For Regulation Crowdfunding (Reg CF) issuers, spring means more than tax time. Uncle Sam, through the Securities and Exchange Commission (SEC), requires the filing of an annual report, Form C-AR. Companies must submit these reports 120 days after the fiscal year (usually December 31) until they become eligible to stop. Ignoring these reports, which update investors on company progress and financial information, comes with dire consequences. First, the SEC could deem Reg CF securities as unregistered. This can mean personal liability for founders and other officers. Indeed, it could put the ent ..read more

Regulation Crowdfunding (Reg CF) is helping small businesses and startups across a broad range of demographic and geographic cohorts. But some tweaks could make it even more appealing for founders. So concluded the Securities and Exchange Commission Office of the Advocate for Small Business Capital Formation (the SEC Advocate) in its recently released annual report. Reg CF allows private companies to accept investment from its own “crowd” of supporters, friends, customers, clients, and anyone else, without the wealth requirements that have traditionally limited investment to Accredited Investo ..read more

NEXT powered by Shulman Rogers Recognized as Best National Law Firm for “Enabling Startup Success” at 2024 Legalweek Leaders in Tech Awards We are thrilled to share that NEXT powered by Shulman Rogers was honored as the nation’s Best Law Firm for “Enabling Start-Up Success”at the fourth annual Legalweek Leaders in Tech Awards ceremony Monday evening in New York City. The kickoff of ALM’s Legalweek, the Leaders in Tech Awards are presented by Law.com and LegalTech News to recognize the most innovative achievements of the past year from in-house legal departments, law firms, and the tech provide ..read more

The Corporate Transparency Act was enacted to combat money laundering, fraud, and other illicit activities by increasing transparency in corporate ownership. Under this law, certain corporations and limited liability companies (LLCs) are now obligated to disclose their beneficial ownership information to the Financial Crimes Enforcement Network (FinCEN). Beneficial ownership includes any individual who directly or indirectly controls an entity or who owns or controls 25% or more of equity of the entity… Read the rest of this article on Shulman Rogers. The post Important Client Advisory: C ..read more

Flipping a foreign entity into a Delaware corporation has become a popular strategy for entrepreneurs and businesses looking to take advantage of the favorable business environment and fundraising opportunities in the United States. Below we explore the process and legal considerations of flipping a foreign entity into a Delaware corporation, along with the reasons why foreign entities choose to flip. Additionally, we will discuss important considerations such as intellectual property (IP) licensing, treatment of existing preferred stock, convertible notes, SAFES (Simple Agreements for Future ..read more

By: Liron Sharon Principal at YMS Value I am often asked by entrepreneurs and business owners why the equity value used, or implied, in a 409A (or an ASC 718, stock-based compensation for financial reporting purposes) valuation is not necessarily an indication of the value of the equity. Here is a short explanation, using the levels of value chart below:               Investment value is the value for a specific buyer that can benefit from unique synergies with the acquired business. Fair market value (or fair value) of a company is the value from the perspe ..read more

Capital for an emerging growth company is like oxygen for a person: You need it to survive. So, at some point, nearly every founder will encounter the daunting task of raising a round of financing. Founders spend an inordinate amount of time pursuing investors, but what happens once they capture funders’ attention? Are they, in fact, ready to make a strong, compelling pitch? Are they “investor ready? It’s incredibly challenging to get into a room with a potential investor — and even more difficult given the current economic climate. Acknowledging all the effort behind securing such a meeting ..read more

As an entrepreneur on a mission to launch a new startup company, your days likely involve charging through a never-ending to-do list and working to overcome unpredictable obstacles without dropping any critical deliverables. There are countless decisions to make and steps to take to help you de-risk and grow your company from the ground up. To position both yourself — as a founder — and the business for success, seek experienced legal support to guide you through this early evolution. Imagine having to rely solely on WebMD as a diagnostic and prescriptive tool any time you experience a health ..read more

America has appealed to global startup companies for years – and for good reason.  The US market promises access to US-based investors, accelerator programs, and a very large market of potential customers and strategic partners. Businesses that demonstrate success in the US market have the ability to dramatically accelerate their global growth, which may ultimately lead to even greater investment opportunities. In most cases, a startup seeking to join an accelerator or secure VC funding in the US must first set up a US legal entity. Since VC investors and most accelerators will get equity ..read more

Startups must make a few key employment law decisions as they begin hiring, including whether to classify workers as independent contractors or employees, whether to classify employees and exempt from minimum wage and overtime, and what kinds of onboarding documents employees will sign. This brief video blog discusses these issues. Video Transcript: Good afternoon, everyone. This afternoon I wanted to talk a little bit about employment law issues that startup founders face. And so the first decision that startups need to make is how are they going to classify the workers they’re going to hir ..read more