We are pleased to share outstanding highlights this month about our firm, the venture capital landscape, and our clients and contacts who continuously enrich the entrepreneurial ecosystem.
McCarter lawyers Benjamin Hron and Stephen Fox authored a Q3 2019 Anatomy of a Term Sheet: Series A Financing pamphlet to help guide entrepreneurs in evaluating a term sheet, introducing them to the standard terms in an early-stage equity financing.
PitchBook recently published an enlightening report discussing “The Emergence of Pre-Seed: How Seed-Stage VC Has Developed and Where We Go from Here,” in which they analyze how pre-seed has emerged as a viable new stage, and that firms are raising more rounds of capital prior to early-stage venture (Series A+). The average number of seed rounds has increased from 1.2 in 2013 to 1.5 in 2019. The data evidences the growing importance of this venture financing segment and suggests that the venture capital industry may be returning to its roots as the supporter of innovation. Much of the report is consistent with our experience regarding the sizes and stages of development of companies undertaking pre-seed deals.
NBA star Spencer Dinwiddie has launched a tokenized Reg D offering to participate in a portion of his three-year, $34.5 million contract with the Brooklyn Nets, and is launching a platform for other players to do the same. Investors would receive monthly payments plus interest, and the player receives payment up front. Investors have the opportunity to participate in the player’s performance bonuses under the contract and can stay involved if the player opts out of the contract and signs with another team for more money. The NBA, however, says that the proposed tokenization violates its collective bargaining agreement.
McCarter lawyers Dave Sorin, Matt Uretsky, Jared Sorin, Joe Daniels, and Scott Smedresman have been on the cutting edge of income-sharing agreements and related securitization transactions for several of our clients. These agreements are being used, among other ways, to finance students’ education and to help employers gain access to prospective talent. We have also been working on tokenized securitization models involving nontraditional assets, including e-commerce inventories and recycling credits. This is all part of a greater trend of the “self-capitalized” individual. Tokenization is here to stay and may grow to replace many more traditional financial instruments.
For the fourth consecutive year, we sponsored the Propelify Innovation Festival held in Hoboken on October 3. More than 8,000 attendees enjoyed music and networking and participated in engaging talks on topics of interest to innovators, technologists, entrepreneurs, and investors. McCarter was the sole law firm sponsor for the event, and Dave Sorin—who has deep roots in NJ Tech Council and the national startup community—spoke about the promise and challenges of blockchain. Guillermo Artiles, former associate counsel to NJ Gov. Phil Murphy, led a panel discussing the emerging cannabis industry.
Take a look below at additional coverage and upcoming events to explore more of the latest in venture capital.
McCarter’s Venture Capital & Emerging Growth Companies Practice lawyers empower clients throughout the development cycle—from ideation to creation, capitalization, implementation, commercialization, and monetization.