Posts Tagged ‘securities laws’

Convertible Note Seed Financings: Founders Beware!

by Scott Edward Walker on May 15th, 2012

This post is the third part of a three-part primer on convertible note seed financings.  Part 1, entitled “Everything You Ever Wanted To Know About Convertible Note Seed Financings (But Were Afraid To Ask),” addressed the basics.  Part 2, entitled “Convertible Note Seed Financings: Econ 101 for Founders,” addressed the economics.  This part will address certain tricky issues.

[This post was originally published on TechCrunch.]

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Is the House Crowdfunding Bill Being Killed in the Senate?

by Scott Edward Walker on March 1st, 2012

“The Senate is the place where bills go to die.” Bill Maher

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House Passes Crowdfunding Bill: FAQ’s for Entrepreneurs

by Scott Edward Walker on November 9th, 2011

Last week, the U.S. House of Representatives passed a crowdfunding bill that will allow startups to offer and sell securities via crowdfunding sites and social networking sites.

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How To Launch a Startup and Avoid Ending-up in Jail

by Scott Edward Walker on June 23rd, 2011

Introduction

jail

I love working with startups and trying to protect founders (and watch their backs).  Not only are there key contractual issues that must be buttoned-down (like vesting and IP assignment), but also there is a minefield of laws and regulations that must be complied with.  Indeed, in a world of easy access to online documents and web sites like LegalZoom, it is often this legal compliance which is overlooked by founders, as they attempt to stay “lean” and “scrappy.”  As discussed below, however, non-compliance with certain laws and regulations could lead to founders’ criminal liability.

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Biggest Legal Mistakes That Startups Make – Part 1

by Scott Edward Walker on May 13th, 2011

Below is a video of my presentation a couple of months ago at a TechZulu event at CoLoft in Santa Monica. I hope you enjoy it (despite the audio issues); it starts at the 9:43 mark. Cheers, Scott (more…)

Can I Raise Funds via Facebook or LinkedIn?

by Scott Edward Walker on March 17th, 2011

As a corporate lawyer for entrepreneurs, I am frequently asked: “Hey Scott, can I raise funds for my new company via Facebook or LinkedIn?  I have lots of friends and connections, and I know some of them would be interested in investing.”  The short answer is no (except in rare circumstances) because it would violate securities laws.

 

 

 

 

 

 

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Can I Raise Money for My Startup via Twitter?

by Scott Edward Walker on January 5th, 2011

Introduction

I get this question all the time (in one form or another): “Hey Scott, can I raise money for my startup via Twitter?  I have a lot of followers, and I know some of them would be interested in investing.”  As discussed below, the answer is no — unless the tweet is a direct message (a “DM”) to a follower with whom you have a substantive, pre-existing relationship. 

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Walker Twitter Highlights: November 28th – December 4th

by Scott Edward Walker on December 5th, 2010

I’m using Twitter as a form of micro-blogging to share interesting blog posts, articles and podcasts relating to entrepreneurship & startups, mergers & acquisitions, and business & corporate law issues.

For those of you who missed this week’s Twitter updates, below are my five most popular tweets (via bit.ly) and my blog-related tweets.  If you’d like to see all of my tweets (or an RSS feed of them), you can do so here.  Thanks, Scott

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Five Common Mistakes with Co-Founders

by Scott Edward Walker on November 2nd, 2010

Introduction

This post was originally part of my weekly “Ask the Attorney” series which I am writing for VentureBeat (one of my favorite websites for entrepreneurs).  Below is a longer, more comprehensive version.  Please shoot me any questions you may have in the comments section – or feel free to call me directly at 415-979-9998.

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Walker Twitter Highlights: October 24th – 30th

by Scott Edward Walker on October 31st, 2010

I’m using Twitter as a form of micro-blogging to share interesting blog posts, articles and podcasts relating to entrepreneurship & startups, mergers & acquisitions, and business & corporate law issues.

For those of you who missed this week’s Twitter updates, below are my five most popular tweets (via bit.ly) and my blog-related tweets.  If you’d like to see all of my tweets (or an RSS feed of them), you can do so here.  Thanks, Scott

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“Ask the Business Attorney” – Will the New Financial Reform Bill Destroy Angel Investing?

by Scott Edward Walker on July 21st, 2010

Introduction

This post was originally part of my “Ask the Attorney” series which I am writing for VentureBeat.  Below is a longer, more comprehensive version.  Please shoot me any questions you may have in the comments section – or feel free to call me directly at 415-979-9998.  Many thanks, Scott

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“Ask the Business Attorney” – What Are the Biggest Legal Mistakes Startups Make Raising Capital?

by Scott Edward Walker on July 7th, 2010

Introduction

This post was originally part of my “Ask the Attorney” series which I am writing for VentureBeat; below is a longer, more comprehensive version.  I know this stuff tends to be very technical (and perhaps boring), but it is nevertheless critical that entrepreneurs have a basic understanding of the securities laws.

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“Ask the Business Attorney” – What Are the Biggest Legal Mistakes that Startups Make?

by Scott Edward Walker on June 9th, 2010

Introduction

This post was originally part of my “Ask the Attorney” series which I am writing for VentureBeat (one of the most popular websites for entrepreneurs).  Below is a longer, more comprehensive version — with ten mistakes, instead of six.

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Ask the Business Attorney – What Is an Employee Stock Option?

by Scott Edward Walker on June 2nd, 2010

Introduction

This post was originally part of my weekly “Ask the Attorney” series which I am writing for VentureBeat (one of the most popular websites for entrepreneurs).  Below is a longer, more comprehensive version.  Please shoot me any questions you may have in the comments section.  Many thanks, Scott

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A Personal Letter to Senator Dodd Regarding His Anti-Angel Investment Bill

by Scott Edward Walker on March 31st, 2010

Below is a copy of the letter I just emailed to Senator Dodd’s office with respect to his new financial regulatory reform bill and its material adverse effect on angel investments. 

