startup 101 legal issues - refreshmiami
DESCRIPTION
Startup 101 crash course, from a legal perspective. You have an idea. Now what? You have a company. How do you get funded? You\'re up and running. Now what? By Nicholas Robbins and Gunster Attorney Gaida ZirkelbachTRANSCRIPT
Information in this presentation is based on general principles of law and is intended for information purposes only. Use of this presentation does not create an attorney-client or any other relationship between the speakers and the user. Neither Gunster nor the speakers make any claim as to the comprehensiveness or accuracy of the information.
Startup 101
RefreshMiami by
Gaida Zirkelbach, Esq. ([email protected])
and
Nicholas Robbins, Esq.([email protected])
GUNSTER – FLORIDA’S LAWYERS FOR BUSINESS
Information in this presentation is based on general principles of law and is intended for information purposes only. Use of this presentation does not create an attorney-client or any other relationship between the speakers and the user. Neither Gunster nor the speakers make any claim as to the comprehensiveness or accuracy of the information.
This presentation and related information have been prepared by This presentation and related information have been prepared by Gunster, Yoakley & Stewart, P.A. for information purposes only and Gunster, Yoakley & Stewart, P.A. for information purposes only and do not constitute advertising, a solicitation, or legal advice. Such do not constitute advertising, a solicitation, or legal advice. Such presentation, materials and information contained herein is not presentation, materials and information contained herein is not intended to create, and receipt thereof does not constitute formation intended to create, and receipt thereof does not constitute formation of, and attorney-client relationship. The presentation, materials and of, and attorney-client relationship. The presentation, materials and information should not be relied upon for any purpose without information should not be relied upon for any purpose without seeking legal advice from a licensed attorney. The information seeking legal advice from a licensed attorney. The information contained in this presentation and related course materials is contained in this presentation and related course materials is provided only as general information and may or may not reflect the provided only as general information and may or may not reflect the most current legal developments; accordingly, this information is not most current legal developments; accordingly, this information is not promised or guaranteed to be correct or complete. Gunster, promised or guaranteed to be correct or complete. Gunster, Yoakley & Stewart, P.A. expressly disclaims all liability in respect to Yoakley & Stewart, P.A. expressly disclaims all liability in respect to actions taken or not taken based on any or all the contents of this actions taken or not taken based on any or all the contents of this presentation or related course materials and information. presentation or related course materials and information.
Information in this presentation is based on general principles of law and is intended for information purposes only. Use of this presentation does not create an attorney-client or any other relationship between the speakers and the user. Neither Gunster nor the speakers make any claim as to the comprehensiveness or accuracy of the information.
I have an idea. Now what?
Information in this presentation is based on general principles of law and is intended for information purposes only. Use of this presentation does not create an attorney-client or any other relationship between the speakers and the user. Neither Gunster nor the speakers make any claim as to the comprehensiveness or accuracy of the information.
Birth of an Idea and the Birth of a Company
Is this idea my idea?
Who owns my idea?
Can I stop others from using my idea?
How can I get paid for my idea?
Information in this presentation is based on general principles of law and is intended for information purposes only. Use of this presentation does not create an attorney-client or any other relationship between the speakers and the user. Neither Gunster nor the speakers make any claim as to the comprehensiveness or accuracy of the information.
Choosing a Legal Structure
Limit liability, tax efficiency, corporate governance
Common types of entities:Sole Proprietorship Partnership Corporation Limited Liability Company
Where to organize – Florida v. Delaware
Information in this presentation is based on general principles of law and is intended for information purposes only. Use of this presentation does not create an attorney-client or any other relationship between the speakers and the user. Neither Gunster nor the speakers make any claim as to the comprehensiveness or accuracy of the information.
Protecting Your Idea
Confidentiality Agreements
Work for Hire / Assignment Agreements
Register and Protect Intellectual Property
Information in this presentation is based on general principles of law and is intended for information purposes only. Use of this presentation does not create an attorney-client or any other relationship between the speakers and the user. Neither Gunster nor the speakers make any claim as to the comprehensiveness or accuracy of the information.
