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INSIGHT: Important Matters to Consider When Facing a Possible Down Round Financing
Articles, Raise Capital Jeremy Glaser Articles, Raise Capital Jeremy Glaser

INSIGHT: Important Matters to Consider When Facing a Possible Down Round Financing

The financial press has been reporting that investors are concerned that the United States economy may be heading toward a recession. In light of this and other factors creating uncertainty in the financial markets, investors are questioning the valuations that companies achieved during the heady times of 2020 and 2021, and are indicating that if a company needs to raise funds, they may need to consider a “down round” financing. A down round financing is when a company’s valuation is lower and its shares are sold at a lower price per share than the company’s most recent financing round.

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COVID-19 and Down-Round Financings
Raise Capital, Articles Jeremy Glaser Raise Capital, Articles Jeremy Glaser

COVID-19 and Down-Round Financings

By Jeremy Glaser, Sebastian Lucier, and Sebastian A. Bacon

Although no one can predict the long-term economic impact of COVID-19, early indications show similarities to the last significant economic downturn that started in 2008. During that period, venture capital investment decreased significantly both domestically and abroad — in the first quarter of 2009, alone, there were double-digit declines in venture financings. The decrease in available capital during that time period led to a significant uptick in financing rounds at lower valuations than in previous rounds, or so-called “down-round financings.” Companies should be prepared for a similar occurrence, and be ready to take precautionary steps in order to minimize risks relating to a down-round financing.

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Five Common Equity Incentive Plan Mistakes
Build Your Team, Articles Sebastian Lucier Build Your Team, Articles Sebastian Lucier

Five Common Equity Incentive Plan Mistakes

By Sebastian Lucier

Equity Incentive Plans (aka, Stock Option Plans) are a standard feature in nearly every start-up.  Although the basic concept (granting an equity interest to an employee or other service provider) is simple enough, there are a few administrative and legal technicalities that need to be respected.  Below is a list of five common mistakes that start-ups make when administering their Equity Incentive Plans.

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Employment Law Basics In California
Build Your Team, Podcast Sebastian Lucier Build Your Team, Podcast Sebastian Lucier

Employment Law Basics In California

Jennifer Rubin, a Member in the Employment, Labor & Benefits Practice, and Sebastian Lucier, a Member in the Venture Capital & Emerging Companies Practice, discuss employment law related matters for companies operating in the state of California, including the challenges relating to characterizing an individual as an employee rather than an independent contractor.

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