17/2023
/ Cryptocurrency ,
Digital Assets ,
Institutional Investors ,
Investment ,
Investors ,
Popular ,
Securities and Exchange Commission (SEC) ,
Securities Regulation ,
Smart Contracts ,
Token Sales ,
Unregistered Securities
The anti-child trafficking thriller “Sound of Freedom” just opened in theatres on July 4th. Based on a true story, it stars Jim Caviezal as former Homeland Security special agent Tim Ballard who quits his job with the agency...more
In the world of venture capital, there are certain investor rights that ensure the smooth execution of exit transactions. The primary such mechanism is the drag-along provision, under which one group of stockholders agrees...more
A major theme of this Blog has always been ongoing legislative, regulatory and market initiatives to reform capital markets by targeting unreasonable or outdated impediments to capital formation to make it easier for...more
The collapse of Silicon Valley Bank will have enormous repercussions for startups and VCs in ways seen and unseen. As for the unseen, SVB had deep relationships among the various players in the venture ecosystem. Founders...more
4/3/2023
/ Banking Crisis ,
Capital Raising ,
Depository Institutions ,
Emerging Growth Companies ,
FDIC ,
Investment Opportunities ,
Loans ,
Receivership ,
Silicon Valley ,
Startups ,
Venture Capital