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Around this time of year, I always get a note from a panicked startup company that has logged in to pay their annual Delaware franchise tax and has seen an eye-watering number.
While it’s true that every year you will have to pay our good friends in DE for the pleasure of existing (death and taxes being the two certainties in life), it is also true that DE is not in the habit of bankrupting its fledgling companies with onerous franchise tax bills.
In this special edition of MintzTech Connect, we introduce the Series SAFE Preferred — a novel early-stage financing instrument designed by the Mintz VC & Emerging Companies team. SAFEs transformed early-stage investing, but lingering questions — particularly around Qualified Small Business Stock (QSBS) — remain unresolved. The Series SAFE Preferred combines the speed and simplicity of a SAFE with the QSBS certainty and stockholder rights of preferred stock, without forcing a premature priced round.
California recently passed the Transparent in Frontier Artificial Intelligence Act (SB 53), which is the first comprehensive state-level AI safety framework in the United States. This law applies mostly to the large AI developers training models with extreme compute (10^26 FLOP) or earning $500m+ annually.
If you are a founder of a tech startup, it is not likely that this law applies directly to you. However, SB53 may still materially impact your startup business. SB 53 introduces regulatory, commercial, and reputational dynamics that are likely to extend well beyond the Golden State.
Below is a summary of what founders of early-stage AI companies and their investors should be preparing for
What We’re Thinking
Around this time of year, I always get a note from a panicked startup company that has logged in to pay their annual Delaware franchise tax and has seen an eye-watering number.
While it’s true that every year you will have to pay our good friends in DE for the pleasure of existing (death and taxes being the two certainties in life), it is also true that DE is not in the habit of bankrupting its fledgling companies with onerous franchise tax bills.
California recently passed the Transparent in Frontier Artificial Intelligence Act (SB 53), which is the first comprehensive state-level AI safety framework in the United States. This law applies mostly to the large AI developers training models with extreme compute (10^26 FLOP) or earning $500m+ annually.
If you are a founder of a tech startup, it is not likely that this law applies directly to you. However, SB53 may still materially impact your startup business. SB 53 introduces regulatory, commercial, and reputational dynamics that are likely to extend well beyond the Golden State.
Below is a summary of what founders of early-stage AI companies and their investors should be preparing for
When launching your startup, there’s no shortage of big decisions to make, but one of the most impactful at the early stages is choosing the right legal structure. Choosing the right form of entity lays the foundation for how your business will be taxed, your process for raising institutional capital, and the treatment of your expected return upon exit. The three most common types of entities are C-Corporations, Limited Liability Companies (LLCs), and S-Corporations. For most founders who intend to raise outside capital from traditional venture capital funds, a C-Corporation is most common. However, LLCs and S-Corporations provide their own unique tax advantages that may be more appropriate for certain businesses. This article provides a summary of some of the pros and cons of each entity and factors to consider as you determine which entity may be the right fit for your new venture. Consulting with a legal advisor to assess your specific situation is essential.
Our Videos
Mintz hosted the Sustainable Media Center at our New York Office for a candid conversation on Gen-Z, politics, and social media in America. Dan DeWolf provided opening remarks and the fireside chat featured bestselling author Kurt Andersen and journalist Kanika Mehra.
Dan DeWolf talks with Vince Molinari on FINTECH.TV about the state of the venture capital markets and why Congress needs to look at some "common sense" legislation that will help drive the economy.
Frank L. Gerratana explains blockchain technology and the relationship between blockchain and cryptocurrency.
Our Podcasts
Mintz’s From the Edge is a podcast geared toward helping entrepreneurs thrive by learning from the experiences of executives in the technology, biotech and finance fields. On this podcast, Mintz partners who work with growing companies raising capital, building great management teams and achieving successful liquidity events will discuss with investors and entrepreneurs the key reasons that they were able to build successful companies and important lessons learned along the way. Mintz is a nationally leading law firm focused on helping emerging growth companies achieve success.
In this episode of Client Corner, Josh speaks to Suono Bio’s CEO Scott Kellogg and COO Skip Farinha. Scott and Skip discuss the importance of active listening in managing a team, strategies for navigating the medical device approval process in the US, key factors to consider when selecting investors, and insights on managing unforeseen challenges.
In this episode of Client Corner, Josh speaks to Paul Le Floch, Co-founder & CEO of Axoft. Paul discusses his journey from growing up in France to becoming a founder and the CEO of a neurotechnology startup. He provides insight into forming Axoft and navigating the fundraising process and offers advice to individuals starting new ventures.
Podcaster Richard Hsu interviewed San Francisco Managing Member Steve Osborn on his podcast Hsu Untied. In the episode, Steve reflects on his career journey, including his start in law school to becoming an attorney advising on international work in London and Hong Kong, and his rise from launching a boutique firm to his current role as a tech and life sciences-focused Managing Member. Steve also highlights the importance of calculated risks for professional growth.