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MintzTech Connect: All Things Technology — October 2020

Dear Readers, 

Working with so many emerging companies over the years, we have learned that collaboration among the various stakeholders really improves the odds for their success. For example, if an investor overreaches on economic terms, simply because it can, the entrepreneur will often be spending too much time trying to figure out how to get rid of that investor instead of building a great company. Similarly, when an entrepreneur is able to demand terms that allow limited accountability, the enterprise is often riddled with problems that can lead to failure without any recourse to change leadership.

We have also learned that the tone of this collaboration starts at the top. It is so important that leadership of a start-up understands that encouraging collaboration, communication, inclusiveness, open-mindedness to new ideas, and a healthy and civil exchange of various ideas is a significant part of what enables an enterprise to be successful.

While collaboration is valuable, our experience has taught us that companies that follow the data, respect the data, and use the data to plot a commercial path forward are generally far more successful than enterprises that simply wing it. As W. Edwards Deming so famously said (and as Mike Bloomberg popularized): In God we trust, all others bring data.

It is not too great a leap to connect the dots: what works so well for so many successful emerging companies may also be applicable to our country at large. While as a general rule we try and stay away from politics as we fully respect that everyone is entitled to their own point of view, we all know that there is a very important election coming up in a few weeks. We ask all our readers when casting their ballots to think hard about what is at stake and what makes a country successful. We would urge you when deciding how to vote to show respect for collaboration, respect for data and science, respect for inclusiveness, respect for the civil exchange of various ideas, and most of all, respect for each other.

In this issue we have included an important article about the SEC’s expanded definition of “accredited investors.” We applaud the SEC for continuing to increase incrementally the ability of emerging companies to raise capital in private, non-registered offerings. The ability to raise capital efficiently for young companies is critically important for the economy and creating new jobs.

We also have two pieces that focus on the topic of vesting of equity. This is a topic of great interest to anyone involved in building emerging companies and we have included an article as well as an interesting video discussing the ins and outs of vesting and ownership for founders.

Our spotlight on an emerging company in this edition is on a developer of community and utility-scale solar farms called East Light Partners. This is an exciting young company that has had extraordinary success in developing renewable energy projects, primarily in Upstate New York.

As always, we welcome your questions and inquiries. Be sure to visit our website for emerging companies @ mintzedge.com, and please sign up here to receive email alerts when new articles are posted to MintzEdge.

Be safe and be well,
Dan + Sam


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Authors

Daniel I. DeWolf

Member / Chair, Technology Practice; Co-chair, Venture Capital & Emerging Companies Practice

Daniel I. DeWolf is an authority on growth companies and serves as Chair of Mintz's Technology Practice Group and Co-chair of the firm’s Venture Capital & Emerging Companies Practice. He has worked on pioneering online capital-raising methods. He also teaches venture capital law at NYU Law School.
Samuel Asher Effron assists Mintz clients with venture capital and private equity transactions, helping start-ups with legal and business matters. He has clients in a variety of technology sectors, including video gaming, music, virtual and augmented reality, and consumer electronics.