Some recent blogs/articles which every entrepreneur/start-up should take a look at:
Mark Suster, an entrepreneur who is now a GP at GRP Partners in 2007 as a General Partner, has a very informative blog post (How to Work with Lawyers at a Startup) over at his blog, Both Sides of the Table. He discusses the importance of a start-up finding the right lawyer, and provides some useful tips when doing one’s search.
Being a lawyer for many start-ups, it’s always nice to see a non-lawyer emphasize the need for the right legal representation. As I continually tell potential start-up clients, when thinking about legal representation, start-ups should consider it a part of its team-building efforts, just like getting the right management. In addition to Mark’s advice, I would add:
- Gregg J. Lallier
Considering that ConnTIP is a blog with a focus on technology, we are, I guess, obligated to add to some more free PR to the Apple Tablet craze by having a post about it. Anyone who bothers to read ConnTIP undoubtedly has read ad nauseum about the new Apple product which is rumored to be unveiled today. Just do a Google search for “Apple” and “tablet” and you’ll find many articles ranging from main stream media news sources (e.g. CNN, NY Times, CNBC (where McGraw-Hill Companies CEO appeared to “unwittingly” spill the beans during an interview) and WSJ (which has its own sub-page on the subject entitled “Apple Tablet“)) to more tech-centric sites (e.g. TechCrunch, Inc. and Web 3.0). This doesn’t even count the plethora of blog entries out, including blogs focused entirely on the Tablet product.
What has fascinated me just as much as the product and its potential is watching the Apple marketing machine go at full force. It’s become a somewhat old routine, as far back as the introduction of the Macintosh (and those cool Super Bowl commercials) Apple, and Steve Jobs in particular, has had a flair for the dramatic. This somewhat viral marketing strategy is all that more effective in the current media/information environment where rumors and hype intensify via Twitter, blogs, YouTube, etc. Still, hype is not enough to get the type of success Apple enjoys. I’m reminded of plethora of internet rumors leading up to the unveiling of the Segway, where a new type of transportation was said to have been invented that would revolutionize how we got around (I distinctly remember that some type of hovercraft device was a prevailing thought). Although somewhat successful in its own right, Segway is nowhere near Apple’s products, and I think it’s because Apple not only has marketing hype and innovative products, but also develops products which appeal to the masses insofar as the products (1) are relatively easy to learn to use, (2) are relatively priced and (3) recognize how people live and work and, as such, serve to make our living experience easier and more enjoyable.
Apple serves as a great model for any start-up to study and emulate, as, even in one of the worst economic climates in our lifetime, where people have less disposable income, Apple, Inc. posted a 50% rise in profit and a 32% increase in revenue for its fiscal first quarter ended 12/26/09.
-Gregg J. Lallier
ConnTIP has previously written about the importance of Connecticut Innovations, Inc. for start-up and tech companies in Connecticut. , Well, now there is a study that backs those claims up, The Economic Impact of Connecticut Innovations’ Portfolio on the Connecticut Economy. CI is a quasi-public corporation that has invested in CT-based tech and start-up companies since as early as 1995. According to CI’s blog entry, the study, commissioned by CI and covering 1995-2008, found that:
- Gregg J. Lallier
I was recently quoted in a Connecticut Post article regarding immigration options for winners of a business plan competition. The article illustrates the immigration challenges faced by foreign students at the University of Bridgeport who, despite their proven potential as entrepreneurs and ability to attract financing, nevertheless face difficulties in obtaining a visa or a green card in the U.S.
Such difficulties are typical within our immigration system despite the contributions that immigrant entrepreneurs have made and continue to make to the U.S. economy. According to a National Venture Capital Association study on The Impact of Immigrant Entrepreneurs and Professionals on U.S. Competitiveness:
Yet the U.S. immigration laws are just as restrictive, if not more so, towards these foreign entrepreneurs. To begin with, with very few and strict exceptions, there is no special visa or green card available to an entrepreneur who wants to start up a business in the U.S., even though the entrepreneur can attract venture capital or private equity financing. Our current immigration system focuses more on visas for employees who can work for U.S. employers than on visas for foreign entrepreneurs who want to start up a business in the U.S. Thus, recommending immigration options for foreign entrepreneurs takes some creative thinking.
Following are some of the immigration options available to early-stage entrepreneurs:
Each of the options above is subject to strict eligibility requirements and complex documentation. Thus, advance consultation with an immigration attorney is highly recommended.
