MintzTech Connect Industry News - September 2017

By Daniel I. DeWolf, Samuel Asher Effron

Dear Readers, 

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.

Our first article in this edition is about SAFEs, which stands for Simple Agreement for Future Equity. SAFEs have become very popular as a legal instrument for use in the first round of funding for many enterprises, and they do indeed have a very catchy name. But the gamesmanship of this catchy name seems to mask the true nature of what the legal instrument is, when its use is appropriate, and whom it protects. Some people think they are notes (they are not); and some people think they should be used in crowdfunding (which is problematic). With all this confusion about what a SAFE is (and is not), we thought it would be useful to set out the pros and cons of this legal instrument so everyone can get a better understanding of what exactly is this pre-paid contract for future equity, which is now commonly called a SAFE.

Our featured company in this edition is QUIP. QUIP plans to revolutionize the toothbrush industry in a way similar to what Dollar Shave Club did to the shaving industry. This is a company to watch.

Additionally, we have two thought provoking articles regarding (i) the continuing challenges to entrepreneurs who are immigrants and need visas, and (ii) a recent tax court decision that may affect investment planning for non-U.S. investors in U.S. enterprises.

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

Sincerely yours,
Dan + Sam

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    • Viewpoint Topics

  • Venture Capital & Emerging Companies
  • Technology

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  • Daniel I. DeWolf
  • Samuel Asher Effron

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    Authors

    Daniel I. DeWolf

    Daniel I. DeWolf

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

    Daniel I. DeWolf is a leading authority on growth companies and venture capital law — and has worked on pioneering online capital-raising methods. He is immersed in the national and international ecosystem of emerging companies and investors focused on start-ups. He has also been a member of NYU Law School’s faculty since 2003, where he teaches venture capital law.
    Samuel Asher Effron

    Samuel Asher Effron

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

    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.