Greenberg Traurig’s Emerging Technology Group to Present at the 2017 Angel Capital Association Summit

Posted in Events, Intellectual Property, Nanotechnology, Technology

Greenberg Traurig’s Emerging Technology Practice will present on four separate sessions at this year’s Angel Capital Association (ACA) Summit in San Francisco (April 26-28 at the San Francisco Marriott Marquis Hotel). The sessions include:

  • After the Check: Tactics to Boost Your Returns (April 27, 9:45-10:30 a.m.)
    James J. DeCarlo, a shareholder in the Intellectual Property Practice in New York and New Jersey, will present on a session covering specific tactics that angels, who are not sitting around board tables, can employ during the holding periods after investing.
  • Workshop for Showcase Companies – The Ins and Outs of Term Sheets (April 27, 9:45-10:30 a.m.)
    Emily Ladd-Kravitz, an associate in the Corporate & Securities Practice and Emerging Technology Industry Group in Boston specializing in mergers & acquisitions, and Beth Cohen, director of Global Emerging Growth Services in the Emerging Technology Industry Group in Philadelphia, will be presenting on term sheets, which is one of the most important documents to an entrepreneur. They will provide answers to the following questions: Which terms are most important? How do they affect you? What are the best ways to negotiate for good results
  • Workshop for Showcase Companies: Intellectual Property and Patents (April 27, 11-11:45 a.m.)
    DeCarlo and Chinh H. Pham, co-leader of the firm’s Emerging Technology Practice and Chair of the firm’s Nanotechnology Practice in Boston, will hold a workshop regarding what startup enterprises need to know about developing, protecting and monetizing their IP assets.
  • The Next Big Thing in Tech – VR, IoT, Deep Learning… (April 27, 2:15-3 p.m.)
    Pham will also present on a session addressing the hottest technology trends in the last two years, including virtual reality/augmented reality (VR/AR), IoT and Artificial Intelligence. The panel will explore future trends and investment opportunities in each category.
  • Structuring Deals (April 28, 11:15 a.m.-12 p.m.)
    Kravitz will participate in a session that analyzes the structuring of deals.

For more details, please click here.

Greenberg Traurig to Host the Second Atlanta-Israel FinTech Innovation Conference

Posted in FinTech, Technology

May 22-23, 2017, Greenberg Traurig’s Atlanta office will host the second Atlanta-Israel FinTech Innovation Conference.

With over 100 guests expected, the conference brings together both U.S. and Israeli companies seeking synergy and collaboration opportunities. U.S. companies attend fin search of “cutting edge” Israeli technologies and Israelis leverage the event to showcase their technologies and make important contacts. The conference allows for many networking opportunities including one-on-one meetings.

The conference will be led for the second consecutive year by Greenberg Traurig’s David Schulman, Intellectual Property & Technology shareholder at the Atlanta office and an active member of the firm’s Israel Practice.

For more information please visit: www.usisraelexchange.com

2017 Atlanta-Israel FinTech Innovation Conference in the news: http://www.globes.co.il/en/article-israel-to-aid-us-payment-security-task-force-1001137036

How Well Do You Know Your Co-founder?

Posted in Entrepreneurship, Start-up

Two co-founders, one CEO and one EVP. One owned more than the other, got paid better, had bigger bonuses. How did this happen?

“We were always very clear with each other about who would have what role,” the EVP once told me. I observed that almost everything between them was consultative, even to a fault. But for a tough call, if push came to shove, the EVP deferred and the buck stopped with his partner. “We defined the roles and it has always worked for us.”

Yet, when representing start-ups, I often find that conversations over business fundamentals such as choice of structure, team recruiting, or tweaking a cap table will be greeted by an entrepreneur nervously wondering, “How am I going to break the news to my co-founder?”

The guy wringing his hands across the table didn’t fret while burning the candle at both ends to improve on the start-up business model. He didn’t squirm when he quit his day job to bootstrap a risky venture. He didn’t sweat when he and his co-founder shook hands. But now, he’s afraid of allocating himself more shares of stock.

