Technology

In two recent no action letters, the Securities and Exchange Commission (the “SEC”) granted no action relief for two venture capital online funding platforms, the FundersClub, Inc. (“FundersClub”) and AngelList, LLC (“AngelList”), allowing them to avoid registering as broker-dealers under the Securities Exchange Act of 1934 (the “Exchange Act”) even though their affiliates will receive some compensation in the form of a carried interest.

Companies in many industries are integrating artificial intelligence into their products despite a decline in US AI patent filings driven by uncertainty about the patentability of software. Advances in machine learning are spurring the increased interest in AI.

For all the publicity generated by the recent increase in value of Bitcoin, as well as the generally increasing awareness of the existence of blockchain technology, Greentech Media’s recent Blockchain in Energy Forum 2018 held in New York City demonstrated that the technology is incredibly young and all stakeholders—utilities, regulators, entrepreneurs, consumers and investors—are still struggling with the ultimate impact of distributed ledger systems.

The Supreme Court on Tuesday will hear arguments in United States v. Microsoft Corp., in which the court will decide whether a US technology service provider, Microsoft, must obey a search warrant for data stored in a foreign country.

Simplexity Services is a San Diego, CA-based company offering back-office services for start-up entrepreneurs and for those who have closed seed or Series A financings. Simplexity helps de-risk and accelerate startups by applying systems science and solutions as building blocks for essential founder infrastructure, resulting in the business insights and deliverables which allow founders and their investors to sleep better at night.

In this edition of MintzTech Connect, we discuss the benefits of a Series LLC; we highlight Simplexity, a wonderful back-office company based in San Diego; and we have included a fascinating article on cryptocurrencies which explains this new asset class that enables decentralized applications. Additionally, we highlight our new series of podcasts called From The Edge, which provides useful information for and about entrepreneurs.

MintzTech Guest Article: Letter to Jamie Dimon and Anyone Still Struggling to Understand Cryptocurrencies

Mintz Levin is excited to announce From the Edge, a podcast for and about entrepreneurs. In this series, Mintz attorneys who specialize in emerging companies speak with investors and entrepreneurs in the technology, biotech, and finance fields to explore the key strategies they used to build successful ventures. Featured industry leaders explain how they raised capital, built great management teams, achieved successful liquidity events, and more.

After being in the insurance industry for several decades in a variety of roles, I frequently get asked which insurtechs I think are going to be successful.

Since its beginnings in early 2015, quip, the Brooklyn-based dental start-up co-founded by former industrial product designers Simon Enever and Bill May, has swiftly reinvented the archaic dental healthcare industry. From its superbly designed electric toothbrushes to its subscription toothbrush-head and toothpaste replacement service, and its “dental connect” digital platform for customers and dental professionals, quip has made it easier, more enjoyable, and more affordable for customers to keep their smiles bright and healthy. For these achievements, quip has received unprecedented dental industry and press coverage, including recognition as one of TIME Magazine’s 25 Best Inventions of 2016, a place on the O, The Oprah Magazine “O-List,” and a 2016 GQ Grooming Award. With such accolades and its robust social media following, quip is revolutionizing the way people around the world approach oral healthcare.

Words are very powerful and the language we use often frames a discussion. For example, the term “shareholder activist” sounds like a consumer friendly person who has everyone’s best interests at heart, when in fact the term “shareholder activist” is a phrase invented to cast corporate raiders in a better light. Such semantic gamesmanship often masks the reality of a particular situation.

Historically, most startup companies were funded either by the offering of equity or by loans in the form of convertible promissory notes. Recently, however, there have been some hybrid instruments created to fund startups.

Kinnos Inc. is a New York-based company that is raising the standard of infectious disease decontamination to protect healthcare workers, patients, and the general public. Their first product, Highlight®, is an additive for disinfectants that eliminates human error and allows even untrained end-users, such as healthcare workers, housekeeping staff, and biosafety personnel, to immediately use disinfectants effectively.

The current edition of MintzTech Connect includes an article relating to investing in hot secondary securities and an article on some of the pitfalls in our “gig economy” under New York law when hiring independent contractors. We also highlight a very cool young company called Kinnos, which is raising the standard of infectious disease decontamination to protect healthcare workers, patients, and the general public.

U.S. Securities and Exchange Commission member Michael Piwowar on Tuesday urged investors to be wary of the pitfalls of so-called SAFE investments — a sophisticated financing instrument for startup companies — that are increasingly being marketed to the broader retail investing public.

There is little doubt that activity in the trading of secondary shares of private companies remains robust. Private companies are staying private longer and there seems to be an unlimited demand to buy into the newest “Unicorn” anointed each week. As the market for secondary shares stays strong, valuations seem not to matter much to most buyers.

Decisions you make when founding and/or investing in an insurtech venture can dictate your regulatory obligations, tax liability, operational structure and, ultimately, profitability. Here are five seemingly simple questions to ask when launching an insurtech venture:

Recognizing that physical therapy will always be in demand, Dr. Stephen Fealy MD, a leading orthopedic surgeon at the Hospital for Special Surgery (HSS), and Greg Peters, a leading health and fitness expert, joined forces to make the overall physical therapy industry and experience more effective and efficient, thus BetterPT was conceived.

This issue includes two articles that challenge conventional thinking. The first, called “Software is Still Patent Eligible,” makes the case that software patents can still be obtained. IP generally accretes in value over time and is critically important to the value proposition of many enterprises. While some commentators believe that software patents are no longer worth trying to obtain, we disagree. The second article is about a novel way to construct a more balanced approach to the share ownership of founders and investors. People often forget that the NVCA (National Venture Capital Association) forms are created by counsel to the venture capital industry and as such are generally biased in favor of the investor. Our article proposes a novel solution to mitigate this bias and the solution is both simple and equitable.

On January 17, 2017, the Federal Trade Commission (FTC) filed suit against Qualcomm in the U.S. District Court for the Northern District of California for allegedly monopolizing the market for CDMA and LTE baseband processor technologies.