The Securities and Exchange Commission released a compliance guide on Regulation A+ for small businesses last week. The guide is only useful for very sophisticated small businesses and their advisors. The compliance guide does provide some context and resources for the securities law practitioner. The guide can be found at: http://www.sec.gov/info/smallbus/secg/regulation-a-amendments-secg.shtml

Background In situations where companies are considering an investment form an institutional investor, the concept of liquidation preference will be certain to come up. The investor will want certain privileges and protections in exchange for making an investment in a start-up or early stage company. These privileges and protections can take many forms but the…

In a recent report, the Kauffman Foundation noted that bank debt was the main source of outside capital for start-ups. More specifically, small banks appeared to be best at servicing this market need. personal savings was the number one source of capital for entrepreneurs. In descending order, capital came from the following top 5 sources:…

Fads come and go and some need to go. Convertible notes are one such fad. The idea sounds great to a startup. All you have to is issue debt to investors and if you cannot pay it back at maturity your debt converts into equity. You do not have to make any payments until maturity….

The Los Angeles Business Journal Reports that UCLA Anderson Forecast shows that the tech sector is hot in several parts of Los Angeles County. The author highlights some of the challenges to more rapid growth: 1. Business friendliness 2. High cost of living 3. Inadequate human capital http://labusinessjournal.com/news/2015/jun/03/anderson-tech-sector-hot-could-be-hotter/?page=1&

Lisa Suennen published a great post about due diligence from her own perspective that of a healthcare VC. The post pulls back the curtain on what VCs look at when contemplating an investment in your company. The post also includes a link to her presentation on the topic. Great allusion to the 12 steps being…

Colorado’s governor signed an equity crowdfunding bill into law Monday. The bill allows intrastate equity crowdfunding of up to $5,000 for non-accredited investors. Under the new law companies have to disclose their business concept and risk factors to investors, and commit to spending 80 percent of crowdfunding money inside Colorado. More and more states are…

Recent articles and news coverage have demonstrated that there is a lot of confusion about what crowdfunding is and is not. To shed some light on this topic let’s look at the history of crowdfunding. History Crowdfunding as a concept and practice has been around since the late 19th century. Some might argue that it…

The Los Angeles Business Journal interviewed a few executives and early stage investors to get their reaction. The topic was crowdfunding rules and the new Regulation A+ from the SEC. http://labusinessjournal.com/news/2015/apr/12/capital-gain/?page=1&

Most entrepreneurs don’t spend a lot of time thinking about the legal aspects of their businesses. This is understandable since without customers, sales, and eventual profitability there is no business. Nevertheless like an electrical system failure paralyzing your car the following mistakes alone, or in concert can bring your enterprise to a sudden halt. Choosing…

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