One such entrepreneur was running the entire operation. One had made a substantial loan to the company. One was dealing with unqualified co-founders whose presence would have violated any nepotism policy. One had declined freelance work and was living with her folks. One had paid the other a handsome salary in one business while they jointly plotted the spin-off. But they all sometimes found themselves walking on egg shells when it came to having what they perceived as difficult conversations with their co-founders.

Watching a rerun of the Food Network show Restaurant Impossible reminded me of this phenomenonOn the show, host Robert Irvine is brought in to a failing restaurant to identify the problems, help correct them, and hopefully turn it all around. On each episode it is often the family member or long-time buddy back in the kitchen or at the host stand that is harming the business in some way. Curiously, nobody can quite bring themselves to pinpoint the problems honestly when Irvine does his initial due diligence. Finally, after the employees quietly signal the real dynamics, the main players have to go on national television so that they can be prodded to have an adult conversation with each other.

Are you nervous about your co-founder? Will he be tempted by surer paths? Are your complementary skills being strained? Are you making allowances? Are you hiding annoyances?

Perhaps you’re nervous about yourself? Do you feel as though you are enjoying an undeserved wide berth? Afraid your co-founder will bear a grudge? Have your expectations changed? Is there some romantic or other non-business alignment?

As seen through personal experience (and on Restaurant Impossible!), for the good of the venture, it is important to be able to talk about these things and your other feelings in an open and trusting way. For starters, discuss each person’s strengths and weaknesses. Identify what actions and reactions he or she views as positive. Figure out what really gets under her or his skin. Compare management styles. Come up with the areas where one person needs a counterweight or could simply benefit from support.

Naturally, it’s ideal to have such talks before deciding to partner with someone. But it’s never too late to employ candid interactions to take your relationship to the next level.

Hatching New Ideas, from Tech Transfer to Incubation

Posted in Education, Entrepreneurship, Start-up, Technology

Colleges and universities are under increasing pressure to be more entrepreneurial and improve their impact on economic growth, job creation, and competitiveness. Additionally, higher education institutions face greater recruiting challenges, with many colleges and universities vying for the same quality professors, faculty and students from around the world. The way schools have addressed these issues has evolved over the last 30 years, inspiring new, creative curriculums and giving students new options to explore entrepreneurship.

 A Tradition of Tech Transfer

Historically, as a way to remain relevant and competitive, academic institutions have focused on improving technology transfer, the complex work that takes place at the intersection of research and commercialization. Over the last three decades, schools have revamped their technology transfer capabilities in order to seize the opportunities presented by patent system reforms such as:

  • The Bayh-Dole Act of 1980 which gives universities the right to take title to inventions made from federal research grants;
  • Supreme Court decisions that expand patentable matter; and
  • The new first-to-file system and other reforms brought by the America Invents Act.

For many years, the emphasis was largely on licensing patents, which was the mission of the university technology transfer office (TTO). However, it can be challenging for some universities to generate significant revenue from this model, and difficult for TTO companies to build sustainable businesses. One of the major hurdles has been the gap between research and conversion to commercial products.

Incubating Student Innovation

In recent years, colleges and universities have reconsidered their role in the innovation system. Rather than a linear system that supports invention in the hopes of landing a blockbuster patent, schools have seen the benefits of supporting an “innovation ecosystem” on campus. As a result, the startup incubator has emerged, which aims to give the student entrepreneur access to a broad array of resources, including education, laboratories and other facilities, investment capital, mentorship, and legal counsel.

With this alternative model, the school can help drive innovation, but may not own the resulting invention. Rather, the school “incubates” the development of new ideas and innovations by helping early-stage ventures to survive and grow during the startup period – a time when they are most apt to fail. On-campus incubators provide student entrepreneurs with a range of support services and resources tailored to meet their unique needs. By devoting resources to support campus entrepreneurs and partnering with business advisors and capital investors, colleges and universities are creating a nurturing environment for these nascent enterprises.

