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MintzTech Connect: All Things Technology — September 2023

We hope you had a great summer, and we are looking forward to working with many of you in what is looking to shape up as a robust fall full of significant business activity. We continue to see a strong pipeline of new start-up enterprises, and our first feature in this edition is an important read for anyone planning to start a new business.

One of the first questions that many entrepreneurs ask us when they want to start a new company is whether they should start the entity as a C corporation or an LLC. For most start-ups that will eventually look for VC backing and aspire for massive growth, the default answer generally is to start as a C corp. But the answer for each individual company and group of founders is always more nuanced, and one size may not fit all.

For some entrepreneurs, starting as an LLC and converting to a C corp later may have some intriguing benefits. The most well-known potential benefit is that the entrepreneur may be able to use the early losses of the enterprise to offset other ordinary income. But more intriguingly, when converting to a C corp, a founder’s basis in the converted corporation’s shares is based on the fair market value of the business at the time of the conversion (not the founder’s carryover basis, i.e., not on original founder value which is often zero or close to it). This can have a potentially enormous impact on the 10x basis tax exemption provided under the Qualified Small Business Stock (QSBS) rules. Our first article, “Considering Converting an LLC Into a Corporation? Here are the QSBS Issues You Should Be Thinking About,” delves deeply into this topic and provides important tax planning information for anyone thinking about starting a new business.

Our second article discusses the latest legal decisions regarding cryptocurrencies and whether cryptocurrencies are — or are not — securities subject to SEC regulation. The legal cases adjudicated to date have been contradictory, but clearly, one must tread very carefully in this sector as regulators and prosecutors are increasingly focused on crypto.

Our next feature is a report on our ongoing partnership with Antler, a leading global start-up accelerator, and specifically discusses one of its progenies: peri. Peri has launched simple and easy-to-use at-home tests to identify specific microorganisms in the mouth that may be linked to certain diseases.

And rounding out this issue, our company spotlight is on mePrism, a privacy-minded company that helps consumers control their personal online data.

Be sure to visit our website for emerging companies @, and please sign up here to receive email alerts when new articles are posted to MintzEdge. We thank you for your continuing support.

Be safe + be well, 
Dan + Sam


// Considering Converting an LLC Into a Corporation? Here Are the QSBS Issues You Should Be Thinking About by Gregg Benson, David Salamon, and Dan DeWolf

// Judge Rakoff Puts the Ripple Party on Ice as the Crypto Community and SEC Ponder Their Next Moves by Cory S. Flashner, David G. Adams, Edmund P. Daley, and Patrick E. McDonough

// Mintz and Antler: A Game-Changing Partnership Boosting Legal Support for Startups Everywhere — Including Innovative Health Care Company “peri”

// Industry News: Spotlight on mePrism

// MintzTech Connect Team

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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

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.