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No Action Letter On Behalf Of Citizen VC
Raise Capital, Articles Sam Effron Raise Capital, Articles Sam Effron

No Action Letter On Behalf Of Citizen VC

By Dan DeWolf and Samuel Effron

The SEC has finally provided clarity as to how an issuer of securities can conduct a private placement in a password protected web page under Rule 506(b), without it being deemed a “general solicitation” and thereby being subject to the additional requirements imposed by the new Rule 506(c). The guidance has been provided by the issuance of the Citizen VC No Action Letter (the “CVC Letter”), which request was authored by Mintz Levin.

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A Balanced Approach to Founder's Equity
Form a Company, Build Your Team Dan DeWolf Form a Company, Build Your Team Dan DeWolf

A Balanced Approach to Founder's Equity

By Dan DeWolf and Samuel Effron

The most successful start-up ventures are companies where the economic interests of the various stakeholders are sufficiently aligned.  If an enterprise can find the right balance among the competing interests of the founders, investors, management, and directors, it has a far greater chance of succeeding. If the right balance is not reached, there will be too much time spent on in-fighting instead of being laser focused on accelerating the growth of the enterprise.

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Seniority Matters
Raise Capital, Articles Dan DeWolf Raise Capital, Articles Dan DeWolf

Seniority Matters

By Dan DeWolf

There is little doubt that activity in the trading of secondary shares of private companies remains robust. Private companies are staying private longer and there seems to be an unlimited demand to buy into the newest “Unicorn” anointed each week.  As the market for secondary shares stays strong, valuations seem not to matter much to most buyers. Additionally, many buyers seem to pay little attention to whether they are buying senior preferred stock at the top of the stack, as compared to junior securities or common stock sold by many former employees.  But as we all know, things that can’t go on forever, don’t.  And, as Warren Buffet once famously said:  only when the tide goes out do you discover who has been swimming naked.

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What is Venture Capital?
Raise Capital, Articles Dan DeWolf Raise Capital, Articles Dan DeWolf

What is Venture Capital?

By Dan DeWolf

Most of us go through our lives down a certain path. We grow up in our house or apartment; we go to school; we get a job; and eventually we grow up (one way or another) and live out our lives: sometimes happily, sometimes not so happily, and most times a little bit of both. In the course of this journey, many of us dream about starting something new, such as a new business based on a new concept or new paradigm. For many of us it is just a daydream. But for some, it is a call to action. Time and time again, an individual figures out a new way to look at things. Then from a scrap of an idea, and against great odds, this individual begins to build a new business.

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Trademarks and Surnames: Why Can’t I Use My Own Name?
Articles, Protect Your Idea and Data Guest Contributor Articles, Protect Your Idea and Data Guest Contributor

Trademarks and Surnames: Why Can’t I Use My Own Name?

By Susan Neuberger Weller

There are many “myths” that float about in the general public about what can and cannot function as a trademark. Under US trademark law, a mark which is “primarily merely a surname” cannot be protected as a trademark without proof that it has “acquired distinctiveness.”

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What is a Term Sheet?
Raise Capital, Articles Dan DeWolf Raise Capital, Articles Dan DeWolf

What is a Term Sheet?

By Dan DeWolf

When a venture capital firm is interested in a company it will meet with the management team numerous times to understand fully the business model and to learn more about the management. At some point in the process, the venture capital firm will decide that the investment is worth pursuing and will present a Term Sheet to the company. The Term Sheet (which is a nonbinding letter of intent) sets forth the basic terms and premises upon which the venture capital firm would be willing to invest.

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The Top 5 Reasons an Employer Will Enforce Your Non-Compete Agreement
Articles, Protect Your Idea and Data Guest Contributor Articles, Protect Your Idea and Data Guest Contributor

The Top 5 Reasons an Employer Will Enforce Your Non-Compete Agreement

By Jen Rubin

Non-compete agreements are a common part of the business world these days. But just because you sign a non-compete agreement doesn’t mean your employer will enforce it (or try to enforce it) after you leave your current job. I’m an employment lawyer and one of the questions my individual clients ask me most frequently is not whether a non-compete agreement is enforceable (which is typically a fairly complex legal question to answer) but whether the former employer will try to enforce it.

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The New Section 4(a)(7): More Than a Codification of Section “4(a)(1½)”
Raise Capital, Articles Sam Effron Raise Capital, Articles Sam Effron

The New Section 4(a)(7): More Than a Codification of Section “4(a)(1½)”

By Samuel Effron and Cliff Silverman 

On December 4, 2015, the Fixing America’s Surface Transportation Act (the “FAST Act”) was signed into law by President Obama. Although the FAST Act is primarily a transportation bill, buried in this legislation is a new statutory exemption under Section 4(a)(7) of the Securities Act of 1933 (the “Securities Act”) that explicitly permits private resales of restricted securities. This new exemption may increase investor liquidity by facilitating the development of secondary markets in private securities.

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