It’s Working

Campus incubators are growing exponentially. According to the National Business Incubation Association (NBIA), as of October 2012, approximately one-third of the 1,250 incubators in the United States were at universities, up from one-fifth in 2006. Today, there are an estimated 7,000 business incubators worldwide. Incubators are no longer found only at technology-centric schools such as MIT, and not just in Boston and Silicon Valley. Even non-tech campuses such as Northern Kentucky University, Duke and Syracuse now have incubator programs.

The on-campus incubation model continues to adapt to meet a variety of needs, from fostering commercialization of university technologies to increasing employment in economically distressed communities to serving as an investment vehicle.

Research conducted by the NBIA states that on-campus incubators can reduce the risk of small business failures. For example, in 2011, North American incubators assisted about 49,000 startup companies that provided full-time employment for nearly 200,000 workers and generated annual revenue of almost $15 billion. Perhaps most telling, is that, according to the NBIA, 87 percent of all companies that have graduated from their incubators are still in business. These newly hatched companies create jobs, revitalize neighborhoods and commercialize new technologies, thus strengthening local, regional, and even national economies.

Whether through tech transfer or incubation, higher education institutions are well-positioned to support entrepreneurship on campus, attract top talent, and help hatch new innovations.

How Big Pharma Taps Outside Ingenuity

Posted in Start-up

Economics in getting a compound approved and commercialized are evolving. Drug companies have reduced budgets that historically funded vast R&D teams. Innovators are chasing tight investment dollars. The two camps are increasingly collaborating.

pillsThere is a self-selection factor rewarding start-ups. Specifically, they can’t attract funding or licensing deals unless they’ve protected their intellectual property, showed clinically relevant data, recruited a credible advisory board, and/or received validation within the industry. Even then there’s plenty of risk. Product prospects fail more often than not and early-stage companies usually have all of their eggs in one basket. Indeed, investors worry that companies trying to pursue multiple compounds would lose focus.

For their part, Big Pharma can test promising compounds developed on the outside and try to reproduce results. As such, they can thoughtfully employ a “build” vs. “buy” analysis, deciding whether to go it alone or in-license (or otherwise acquire) given material. Even with the resources and expertise to get new ideas out of the lab and launched, established drug companies must figure out at what point licensing makes sense. There’s obviously greater risk at early stages of discovery. On the other hand, they’ll pay more for drugs that have already shown promise.

Happily, technology has enabled companies small and large to stretch their dollars. Huge new and open data sets together with relatively inexpensive high throughput computing identify genetic or other characteristics to achieve earlier targeting, better prospects, and even repurposing of previous failures.

So what does an exclusive licensing deal look like? Here are the basic elements:

  • Field of Use – Parties determine whether the license is limited to developing therapeutics for a particular disease and what activities a licensor can pursue outside of certain indications.
  • Up-Front Payments – These are usually paid on signing of the license and represent concrete value in the licensed compound; other payments are not guaranteed.
  • Milestones – Each step of advancement — whether filing a regulatory application, dosing the first patient in a clinical trial, or achieving the first sale in a given market — typically give rise to additional remuneration. Conversely, if a licensee discontinues development, there may be a mechanism for rights to revert and interim development to be licensed back.
  • Royalties – Payments are based on a percentage of net sales (sometimes per unit sold). Each deal varies as to the types of expenses, taxes and combinations that are included, and how and for what markets and periods thresholds are calculated.
  • Intellectual Property – The parties agree which has the right to register, enforce or defend IP rights and how costs and awards are split.
  • Reporting and Consultation – A committee often confers on the direction of, and each side’s continuing contribution toward, R&D.
  • Protections – Licensing can be a big-ticket deal. The parties must carefully craft legal and other provisions to anticipate issues that may arise in the future and apportion responsibility.

One of the terrific aspects of working with life sciences companies is the ability to witness ingenuity. Start-ups bring great creativity to a problem. Successful drug companies achieve a balance between internal R&D capabilities and external deal making. Getting a drug to market is rewarding for all.