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“Ask the Attorney” – Beware of Finders

by Scott Edward Walker on February 24th, 2010

Introduction

This post is part of my weekly “Ask the Attorney” series which I am writing for VentureBeat (one of the most popular websites for entrepreneurs).  As the VentureBeat Editor notes on the site: “Ask the Attorney is a new VentureBeat feature allowing start-up owners to get answers to their legal questions.”

I have two goals here: (i) to encourage entrepreneurs to ask law-related questions regardless of how basic they may be; and (ii) to provide helpful responses in plain English (as opposed to legalese).  Please give me your feedback in the comments section.  Many thanks, Scott

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Walker Twitter Highlights: February 14th – 20th

by Scott Edward Walker on February 21st, 2010

For those of you who missed this week’s Twitter updates, below you’ll find highlights of our top tweets.  If you would like to see all of our tweets (or if you would like to receive an RSS feed of them), you can do so here.

If you have any questions or comments with respect to any of the tweets below, please contact us through the comments section of this post.  Many thanks, Scott

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“Ask the Attorney” – Formation Issues (Part II)

by Scott Edward Walker on February 3rd, 2010

Introduction

This post is part of a new series entitled “Ask the Attorney,” which I am writing for VentureBeat (one of my favorite websites for entrepreneurs).  As the VentureBeat Editor notes on the site: “Ask the Attorney is a new VentureBeat feature allowing start-up owners to get answers to their legal questions.”  This post is a longer, more-comprehensive version of the VentureBeat post.

The goal here is two-fold: (i) to encourage entrepreneurs to ask law-related questions regardless of how basic they may be; and (ii) to provide helpful responses in plain english (as opposed to legalese).  Please give me your feedback in the comments section.  Many thanks, Scott

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“Ask the Attorney” – Securities Laws

by Scott Edward Walker on January 12th, 2010

Introduction

This post is part of a new series entitled “Ask the Attorney,” which I am writing for VentureBeat (one of my favorite websites for entrepreneurs).  As the VentureBeat Editor notes on the site: “Ask the Attorney is a new VentureBeat feature allowing start-up owners to get answers to their legal questions.”

The goal here is two-fold: (i) to encourage entrepreneurs to ask law-related questions regardless of how basic they may be; and (ii) to provide helpful responses in plain english (as opposed to legalese).

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Angel Financings: Legal Tips For Entrepreneurs – Part 1

by Scott Edward Walker on December 2nd, 2009

Introduction

I am currently working with several smart, young entrepreneurs who are trying to raise capital from “angels” (i.e., wealthy individuals who invest in startups).  Indeed, since I moved to Los Angeles from New York City in 2005,  I have been involved in a number of angel financings; and what’s interesting from my perspective as a corporate attorney is that the deals run the gamut from an angel handing a check to an entrepreneur and instructing him to “send the paperwork when it’s ready” — to an angel retaining a large, aggressive law firm and insisting on shares of preferred stock, with all the “bells and whistles.”  Below are five tips for entrepreneurs to help them through the angel financing process.  (This is part one of a two-part series; I will provide five additional tips in my next post.) (more…)

Rescission Offers: Five Tips For Entrepreneurs

by Scott Edward Walker on November 24th, 2009

In light of the Madoff affair and other significant external pressures, the Securities and Exchange Commission (the “SEC”) and State securities law commissions and departments are dramatically stepping-up enforcement of securities laws.  Indeed, there is a heightened level of regulatory scrutiny that entrepreneurs need to be aware of as they struggle to raise capital during this difficult economic period.  I have discussed the most common securities law violations in a relatively recent post: “Five Common Mistakes Entrepreneurs Make in Raising Capital”; and as I pointed out in “Mistake #1”, non-compliance with applicable securities laws could result in serious adverse consequences. (more…)

Issuing Stock Options: Ten Tips For Entrepreneurs

by Scott Edward Walker on November 11th, 2009

Fred Wilson, a New York City-based VC, wrote an interesting post a few days ago entitled “Valuation and Option Pool,” in which he discusses the “contentious” issue of the inclusion of an option pool in the pre-money valuation of a startup.  Based on the comments to such post and a google search of related posts, it occurred to me that there is a lot of misinformation on the Web with respect to stock options – particularly in connection with startups.  Accordingly, the purpose of this post is (i) to clarify certain issues with respect to the issuance of stock options; and (ii) to provide ten tips for entrepreneurs who are contemplating issuing stock options in connection with their venture.  (more…)

Launching A Venture: Ten Tips For Entrepreneurs

by Scott Edward Walker on September 15th, 2009

Below are ten tips for entrepreneurs who are launching a startup that will seek venture capital (“VC”) financing.

1.  Protect Yourself from Personal Liability.  The entrepreneur’s first step in connection with launching a startup should be to form an entity that will protect against personal liability.  As discussed below, a Delaware C-corporation is generally the recommended choice; however, in certain rare circumstances, it may be prudent for the entrepreneur to form an S-corporation or a limited liability company to obtain “pass-through” tax treatment (and then convert the entity to a C-corporation down the road, if necessary).  The bottom line is that the entrepreneur should seek the advice of corporate and tax counsel in connection with the formation of any business organization (e.g., shareholders in S-corporations — as opposed to C-corporations — are not eligible for the “qualified small business stock” capital gains tax break; and losses in C-corporations may be deductible up to $50,000/yr. or $100,000/yr. on a joint return with respect to “Section 1244 stock”). (more…)