en-us http://www.intensedebate.com/users/272765 Comments by Yokum http://www.jasonmendelson.com/wp/archives/2010/03/why-there-will-never-be-a-standard-set-of-seed-documents-a-k-a-why-brad-feld-will-fail.php#IDComment62439935 For the record, I've offered to get in a room with Brad and other attorneys/investors, but I really think that it needs to be an investor-driven process for any set of standard docs to gain widespread acceptable. For example, WSGR will generally not use the NVCA docs on a company-side Series A financing unless absolutely demanded by the investor. (It seems like this is generally true of other firms on the West Coast in my experience.) The WSGR-template Series A documents can be generated using document automation software, which makes it easy for us to draft -- and most of the firms that do a lot of venture financings are very familiar with the WSGR forms. Tue, 16 Mar 2010 19:16:09 +0000 http://www.jasonmendelson.com/wp/archives/2010/03/why-there-will-never-be-a-standard-set-of-seed-documents-a-k-a-why-brad-feld-will-fail.php#IDComment62439935 http://ocvcblog.com/2009/09/15/open-letter-to-congress/#IDComment35242126 Very well said. Mon, 21 Sep 2009 02:38:27 +0000 http://ocvcblog.com/2009/09/15/open-letter-to-congress/#IDComment35242126 http://www.feld.com/wp/archives/2009/08/the-challenge-of-the-ideal-first-round-term-sheet.html#IDComment33949817 I'm late on commenting, but as the author of the TheFunded Founder Institute term sheet, I'd volunteer as the WSGR rep to be locked in a room with folks from other firms. I'm not sure if creating "NVCA"-lite documents is the answer. It may require a completely different approach to these concepts -- such as creating the Creative Commons-style human readable version of a term sheet with standard legalese that corresponds to the human readable version. Just talking out loud ... Fri, 11 Sep 2009 08:07:00 +0000 http://www.feld.com/wp/archives/2009/08/the-challenge-of-the-ideal-first-round-term-sheet.html#IDComment33949817 http://www.jasonmendelson.com/wp/archives/2009/05/quick-ways-to-get-fired-as-a-lawyer.php#IDComment21278854 This needs to be required reading for corporate attorneys. Tue, 12 May 2009 03:27:59 +0000 http://www.jasonmendelson.com/wp/archives/2009/05/quick-ways-to-get-fired-as-a-lawyer.php#IDComment21278854 http://www.startupcfo.ca/2009/04/automatic-term-sheet-generator.html#IDComment19783248 Glad you like the tool. Fri, 24 Apr 2009 05:38:29 +0000 http://www.startupcfo.ca/2009/04/automatic-term-sheet-generator.html#IDComment19783248 http://www.feld.com/wp/archives/2009/04/tennis-mini-break.html#IDComment18389521 The Jack Kramer Autograph was my first racquet too ... until I had to have the Jack Kramer Pro Staffs (which pretty much seemed like the same racquet anyway) because John McEnroe used them. Thu, 9 Apr 2009 00:02:42 +0000 http://www.feld.com/wp/archives/2009/04/tennis-mini-break.html#IDComment18389521 http://www.jasonmendelson.com/wp/archives/2009/03/time-to-reboot-venture-capital-deal-structures.php#IDComment17277746 As a practical matter, I'm not sure that eliminating/modifying some of the suggested rights will significantly decrease the length/complexity of the documents that much to make a difference. Perhaps there needs to be some sort of common understanding so that standard term sheet language refers to a commonly understood standard -- like "Creative Commons Attribution 3.0" refers to a longer license agreement with a human readable summary. Getting rid of some of the registration rights might get rid of a couple of pages. Deleting price-based anti-dilultion might save a couple of pages, but the rest of the structural anti-dilution needs to remain. Getting rid of some reps and warranties would save a few pages -- but I don't think that reps are particularly difficult to read, as compared to, say, IRA indemnification provisions. Eliminating the RFR/Co-sale would eliminate an agreement, but most people never have substantive comments on a typical form anyway. Redemption rights aren't in most deals anyway, so I think there really isn't a savings there. In any event, making venture financings easier to complete is a worthy goal. Fri, 20 Mar 2009 07:39:24 +0000 http://www.jasonmendelson.com/wp/archives/2009/03/time-to-reboot-venture-capital-deal-structures.php#IDComment17277746 http://www.naffziger.net/blog/2008/12/27/making-an-irs-section-83b-election/#IDComment13312111 Hmm ... not sure where the advice is coming from ... I hope it's not any of my colleagues. I think that the suggestion to always place restrictions on founders stock at initial issuance to be an extreme and unnecessary position. I have never heard that advice before and I would be surprised to hear it from a reputable law firm. Even prior to the ruling, the conventional wisdom was that 83(b) filings were not necessary in the event of vesting of previously fully-vested stock in connection with a venture financing. I'll make a point to quiz some of my tax and employee benefits colleagues to double check as I believe the conservative position that you explain above is simply incorrect. At the end of the day, the corporate attorneys (like me) really defer to the tax and employee benefits specialists on any difficult 83(b) issues and I didn't think that there was even debate on this issue. Wed, 31 Dec 2008 10:02:52 +0000 http://www.naffziger.net/blog/2008/12/27/making-an-irs-section-83b-election/#IDComment13312111 http://www.naffziger.net/blog/2008/12/27/making-an-irs-section-83b-election/#IDComment13305940 Dave - in the situation where founders stock is originally issued with no vesting and then vesting