The High-touch Legal Services® Blog…for Startups!

© 2009-2017 Dana H. Shultz, Attorney at Law

Corporate Personhood May Be More than a Legal Concept

Logo for WSJ.com, which published an article about corporate personhoodCorporate personhood – the idea that business entities may have some of the same legal rights and responsibilities as human beings – is a contentious legal concept. However, in his recent Mind and Matter column in the Wall Street Journal (Our Brains Say Corporations Are People, Too), neuroendocrinologist Robert Sapolsky cited studies showing that as far as the human brain is concerned, corporate personhood is not merely a legal concept.

Quoting a portion of that column (emphasis added): (more…)

Nonbank Lenders Increasingly Attractive to Small Businesses – WSJ

Logo for WSJ.com, which published an article about nonbank lendersNonbank lenders are becoming increasingly attractive to small businesses, according to an article published today in the Wall Street Journal. (Alternative Lenders Peddle Pricey Commercial Loans)

The lenders cited in the article include OnDeck Capital Inc., Kabbage Inc., CAN Capital Inc. and Business Financial Services Inc.

Loans Offered by Nonbank Lenders

Nonbank lenders offer loans that typically are for less than $50,000 and have high interest rates – sometimes more than 50% per year. The article says that such loans, nevertheless, are popular for the following reasons. (more…)

WSJ: VCs Reducing Appetite for Risk

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In an article published today (Venture Capital to Suppress Its Appetite for Risk in 2013), the Wall Street Journal reports that venture capitalists have dramatically lowered their appetite for risk, reducing the power of Internet entrepreneurs who are seeking funding.

The article notes that:

  • In light of disappointing stock-market performance of Facebook, Zynga and Groupon, VCs are investing less in consumer Internet companies.
  • During the past year, valuations have gone down significantly.
  • On a quarter-over-quarter basis, the number of deals, the amount invested and the percentage of “up” rounds all have declined.

(more…)

Equity-Based Crowd Funding: Pro and Con

Logo for WSJ.com, which published an article about equity-based crowd funding

Congress is considering legislation by which the Securities and Exchange Commission would lift limits on private equity investments, letting companies sell equity interests to investors online (“crowd funding”). Today the Wall Street Journal published a debate on this topic (Should Equity-Based Crowd Funding Be Legal?).

(more…)

WSJ: Angel Investors are Getting Harder to Sell

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In an article published today (Chasing the New Angel Investors), the Wall Street Journal discusses why entrepreneurs must work ever-harder to persuade angel investors to invest.

According to the article, although seed and startup angel investment has increased, there are several reasons why that money is more difficult to attract:

  • Since the recession, many angels have become more demanding, looking for proof of marketplace acceptance rather than a hunch that it exists.
  • Angel groups, which syndicate deals among their members, have a more-formal review process that may involve discussions by dozens of potential investors.
  • With less venture capital available, angels are more concerned about whether a company can grow to profitability or a successful exit.

The article’s advice for entrepreneurs: Have something to show, know your business thoroughly, and polish your pitch.

Dana H. Shultz, Attorney at Law? +1 510 547-0545? dana [at] danashultz [dot] com
This blog does not provide legal advice and does not create an attorney-client relationship. If you need legal advice, please contact a lawyer directly.

WSJ: New Industry Hubs Drawing Entrepreneurs and Investors

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In an article yesterday (Where the Action Is), the Wall Street Journal discussed seven centers of innovation across the U.S. – other than well-known locations, such as Silicon Valley and Boston – where entrepreneurs, investors and government are working together to develop specific industries.

Those industries and their locations are:

  • Outdoor Sports Gear – Ogden, Utah
  • Cybersecurity – San Antonio, Texas
  • Information Technology? – Kansas City, Kansas / Missouri
  • Life Sciences – Indianapolis, Indiana
  • Health Care – Nashville, Tennessee
  • Beer Brewing – Asheville, North Carolina
  • Nanotechnology – Albany, New York

Dana H. Shultz, Attorney at Law? +1 510 547-0545? dana [at] danashultz [dot] com
This blog does not provide legal advice and does not create an attorney-client relationship. If you need legal advice, please contact a lawyer directly.

WSJ: Lots of Money for Social Startups

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In an article published yesterday (“Money Rushes Into Social Start-Ups”), the Wall Street Journal reported that VCs are investing in companies that are taking social networking from computers to mobile phones. The rationale, according to the article (emphasis added):

Behind the spurt of new services is also the idea that the phone, carried by people at all times, can reinvent the notion of a social network by sharing more real-time information about where people are, what they’re seeing and even who they’re around.

Other points made in the article: (more…)

WSJ: Web Start-Ups Get Upper Hand Over Investors

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In an article published today (“Web Start-Ups Get Upper Hand Over Investors”), the Wall Street Journal reported (emphasis added) that “As venture capitalists scramble to get a piece of Silicon Valley’s new Web boom, entrepreneurs … are finding they have the upper hand.

Here are some of the points the article makes about the latest Web boom:

  • As VCs search for the next Facebook or Twitter, some entrepreneurs are positioned to have a greater say about how much they raise and deal terms.
  • Bidding among VCs is driving up the price of many deals.
  • Angel investors are driving up the prices of the tiniest early-stage companies.
  • Some entrepreneurs are taking advantage of the situation by seeking the best advisors rather than the greatest amount of money.

Dana H. Shultz, Attorney at Law  +1 510 547-0545  dana [at] danashultz [dot] com
This blog does not provide legal advice and does not create an attorney-client relationship. If you need legal advice, please contact a lawyer directly.

WSJ: Startup Obtains Financing via LinkedIn

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Yesterday the Wall Street Journal published a fascinating article (Dear Contact: Send Cash) about a startup that obtained first-round funding of approximately $350,000 via LinkedIn.

The founder sent an appeal to his 700 contacts, offering ownership of 2% of his company in exchange for approximately $35,000. Within eight days, ten investors (the target number) were lined up

The founder must have had an impressive set of contacts. In any event, I’m impressed – this was a creative approach that saved the founder a huge amount of time.

Dana H. Shultz, Attorney at Law? +1 510 547-0545? dana [at] danashultz [dot] com
This blog does not provide legal advice and does not create an attorney-client relationship. If you need legal advice, please contact a lawyer directly.

WSJ: Specialty Lenders are Lending

In an article published today (Entrepreneurs Find Success With Specialty Lenders), the Wall Street Journal reported that some entrepreneurs who otherwise cannot obtain loans have been able to borrow from banks that specialize in niche industries.

As an example, the article cites Silicon Valley Bank, which caters to high-growth technology and life sciences firms.

This blog does not provide legal advice and does not create an attorney-client relationship. If you need legal advice, please contact a lawyer directly.