Financings

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In the beginning of February 2020, COVID-19 seemed to have little to no impact on venture capital investing in the United States.  Fast forward a few weeks later: concerns quickly spread over the entire industry about the effects of the COVID-19 pandemic on venture investing, its impact on startup companies and the U.S. economy in general.  Emerging growth companies instantly went into “conserve cash mode” and applied for PPP loans.
Continue Reading 2020, 2021 and the EC/VC Industry – Review of the Past Year and Predictions for the Current One

As the COVID-19 pandemic spread from Asia to the rest of the world at the beginning of 2020, global venture capital (VC) funding dropped dramatically—by about 20% since December 2019 according to Startup Genome.[1]  While the longer-term effects of the pandemic on startups’ ability to raise money cannot be fully grasped yet, it is likely that this downward trend will continue.  Furthermore, though many venture rounds in Q1 2020 benefitted from optimistic beliefs in a V-shaped economic recovery, deals that get done over the next several quarters may reflect pressures resulting from what most now predict to be a longer and more painful path.
Continue Reading Investments in Emerging Growth Companies Post-COVID-19

On January 9, 2014, the Securities and Exchange Commission released its examination priorities for 2014 (the “2014 Exam Priorities Release”), covering a wide range of issues at financial institutions, including investment advisers and investment companies, hedge funds and private equity funds.  The 2014 Exam Priorities Release highlights a number of areas and key risks that the SEC will be monitoring and examining in 2014.  The SEC has identified the following core risk areas for investment advisers:
Continue Reading SEC Announces 2014 Examination Priorities for Investment Advisers

By Riaz Karamali

This blog post picks up where the last post in this start-up series left off, with the assumption that the start-up has been in incorporated, completed its founders’ round of financing, created an executive summary and pitch deck and is ready to begin the hunt for “angel” investors (as used in this post, the term angel investors will include all types of potential investors in a company’s initial or seed round of funding, including founders’ friends and family, “super-angels” and early stage funds). There are several different structures an angel or “seed round” can take — among them, sale of common stock, sale of convertible notes, and sale of a “light” preferred stock. While ultimately, the investor group may have the final say over the structure of the financing, it makes sense to understand the alternatives in advance and approach investors with a clear plan in mind.Continue Reading Starting Up the Start-Up: Approaching the Angel Financing Round

On January 25, 2011, the SEC proposed new amendments to conform the definition of “accredited investor” under Rule 215 of the Securities Act of 1933 and Rule 501 of Regulation D to requirements imposed by Congress under the Dodd-Frank Wall Street Reform and Consumer Protection Act (“Dodd-Frank”). Various exemptions for private or other limited offerings of securities under the Securities Act of 1933 and state “blue sky” laws depend on whether participants are “accredited investors.” Non-accredited investors who participate in private offerings under Rule 505 or Rule 506 of Regulation D must receive financial and other information that is not required to be given to accredited investors.Continue Reading SEC Proposes Amendments To Reflect Dodd-Frank’s Definition Of “Accredited Investor”

By John Stigi and Taraneh Fard

In Viterbi v. Wasserman, 2011 Cal. App. LEXIS 25 (Cal. App. Jan. 11, 2011), the Court of Appeal for the Fourth Appellate District of the State of California affirmed the judgment of the Superior Court of San Diego County holding that privity between the purchaser and seller of a security is necessary to maintain an action for rescission under Sections 25504 and 25504.1 of the California Corporations Code. This decision, which follows persuasive authority in the federal courts construing analogous federal law, confirms the limits of the remedy of rescission under the California Corporations Code.Continue Reading California Court Of Appeal Holds That Privity Of Contract Is Necessary To Maintain An Action For Rescission Under California Corporations Code Sections 25504 And 25504.1

By Matthew Richardson

Included in the Tax Relief, Unemployment Insurance Reauthorization, and Job Creation Act of 2010 signed into law on December 17, 2010, a tax incentive relating to qualified small business stock (“QSBS”) was extended for another twelve months.  Pursuant to this extension, noncorporate taxpayers are allowed to exclude all (100%) of their gain from the sale or exchange of  QSBS (subject to  a variety of special rules), provided that the stock is acquired after September 27, 2010 and before January 1, 2012.  The gain exclusion provision only applies to QSBS held for more than five years.  The amount of gain from the sale of QSBS that can be excluded by a taxpayer is generally limited to the greater of $10,000,000 (in the aggregate) or 10 times the tax basis of the QSBS sold.  Generally speaking, and with a few exceptions, QSBS must be acquired when it is issued in exchange for money, property (other than stock) or services.Continue Reading Extension of 100% Gain Exclusion for Qualified Small Business Stock