Financing Basics for Entrepreneurs: Borrowing for Working Capital and Long-Term Capital Needs

Posted in Entrepreneurship, Small Businesses, Start-up

Working capital is the lifeblood of a successful business. When running a startup, entrepreneurs sometimes rely on their own personal resources to fund the business. An alternative may be to borrow funds through a short-term or long-term loan. These loans offer flexibility to cover day-to-day expenses and support company growth. However, choosing the right option will depend on your specific business needs. In this post, we provide an overview of short-term and long-term loans and key advantages for each.

Meeting Short-Term Business Needs

What is a working capital loan?

As the name suggests, working capital is the money available to operate the immediate and short-term needs of your company. A working capital loan is a short-term (one year or less) line of credit from a bank, credit union, or other alternative lender. This type of loan is intended to finance everyday expenses involving the daily operation of a business.

A working capital loan has a variable rate of interest that is tied to short-term interest rates (APR, LIBOR), and the lender makes a certain amount of money available to the business to draw (i.e., borrow) as necessary.  The borrower only pays interest on what is borrowed.

Why establish a working capital loan?

Because aligning monthly revenue and expenses is hard to achieve, a working capital loan provides ready access to capital to keep a business operating. For example, a working capital loan allows a business to borrow money to pay routine expenses, such as rent, payroll, invoices, taxes, insurance, etc. It also allows a business to borrow money to do things like purchase inventory or equipment or invest in advertising. The business repays the loan over time. This type of loan can help a business owner establish good credit history and good business practices, which can be particularly important for an entrepreneur or first-time business owner.

Short-term loans can be unsecured or secured. For secured loans, lenders will likely require a personal guarantee and/or need to pledge “all assets” (i.e., revenues, receipts, intellectual property rights, contracts, equipment, inventory, etc.). If a default occurs, the lender has the right to these assets.

Key advantages of working capital loans

  • The loan provides an infusion of capital when needed to cover expenses.
  • You maintain control of the business.
  • Often, collateral is not required to secure the loan, although in these circumstances excellent credit history is needed.
  • Borrowers can access money quickly.

Meeting Long-Term Business Needs

What is a long-term capital loan?

A long-term commercial loan is money borrowed for more than one year from a bank, credit union, or other alternative lender. This type of loan has a fixed interest rate that is usually tied to longer-term interest rates (i.e., 3, 5, or 10-year Treasury Rate plus a spread). The borrower pays principal and interest in equal installments over time .

Long-term loans are typically secured. Lenders will likely require a personal guarantee, a pledge of the asset that you acquire with the loan, and/or a pledge of “all assets” (i.e., revenues, receipts, intellectual property rights, contracts, equipment, inventory, etc.). If a default occurs, the lender has the right to these assets.

Why establish a long-term capital loan?

If a business needs to buy capital equipment, buildings, other businesses, or undertake construction projects, a long-term loan may be a better option. All the money is disbursed up front except for construction loans, which are disbursed during the construction period.

Key advantages of long-term capital loans

  • These commercial loans can be made in very large sums, allowing you to cover the cost of larger projects with a single loan.
  • You maintain control of the business.
  • You can get access to funds quickly.
  • You can avoid large payments up front, which can be attractive to most startups.

Summary

Whether you are borrowing to cover daily expenses or to purchase equipment, it may be worth exploring short- and long-term commercial loan options. Regardless of the loan you choose, there are benefits to be had from working capital that supports business growth.

Israeli Startups Continue to Fare Well in 2016

Posted in Start-up

In what has become a staple of lists that review the top startup hubs in the world, a recently published list by Sparklabs Global Ventures has listed Tel Aviv as the number three global startup hub. The list has Tel Aviv right behind Silicon Valley and Stockholm, and ahead of New York City, Los Angeles, London, Berlin and Beijing. With an enormous amount of startups starting their way in Israel every year, it is no wonder the country’s most common nickname is “Startup Nation.” It also comes as no surprise that when the partners at Y Combinator, a leading Silicon Valley based investor that provides seed funding for startups, recently took a whirlwind global tour, a stop in Tel Aviv was on the itinerary.

