The Venture Capital industry is changing. So are the services the Venture Capital industry needs. Our team is leading the way into a bright future by creating a new Eco System to provide Venture Capital Funds, other early-stage investors and their portfolio companies with new tools to solve old problems.
We are focused on helping the investor community blend their traditional venture investing practices with new business practices utilizing technology. Our systems integration approach includes assembling a team of marketing, escrow, technology, platform and business resources to supplement our legal services.
We have described below both our experience with traditional venture capital transactions and new Crowdfunding related improvements.
Venture Capital Fund Organization. We have organized multiple private funds:
- Preparing organization documents and offering documents
- Private placements under exemptions from registration under the Securities Act of 1933
- Advising about conflict of interest issues for Fund Managers
- Investment Company Act of 1940 exemptions
- Investment Advisers Act of 1940 exemptions
Our team’s fund experience began in large New York law firm, where we formed venture capital funds for technology boutique investment banking clients (such as Robertson Stephens in San Francisco and Alex Brown in Baltimore), as well as the Accel, Adler Venad and Advanced Technology Ventures families of funds. All the funds invested primarily in technology and science based early-stage businesses. Our team has advised both registered broker-dealers and investment adviser firms about compliance and risk issues.
We also have extensive experience facilitating both venture capital and private equity transactions and advising their portfolio companies.
JOBS Act of 2012 Changed Venture Capital Industry.
Since passage of the JOBS Act of 2012, Crowdfunding has been changing the venture capital industry. Our book published by Thomson Reuters in 2016 (Crowdfunding: A Legal Guide to Investment and Platform Regulation) analyzes through the prism of Crowdfunding business practices and technology the impact of the JOBS Act on traditional securities laws, including the Securities Act of 1933, the Securities Exchange Act of 1934, the Investment Company Act of 1940 and the Investment Advisers Act of 1940. We have developed new strategies for early-stage venture capital funds and sophisticated angel investors that take advantage of the opportunities afforded by this revolution in securities laws, including Lead Investor Syndicates and using Crowdfunding to decrease dilution for both early investors and founders.
Public Sales Efforts Require Communications Experience.
Investment funds are a major category of Crowdfunding issuers. New sales communications tools are enabling a wider range of investors to invest in Venture Capital funds. Our team is adept at ensuring that capital raising campaigns are both simple to understand and comply with securities laws. We work with marketing teams in Crowdfunding offerings to ensure securities law compliance while not interfering with the marketing message.
Term Sheet and Investment Document Modernization.
Traditional Venture Capital Term Sheets and other documents are overly complex for the new investors in Crowdfunding offerings. Our team is creating Term Sheets and implementing documentation that work in offerings to retail investors.
Dilution Prevention and New Types of Securities for a Portfolio Company.
Crowdfunding markets are enabling companies to decrease dilution for both founders and early-stage investors by selling to investors that have lower investment return expectations than traditional venture investors. New debt securities called Revenue Share Notes enable portfolio companies that are generating revenue to avoid doing dilutive rounds.
Bridge Investments to Finance Crowdfunding Campaigns for a Portfolio Company.
Early-stage investors that want to minimize the amount they need to invest in later rounds can fund the expenses of doing Crowdfunding offerings. A $50,000 to $100,000 investment can pay the expenses of an offering that raises several million dollars.
Liquidity and Exit Strategies for Portfolio Investments.
An investment without a strategy exit is a prison. Consolidation in the investment banking industry created massive financial institutions that are only interested in doing nine figure public offerings. Smaller traditional IPOs have been a vanishing breed. But new Regulation A+ created a way for businesses to go public utilizing smaller investment banks, PR and social media to sell smaller IPOs – under $50 million. Crowdfunding is also creating exits for early investors by enabling management teams to buy out impatient investors. Our work in M & A transactions and in advising issuers in public offerings and SEC periodic reporting compliance prepares us to advise both funds and their portfolio companies about exit strategies.