is imposed by VCs in connection with a venture financing, no 83(b) filings are necessary in this case. The rev ruling is very clear on the subject, so I think that attorneys that have alternative views simply don't realize that this ruling exists. In the past, many attorneys counseled founders to make an 83(b) filing just in case in this situation, but this is no longer necessary. Thus, I think your comments above are somewhat misleading that "[c]reating stock vesting agreements after the 30-day 83B window is tricky." Wed, 31 Dec 2008 03:19:11 +0000 http://www.naffziger.net/blog/2008/12/27/making-an-irs-section-83b-election/#IDComment13305940 http://www.askthevc.com/blog/archives/2008/12/why-is-my-ventu.php#IDComment12395586 Venture funds with in-house general counsels are particularly likely to have requested these amendments to indemnification agreements as they are aware of the issue. Most company counsels have no particular objections to amendments along the lines of the NVCA language, but the amendment requires board approval (and related explanation at a board meeting). Wed, 10 Dec 2008 07:14:02 +0000 http://www.askthevc.com/blog/archives/2008/12/why-is-my-ventu.php#IDComment12395586 http://www.startupcompanylawyer.com/2008/11/28/what-are-securities-laws/#IDComment11873565 @Ralph - Please see the below clip from the registration statement for the rescission offer. David Drummond, the general counsel of Google is a former WSGR partner, and WSGR advised Google in connection with the rescission offer. There are various situations where there is a tension between strict compliance with securities laws and business needs (in Google's case, financial statement disclosure). For example, in order to minimize liability in a highly dilutive financing, a company may offer to sell the securities on all existing stockholders in order to avoid claims of unfairness. However, there may be too many stockholders or unaccredited stockholders to fall within an exemption from registration. Thus, a board may face the difficult choice between violating securities laws or failing to make an offer to all stockholders that may decrease the risk of stockholder litigation in connection with a dilutive financing. "Shares issued and options granted under our 1998 Stock Plan, our 2003 Stock Plan, our 2003 Stock Plan (No. 2) and our 2003 Stock Plan (No. 3) from September 2001 through July 2004 may not have been exempt from registration or qualification under federal securities laws and the securities laws of certain states. Certain of the shares issued during this period may not have been exempt from registration and qualification requirements under Rule 701 under the Securities Act of 1933 and under those state securities laws that provide an exemption to the extent the requirements under Rule 701 are met. We became aware that we were approaching the numeric limitations prescribed by Rule 701 in September 2002 and thereafter determined that we could not continue to count on being able to rely on Rule 701 to provide an exemption from the registration requirements of the Securities Act of 1933. In addition, continued compliance under Rule 701 would have required broad dissemination of detailed financial information regarding our business, which would have been strategically disadvantageous to our company. In evaluating how to issue stock upon exercise of outstanding options in light of these limitations we determined we would utilize “private placement” exemptions provided by Section 4(2) of the Securities Act of 1933 in order to exempt these issuances from federal registration requirements notwithstanding the factual and legal uncertainties inherent in Section 4(2). These uncertainties arise because analyzing whether or not issuances of securities qualify for the exemptions afforded by Section 4(2) involves a number of subjective determinations including whether the number of offerees constitutes a general solicitation, the financial sophistication of offerees and their access to information regarding the issuer, as well as whether the offering was designed to result in a distribution of shares to the general public. We considered various alternatives in determining to rely on the exemption provided by Section 4(2) despite its inherent uncertainties. We considered ceasing granting options and shares to service providers. However, we determined that this would be detrimental to our development, as equity compensation was an essential ingredient to building our company. We also considered becoming a reporting company for the purposes of federal securities laws. We determined that this too would be contrary to the best interests of our stockholders. We therefore concluded that relying on Section 4(2) despite its uncertainties was in the best interest of our security holders. Because of this uncertainty in relying on Section 4(2), the options we granted and the shares issued upon exercise of these options during this period may have been issued in violation of either federal or state securities laws, or both, and may be subject to rescission. In order to address this issue, we are making a rescission offer to the holders of these shares and options. We will be making this rescission offer to 1,362 persons who are or were residents of Arkansas, California, Colorado, Connecticut, the District of Columbia, Georgia, Illinois, Maryland, Massachusetts, Michigan, Nevada, New Hampshire, New Jersey, New York, North Carolina, Pennsylvania, Texas, Virginia and Washington." Sat, 29 Nov 2008 11:06:05 +0000 http://www.startupcompanylawyer.com/2008/11/28/what-are-securities-laws/#IDComment11873565