Category / Reference

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AlphaTakes – Incorporation Process for an Emerging Technology Company

In this AlphaTakes video, you will learn about the incorporation process for C corporations, and why it is important to complete the incorporation formalities properly.

Understanding the incorporation process is important for emerging company founders. In this AlphaTakes video, Macy Stoneback describes the incorporation process for a typical emerging technology company. She explains some reasons why it is important to properly complete the incorporation formalities:

  • Help ensure limited liability protection
  • Avoid delays and expense at the time of financing or sale in fixing matters that were not properly addressed at the time of incorporation
  • Set founder expectations

 

 

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AlphaTakes – Liquidation Preferences

So, what is a liquidation preference? A liquidation preference is a right to all or a portion of the assets of a company upon its sale over the rights of others. The liquidation preference can be a basic preferential right like that of preferred stock over common stock, or the liquidation preferences can be very complex with multiple layers of preferences and priorities with several series of preferred stock.

In this AlphaTakes video, Matt Storms discusses the basics concerning liquidation preferences. He provides a summary of the different types of liquidation preferences that are typically negotiated in emerging technology company transactions. He also provides a spreadsheet illustration of the effects of the different types of liquidation preferences.

Here are the key takeaways from this video:

    (1) A liquidation preference is a right to all or a portion of the assets of a company upon its sale over the rights of others

    (2) The three most common types of liquidation preferences for an emerging technology company are

    (a) non-participating preferred (most common in early stage deals)

    (b) participating preferred

    (c) participating preferred with a cap

    (3) Liquidation preferences are important

 


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Board and Shareholder Approvals 101 for Emerging Technology Companies

This article outlines the basic Board and Shareholder approval requirements of typical early stage emerging technology companies.

Now that you’ve incorporated your emerging company, you may be wondering, “How often do I need to hold Board and shareholder meetings?” and “What decisions do I need to bring to the Board or the shareholders?”  These are common questions, and the answers differ company by company, to some extent.  This article is written for founders of typical early stage emerging technology companies. Continue reading →

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Electronic Minute Books 2.0

Keeping an organized, complete minute book is necessary for establishing the legal record of actions properly documented, retrieving information, and quickly disclosing documents to investors for due diligence. The following article compares the traditional paper method to various more efficient and searchable electronic options.

As a paralegal, I have done my fair share of preparing and updating corporate minute books.  Keeping an organized, complete minute book is necessary for establishing the legal record of actions properly documented, retrieving information, and quickly disclosing documents to investors for due diligence, among other reasons.  Despite the proliferation of electronic files, physical copies of minutes and consents are still typically kept in three-ring binders or those confounded hard red books.  Neither Wisconsin nor Delaware laws require that minutes be kept in original, hard copy. Continue reading →

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The Confusing World of Joint Ownership of Intellectual Property

A confusing topic for many emerging companies is joint ownership of intellectual property. Many of the implications of jointly owned intellectual property are counterintuitive. In this post, we breakdown the implications of joint ownership by the default rules in the United States for patents, copyright, trade secrets, and trademarks.

A confusing topic for many entrepreneurs is joint ownership of intellectual property.  It often comes up in connection with joint development arrangements, subcontracting portions of work, joint ventures, and other collaborative projects involving intellectual property development, whether it be in connection with software, cleantech, medical device, drug development, or other technology-based initiatives. Continue reading →

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Who Owns the Rights to Customer Feedback?

An issue in many software licenses and SaaS service agreements relates to who owns or has rights to use customer feedback related to the software or SaaS offering. This post addresses the intellectual property issues related customer feedback and the approaches many companies take to customer feedback.

Suppose a customer proposes an idea to improve the software or SaaS offering of a company. The company likes the idea so much that it integrates the idea into its next upgrade. The question becomes, who owns the idea that is integrated into the software or SaaS offering?

As a general rule, the person who creates an idea, authored work, invention, or process, owns the related intellectual property.  There are exceptions to the general rule.  But, in the software and SaaS arena involving licensors and licensees, the general rule applies in most circumstances. Continue reading →

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Bridge Financing Documents

One of the sets of documents that we have automated at AlphaTech Counsel is the bridge financing documents for an emerging company. Attached is a sample of the documents.

One of the sets of documents that we automated at AlphaTech is the bridge financing documents for an emerging company.  Attached is a sample of the documents: Convertible Note and Subscription Agreement

Instead of just using form documents as most law firms do, robust automation allows us to deliver common document sets for emerging companies in a more efficient manner.  So what else does “robust automation” yield?  It improves document accuracy, provides a valuable knowledgebase from which to draw, and enables us to deliver common document sets to our clients quickly.  It also frees up time of our lawyers to enable them to spend less time on basic contract drafting and more time on activities that afford our clients higher value. Continue reading →