Types of Intellectual Property
Copyrights
protect the expression of an idea (but not just an idea)
must be in fixed in tangible medium of expression
exclude others from reproducing, preparing derivative works from, distributing, performing publicly, or displaying publicly (with some exceptions, such as fair use)
exists upon creation – but registration with United States Copyright Office can provide additional legal rights
usually shown as: © Company Name, Year
examples: design of Coca-Cola bottle; text and images on a website describing a service
Information in this presentation is based on general principles of law and is intended for information purposes only. Use of this presentation does not create an attorney-client or any other relationship between the speakers and the user. Neither Gunster nor the speakers make any claim as to the comprehensiveness or accuracy of the information.
Types of Intellectual Property
Trademarks
protect association of a company with its goods or services
prevent consumer confusion and others from benefiting from goodwill associated with your company’s products and services
usually shown as: Logo™ (as soon as claim rights) or Logo® (only after USPTO registers the mark)
examples: logo on Coca-Cola bottle; logo or slogan on a website associated with a service
Information in this presentation is based on general principles of law and is intended for information purposes only. Use of this presentation does not create an attorney-client or any other relationship between the speakers and the user. Neither Gunster nor the speakers make any claim as to the comprehensiveness or accuracy of the information.
Types of Intellectual Property
Patents
protect ideas or inventions
exclude others from making, using, offering for sale, selling or importing
must be issued by the United States Patent and Trademark Office
must have utility; be novel; not obvious to an ordinary person at the time made; and thoroughly explained and documented
examples: shape of Coca-Cola bottle; computer software; novel service or product being sold on a website
Information in this presentation is based on general principles of law and is intended for information purposes only. Use of this presentation does not create an attorney-client or any other relationship between the speakers and the user. Neither Gunster nor the speakers make any claim as to the comprehensiveness or accuracy of the information.
Types of Intellectual Property
Trade Secrets
Protect confidentiality of ideas and information
independent economic value from not being known by others
must take reasonable measures to protect secrecy
no registration requirement
examples: formula for Coca-Cola; source code
Information in this presentation is based on general principles of law and is intended for information purposes only. Use of this presentation does not create an attorney-client or any other relationship between the speakers and the user. Neither Gunster nor the speakers make any claim as to the comprehensiveness or accuracy of the information.
Why Protecting Your Idea Matters
Attracting investmentBuyoutExclusivityBarriers to EntryLicensing OpportunitiesJoint VenturesDefensive PurposesEstablish ExpertiseEstablish Brand Loyalty
Information in this presentation is based on general principles of law and is intended for information purposes only. Use of this presentation does not create an attorney-client or any other relationship between the speakers and the user. Neither Gunster nor the speakers make any claim as to the comprehensiveness or accuracy of the information.
I’ve got a company. Who can fund it?
Information in this presentation is based on general principles of law and is intended for information purposes only. Use of this presentation does not create an attorney-client or any other relationship between the speakers and the user. Neither Gunster nor the speakers make any claim as to the comprehensiveness or accuracy of the information.
Who are these Venture Capitalists?
Professional investors who manage a portfolio of growth companies (however, not looking to operate them).
Long-term outlook – 5-7 year investment horizon
Goal is to maximize return while limiting investment risk
Not lifestyle investors
Information in this presentation is based on general principles of law and is intended for information purposes only. Use of this presentation does not create an attorney-client or any other relationship between the speakers and the user. Neither Gunster nor the speakers make any claim as to the comprehensiveness or accuracy of the information.
Private Equity Performance Index
Investment Horizon Performance, 2005
What is Venture Capital?
Information in this presentation is based on general principles of law and is intended for information purposes only. Use of this presentation does not create an attorney-client or any other relationship between the speakers and the user. Neither Gunster nor the speakers make any claim as to the comprehensiveness or accuracy of the information.
LocalVCs46%
OutsideVCs54%
OutsideVCs51%
LocalVCs49%
LocalVCs12%
OutsideVCs88%
California Northeast Southeast
Comparison of Local Landscape
Sources: 2008 NVCA Yearbook Crossbow Ventures, Inc.
What is Venture Capital?
Information in this presentation is based on general principles of law and is intended for information purposes only. Use of this presentation does not create an attorney-client or any other relationship between the speakers and the user. Neither Gunster nor the speakers make any claim as to the comprehensiveness or accuracy of the information.
