Our Venture BestTM group works closely with entrepreneurs, and with their venture capital and angel investors, to help new, high-growth companies find financial backing and grow their businesses.
We help companies and investors make connections, structure and close transactions, and maximize returns. We also counsel early-stage businesses on their financial, organizational, and regulatory needs as they grow.
We represent start-ups and emerging technology companies in many different industries, including biotechnology, information technology and software, clean tech, pharmaceuticals, medical devices, electronics, and other high-technology sectors. Members of our Venture Best team have themselves been venture-backed entrepreneurs, as well as angel and venture capital investors, giving us great depth of insight on both the legal and business sides of the start-up environment.
Our core services include advising clients on:
- Business formation, capitalization, and financing strategies
- Employment and consultant documentation
- Customer/vendor contracts
- Licensing and material transfer agreements
- Negotiation of term sheets, debt, and venture financing documents
- A wide array of post-start-up legal and business matters, from intellectual property to corporate, environmental, employment and immigration, and tax issues
We go beyond core legal services to provide crucial value-added services, such as advising on business plan and pitch development, making investor introductions, and team-building referrals. The extensive network of contacts we’ve cultivated throughout the venture capital ecosystem enables us to help each entrepreneur find the right investors — and vice versa.
We also understand that raising money, building teams, growing businesses, and innovating “between the coasts” is different than in the major venture capital centers such as Silicon Valley and New York. While we have experience in these major markets, our “between the coasts” focus means Michael Best can also provide entrepreneurs with strategic, sophisticated, affordable counsel across the country.
Avoiding Common Pitfalls
Thanks to our experience working with emerging as well as established businesses, we know how to help entrepreneurs succeed while avoiding (or remedying) common mistakes such as those outlined below. A more detailed discussion is available on our Venture Best site, along with other resources for entrepreneurs and investors.
Type of Entity
For entrepreneurs who hope to receive outside venture or angel capital, incorporating as a C-corporation is usually best. Most venture capital funds and angel funds will only invest in C-corporations for tax and administrative reasons. A limited liability company or S-corporation can be converted into a C-corporation if necessary.
We help entrepreneurs who are raising capital navigate the plethora of securities laws that apply to, for example, selling shares of the company’s common stock or other securities to family and friends; providing proper disclosure documents; advertising and solicitation; and the definition of an “accredited investor.” Violations can have severe consequences, such as fines, penalties, and criminal sanctions.
Prior Employment Agreements
When an entrepreneur starts working on their new idea or business while still employed by another company, there may be issues related to employment agreements with invention assignment, non-competition, or other restrictive clauses. Michael Best applies our combined experience in employment law, intellectual property law, and start-up businesses to help entrepreneurs understand and navigate this potentially thorny issue.
Taxation of Restricted Stock
Founders of start-up companies generally hold restricted stock, subject to vesting (a condition often required by investors). Under certain tax laws, these shares of stock are not taxable when first received — but if the company is successful, the shares could be worth a lot more by the time they vest and become taxable. This situation can be avoided, and additional tax benefits gained, by filing an 83(b) election with the IRS within 30 days after receipt of the shares of restricted stock.
Trademarks and Patents
Most entrepreneurs seek legal assistance with the complex process of applying for patents, but they may not realize they should also discuss potentially patentable ideas with legal counsel before disclosing them to anyone else. Trademark registration is easier, by contrast, and thus some tackle the trademark process without legal counsel. This can lead to mistakes such as incorrectly submitted trademark applications, resulting in loss of rights and the need to refile. We help clients with all aspects of intellectual property law, from applications to licensing and protecting against infringement.