For a brief presentation on Immigration Law with a focus on business- and employment-based visas, see my webcast.
Dana is an immigration attorney at Updike, Kelly & Spellacy, P.C., and contributing author to ConnTIP
As most know, throughout 2009, I’ve posted about the dismal VC market in ConnTIP. The drying up of exit opportunities, with fewer M&A’s and even fewer IPOs, didn’t help matters much. Here’s a chart posted by the WSJ which is a pretty way of showing the awful 2009 VC market:
![[VCYEAR]](http://s.wsj.net/public/resources/images/MK-BA230A_VCYEA_NS_20091222185250.gif)
Still, an article posted today on WSJ suggests that 2010 may be a pretty good year in the VC market (After Dry Year, Start-Ups Are Poised to Get Cash). Some encouraging observations made by VCs in the post:
Bottom line is for everyone in the field to chalk up 2009 as a learning experience, and, hopefully, start ramping things up to 2010!
-Gregg J. Lallier
Wall Street Journal has a blog entry from last week about a recently passed law in North Dakota that extends a 45% tax credit to angel investors who back homegrown businesses (North Dakota: More Than A Flyover State). Two new angel funds, the Grow Dakota fund (estimated $2 million) and Aurora Angel Fund ($5 million) are being created as vehicles for the program, where investors can invest in these funds, and receive the tax credits, and the funds would invest in target companies in the state. This is a great example of states doing their part to help solve the Need for Seed problem that exists throughout the country. Some other states have similar tax credit incentives for local venture investment:
These are great ways for states to help incentive intrastate venture/angel investments, and a direction that Connecticut and other states hopefully will soon follow.
- Gregg J. Lallier
David B. Lerner has a nice summary on his blog (Heard it from the Horses’ Mouth: What Venture Capitalists Like and Don’t Like to See when Doing University Spinoffs) of the annual University Startups Conference arranged by NCET that took place last week in Washington DC . I especially liked his summary of what VCs don’t like about dealing with university spin-offs.
- Gregg J. Lallier
He Who Has the Gold Makes the Rules
The Golden Rule, as the above is known, is something that I use often when counseling start-ups going through their first round of venture capital/seed money. It comes into play not only at the term sheet stage of negotiating the preferential privileges of the venture capitalist’s investment (e.g. liquidation preferences, anti-dilution rights, veto rights, board seats, etc.), but also after the investment as the venture capitalist tries to ensure the maximum value of its investment through macro (and sometimes micro) management. A recent Wall Street Journal article highlights this give-and-take with VCs in Who Has The Gold To Make The Rule – VC Or Entrepreneur?.
The current market environment, where venture (and early stage/seed) money is hard to come by, only helps to reinforce the Golden Rule (which exists also in a good market environment…although, maybe, in a less stringent form). I recently attended the New England Venture Summit in MA, and the panels of VCs continually brought up the fact that tight venture market is going to continue for some time. Given that, entrepreneurs need to recognize that, in order to get the money needed, they will need to cede some power and control to their investors. Still, my advice to these start-ups is to (1) still try to get the best deal that they can get and (2) more importantly, try to look at the increased VC presence as a good thing for their business. The right VC can add more than just their money: experience, connections and advice all should come along. Thus, it’s important to do one’s due diligence of prospective VCs to find one that will fit with the culture and plans of the company. Jeff Glass, a managing director with Bain Capital Ventures, brings up this point in the WSJ article:
A huge part on both ends is just personal chemistry between management and board; board and CEO; investor and management…I would advise to spend more time diligencing the VC or PE firm. Everyone’s cash is green until you have a problem.
Everyone’s cash is green until you have a problem….maybe that should be called The Green Rule.
- Gregg J. Lallier
Just as start-ups are creatively developing ways in which to do more with less money in today’s environment, start-ups and VCs are developing creative plans and alternatives for investment. Two recent Mass High Tech articles highlight this trend:
Taking equity investment is complicated and expensive. At the early stages of launch, a startup can ill afford the legal fees required to generate an equity term sheet. Dealing with inexperienced friends-and-family investors, it may be nearly impossible to set a reasonable valuation.
By using a convertible debt instrument, you’re basically leaving the valuation process to the professional investors (or, as the post describes, “punting” it). This is a great consideration that more start-ups should consider.
- Gregg J. Lallier
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