Valuation
Supply and Demand
Market Environment
- IPO Market- Public Market- M&A Market- Other VC Valuations
Deal Terms
Greater Demand from VC Community = Greater Upward Valuation Pressure
What is My Company Worth?
Information in this presentation is based on general principles of law and is intended for information purposes only. Use of this presentation does not create an attorney-client or any other relationship between the speakers and the user. Neither Gunster nor the speakers make any claim as to the comprehensiveness or accuracy of the information.
Source: DowJones VentureOne
Convertible Preferred
Convertible Participating
Preferred
Common Convertible Debt
Other0
20
40
60
80
100%
25.0%
66.9%
9.3% 4.7% 1.2%
Type of Securities Issued to Investors
What Does the Deal Look Like?
Information in this presentation is based on general principles of law and is intended for information purposes only. Use of this presentation does not create an attorney-client or any other relationship between the speakers and the user. Neither Gunster nor the speakers make any claim as to the comprehensiveness or accuracy of the information.
Key Deal Considerations
Economics - Valuation
Control- Board seat- Class vote on major corporate decisions- Investor rights
Valuation Protection- Liquidation Preferences 1-4 x- Anti-Dilution Price Protection- Dividends- Rights of First Refusal
Liquidity Protection- Redemption Rights- Registration Rights- Follow-Along and Drag-Along Rights
Type of Securities
Deal Structure- Common Stock- Convertible Note- Preferred Stock
What Does the Deal Look Like?
Information in this presentation is based on general principles of law and is intended for information purposes only. Use of this presentation does not create an attorney-client or any other relationship between the speakers and the user. Neither Gunster nor the speakers make any claim as to the comprehensiveness or accuracy of the information.
Art of The Successful VC Deal
1. Realistic Valuation
3. Proven Management
4. Strong Investors
5. Shared Vision
2. Correct Capital Assumptions
6. Trust
7. “Market” Term Sheet
8. Experienced Company Counsel
9. Experienced Investor Counsel
How Do We Get There?
Information in this presentation is based on general principles of law and is intended for information purposes only. Use of this presentation does not create an attorney-client or any other relationship between the speakers and the user. Neither Gunster nor the speakers make any claim as to the comprehensiveness or accuracy of the information.
I’m up and running. Now what?
Information in this presentation is based on general principles of law and is intended for information purposes only. Use of this presentation does not create an attorney-client or any other relationship between the speakers and the user. Neither Gunster nor the speakers make any claim as to the comprehensiveness or accuracy of the information.
Continue to Protect Your Idea
Relationships with Employees and Independent Contractors
Relationships with Vendors / Service Providers
Relationships with Customers and End-Users
Information in this presentation is based on general principles of law and is intended for information purposes only. Use of this presentation does not create an attorney-client or any other relationship between the speakers and the user. Neither Gunster nor the speakers make any claim as to the comprehensiveness or accuracy of the information.
Employees and Independent Contractors
Work for Hire / Assignment
Confidentiality
Non-Competition
Non-Solicitation
Information in this presentation is based on general principles of law and is intended for information purposes only. Use of this presentation does not create an attorney-client or any other relationship between the speakers and the user. Neither Gunster nor the speakers make any claim as to the comprehensiveness or accuracy of the information.
Vendors / Service Providers
Work for Hire / Assignment
Confidentiality
Non-Competition
Non-Solicitation
Licenses
Warranties
Liability
Information in this presentation is based on general principles of law and is intended for information purposes only. Use of this presentation does not create an attorney-client or any other relationship between the speakers and the user. Neither Gunster nor the speakers make any claim as to the comprehensiveness or accuracy of the information.
Customers / End Users
Service Agreement / License Agreement / Purchase Agreement / Terms of Use
Signed, browsewrap, clickwrap
Privacy Issues
Social Media = user generated content
Information in this presentation is based on general principles of law and is intended for information purposes only. Use of this presentation does not create an attorney-client or any other relationship between the speakers and the user. Neither Gunster nor the speakers make any claim as to the comprehensiveness or accuracy of the information.
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