Category: Tech News

Top 10 highlights from the StartEngine – ICO 2.0 Summit

On Friday, November 10th StartEngine hosted a summit focused on regulated ICOs.

Check out the Top 10 Highlights from the event:

  1. Management and company counsel might need to consult with local legal counsel in other countries to ensure compliance with rules and regulations of other countries. The level of compliance requirements might ultimately result in eliminating countries from the token offering. For those countries that do not get eliminated, be sure to include relevant disclosures by country (and state).

 

  1. There are several possible federal exemptions and securities regulations that can be used, such as 506(c), the Crowdfunding regulation, Regulation A+, and Regulation S. If you’re relying on more than one, be sure you’re complying with the requirements of each, as they may be different. Also, be careful to also comply with state securities exemption requirements, if necessary.

 

  1. In order to comply with the advertising rules for US and non-US investors, consider having the tokens sold in the US be different from tokens sold to foreign investors.

 

  1. Company should consider as a risk factor what the implications are if their token cannot handle the large number of users at the end of their token sale.

 

  1. “Curb your enthusiasm”, meaning what you say today in marketing and advertising can be used against you later.

 

  1. When determining whether an investor is accredited, go beyond just a questionnaire. Get bank statements or a letter from their accountant to verify income.

 

  1. The variety of possible exemptions and securities regulations all have different resale restrictions to be considered and complied with during token sales.

 

  1. Be extra diligent when doing your know your customer (KYC) and anti-money laundering (AML) checks.

 

  1. Some investors think there is too much emphasis on who the Company’s advisors are during an ICO. Instead, the focus should be on identifying for investors: (1) who is on the management team? (2) what is the opportunity? (3) what is the smart contract code itself and has it been audited? (4) what is the overall marketplace analysis? and (5) what is the company’s expectation for the use of proceeds?

 

  1. Investors should have engineers and coders on their team to look at the smart contract code during diligence.

 

If you missed the event or for more information visit: https://www.startengine.com/ico

 

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Dangers of drafting your own documents

SHOULD I PAY A LAWYER TO DRAFT A CONTRACT OR JUST PLUG NAMES INTO A TEMPLATE – WHAT COULD POSSIBLY GO WRONG?

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In today’s DIY world, there are some things that should be left to the professionals.

We’ve compiled a top ten list of just some of the dangers you can run into when using templates or drafting your own documents. These are all things that we’ve actually seen in agreements.

  1. Using the wrong document. One classic issue is grabbing the first consulting agreement that shows up on the web, without realizing that it’s drafted to be one-sided in favor of the other party. 
  1. A 4-line agreement with no end-date or ability to terminate. Lasts longer than most marriages…
  1. The Frankenstein agreement. The drafter takes clauses from multiple documents and sews them together without realizing that some concepts are being covered two different ways by two different clauses.
  1. Undefined terms. Every other word in the agreement is uppercased, but not defined. 
  1. Fancy words.Malfeasance” and “devolve” – nobody knows what these mean. 
  1. Illegal clauses. Not all states will honor a non-competition clause imposed on a rank and file employee – California is one of them. 
  1. Integration clauses. The drafter includes an “entire agreement” clause . . . but it doesn’t reference its own schedules and exhibits! 
  1. Backdating deals. Rather than enter into an agreement on November 30, 2016 that is effective as of June 30, 2016, the drafter wants to pretend the contract existed before it was actually signed. Under the wrong circumstances, the drafter opens herself up to fraud claims. 
  1. Termination. Includes material breach as a way to terminate, but doesn’t say if the non-breaching party still gets paid from the party in breach. The non-breaching party gets injured twice. 
  1. Training. An agreement to provide training, without any details on the number of hours or for how many weeks the training will last.

Sometimes the pitfalls come in piecing together an agreement from multiple sources, grabbing a document you’ve used before and trying to repurpose it to a new situation, or downloading a “boilerplate” agreement from the internet for free. Whatever the method, it usually ends up costing you more to have your attorney fix your attempt at drafting than it would have been to have your attorney draft the documents from the get-go.

Startup Law Unplugged with General Assembly

Join us in Downtown, Los Angeles on Wednesday, September 28th from 7:00pm – 8:30pm for our “Startup Law Unplugged” event with General Assembly!

This event is designed to be more of a workshop for attendees than just a speaking event, so we will open the floor to questions from attendees – right from the start! If there are no questions up front, we will speak on topics our entrepreneur clients encounter along the way.

Agenda:

  • 10 minute introductions
  • 50 minute Question & Answer session / discussion on common topics for entrepreneurs
  • 30 minute networking afterwards

Sign up here: https://generalassemb.ly/education/startup-law-unplugged/los-angeles/29430

 

 

Mottek on Money interview

I am please to announce that I was interviewed last week by Frank Mottek for his  radio show, ‘Mottek On Money’,  which airs on KNX 1070. I spoke about our first time entrepreneurs workshop with the LA Venture Association (LAVA), as well as recent trends for technology startups in Silicon Beach.

Click below to listen to the podcast of the interview (I’m at the 19:25 mark).

Mottek On Money (Sept. 10, 2016)

“Mottek On Money” airs 11am on Saturdays and 8pm on Sundays on KNX1070.

 

 

New Book! ‘Winning the Game’

I am thrilled to announce that I just published my second book!

Winning the Game:  How to Successfully Sell Your Business” is the companion to my first book on venture capital for first time entrepreneurs.

By reading Winning the Game, you’ll learn how to successfully sell your business using the advice of a corporate lawyer with $6+ billion in merger & acquisition experience. This book breaks down the lessons that a business owner needs to learn to have a successful exit. Each chapter is geared toward explaining in simple terms what a business owner needs to know about finding buyers and getting to a deal. The book guides the reader through challenging concepts like earnouts and indemnification in an easy-to understand format. The author shares life lessons from other business owners to help the reader avoid pitfalls.

 

Winning the Game is live on Amazon now and is currently listed as the #1 New Release in Consolidation & Merger!

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Last Call: First Time Entrepreneur Workshop

This is the last call for our First Time Entrepreneur workshop on Saturday June 18th!

The program is open to entrepreneurs that are starting companies in areas that are likely to draw venture capital investment. The program is not open to service providers.

During our five hour program, you will learn how to:

  • Determine the value of your company
  • Put together a capitalization table
  • Understand how VCs screen potential investments
  • Understand the differences between trademarks, copyrights and patents and when you need them
  • Choose co-founders
  • Network at startup events — the right way

Saturday June 18, 2016 (10am-3pm)

Santa Monica Place Mall – EXPERT DOJO ,(The Old Redwood Grill, Next to the Cheesecake Factory)
395 Santa Monica Place
The Community Room – 3rd Floor
Santa Monica, California  90401

For more information and how to register, please click here: http://www.lava.org/events/EventDetails.aspx?id=815409&group=

Reminder: First Time Entrepreneur Workshop

Don’t forget about our First Time Entrepreneur workshop on Saturday June 18th!

We will be teaching about valuation, dilution, intellectual property rights, working with co-founders, and a variety of other topics that are critical for startup founders to master.

Saturday June 18, 2016 (10am-3pm)

Santa Monica Place Mall – EXPERT DOJO ,(The Old Redwood Grill, Next to the Cheesecake Factory)
395 Santa Monica Place
The Community Room – 3rd Floor
Santa Monica, California  90401

For more information and how to register, please click here: http://www.lava.org/events/EventDetails.aspx?id=815409&group=