Greenberg Traurig has a dedicated Emerging Technology Practice and is the only Am Law 100 law firm that maintains multidisciplinary, permanent offices in both Israel and the United States, among many other locations throughout the world. For more information on startups in Tel Aviv or growing your business around the world, please feel free to contact your Greenberg Traurig attorney.

U.S. Market Entry Top 10

Posted in investments, Start-up, Technology, Workforce

uSAOver the last few months I have had the chance to speak to entrepreneurs from Brazil, China, Estonia, France, Germany, Guatemala, Israel, Norway, Singapore and Ukraine seeking to operate and solicit investment here in the U.S.  As an attorney, I’m expected to focus on best legal practices.  They’re indeed important, but perhaps not worth quite so much energy if the company isn’t on a course to succeed as a business.

Among my first questions, I’m curious to know what a company has, why it’s great, who’s willing to pay, and how much.  Then, I explore other challenges facing the business.

For start-up companies that still want to talk, here’s my simplified rundown of business and legal items (for information purposes only, not legal advice):

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USCIS Proposes International Entrepreneur Rule to Spur Innovation and Job Creation

Posted in Entrepreneurship, Visas

On Aug. 26, 2016, U.S. Citizenship and Immigration Services (USCIS) announced a notice of proposed rulemaking for an International Entrepreneur Rule, and provided an advance version of the proposed rule for public review.

According to an announcement from USCIS, the proposed rule will allow the Department of Homeland Security (DHS) to exercise discretion, on a case-by-case basis, to provide parole for foreign entrepreneurs who are directing the development of a startup business entity in the United States and whose involvement in the startup would provide a significant public benefit.  USCIS proposes to amend its regulations in connection with Section 212(d)(5) of the INA to provide a “transparent framework” for the exercise of agency discretion and the case-by-case adjudication of parole requests for start-up entrepreneurs.

In order to be considered for parole under the proposed rule, an immigrant entrepreneur would be required to:

  • Own at least 15 percent of the startup and be actively involved in its operation
  • Have formed the business in the United States within the previous three years.

The entrepreneur must also demonstrate that his or her business the potential for job creation and growth by showing:

  • Investment of a minimum of $345,000 from qualified U.S. investors with success in prior investments
  • The receipt of grants or awards from federal, state, or local government entities.

The proposed rule also provides flexibility for an entrepreneur who may only partially satisfy one or both of the above criteria, by permitting the entrepreneur to provide evidence of the start-up’s potential for growth and job creation.

Under the proposed rule, a qualifying entrepreneur may receive parole for a two-year period, and may be eligible for renewal based upon the success of the start-up.

When finalized, the proposed rule may hold potential for immigrants who find themselves caught in current immigrant visa backlogs, as well as individuals who seek to emigrate from countries that do not have E-1 or E-2 visa status.

Upon publication of the rule in the Federal Register, the public will have 45 days during which to provide comment on the rule.

As we review the text of the proposed rule thoroughly, we will provide additional insights and discussion about the potential opportunities it could present to immigrants in different contexts.

Greenberg Traurig partners with leading internet conference NOAH in Berlin and London

Posted in Cybersecurity, Events, Technology

Greenberg Traurig sponsors the leading internet conference NOAH 2016. In June, over 3,000 attendees including entrepreneurs, investors, corporate executives, networkers and journalists met in Berlin to discuss disruptive trends across industries.

Among the speakers was Rudolph W. Giuliani, who delivered a keynote on cybersecurity together with Bill Morrow, CEO of Quarri Technologies.

The conference was well received, see a summary and impressions of NOAH Berlin.

Our German team also hosted a post-conference reception at their rooftop terrace. More than 250 guests embraced the opportunity to enjoy fantastic views, food and drinks while networking with other investors and technology entrepreneurs.

On Nov. 10 and 11, 2016, NOAH will take place in London. Shareholders and associates of both our German and London office will attend and actively support the conference. Read on for further details about NOAH London.

For further information, please contact Henrik Armah (Shareholder, Corporate/M&A) or Sarah Koch (Events Coordinator).

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