Venture Capital Law
Venture Capital refers to the financial capital offered to startup companies in their early stages that have a high potential for growth after the initial round of growth funding, commonly known as seed funding. These companies are targeting for eventual initial public offerings or even a trade sale.
They are interested in venture capital because most of these companies are too small to raise adequate capital in the public markets, procure bank loans, or even total debt offerings. Since the investment is high risk, most venture capitalists acquire considerable control over decisions of the company and also a major portion of the ownership of the company.
Attorneys at SBEMP (Slovak, Baron, Empey, Murphy & Pinkney) law firm provides professional legal advice and services to clients in Palm Springs, Palm Desert, Rancho Mirage, Inland Empire, Orange County, Coachella Valley, Costa Mesa, San Diego, New Jersey, New York, and surrounding locations.
Financing and M&A Transactions
Venture Capital (VC) law includes several financing and M&A transactions, containing public/private and private/private mergers, along with, extensive strategic partnering transactions (i.e., licensing matters, acquisitions, Original Equipment Manufacturers (OEM), technology development partnerships and other joint ventures) and reseller and Value Added Reseller (VAR) arrangements.
This kind of law also includes many non-VC financing transactions which involve the public and private sale of equity securities and debt. Attorneys serving as primary counsel to several developing company clients are usually considered as outside general counsel.
These attorneys offer extensive operational counsel on a variety of matters that are fundamental for the developing company and its investors, including matters of employment, issues of compensation, protection of intellectual property, monetization and enforcement, and policy work. Comprehending the client’s technology and the market in which it competes is vital for the success of these operations.
Startups and Tech Companies
Young companies that are interested in venture capital generally have rare, highly sought after qualities, for instance innovative technology, the potential for fast growth, or exciting models of business and management teams. Due to the high risk and the requirement for high returns, venture funding is a costly capital source for companies and explains its popularity in rapidly-growing areas like technology including cleantech and the life sciences.
Depending on a venture capital legal practice’s availability of resources and size, startup clients may depend on them for nearly everything legal and quasi-legal. Entrepreneurs often involve their legal counsel in all of their new projects and investor clients generally refer their portfolio companies to the legal counsel.
Due Diligence & Venture Capital Law
Prior to considering investing in a startup, your investment attorney should conduct a thorough due diligence check to look for any potential liabilities and make sure that everything within the company is as it appears. A crucial part of this process is the legal opinion on the company given by an outside investment lawyer.
This opinion will give an impartial assessment of procedures and records relating to the formation of the company, make sure that corporate capitalization and governance are in order, and investigate that the company has the legal authority as well as approval to enter into a VC funding transaction. This subject can be contentious—startups are concerned about the expense of such an opinion—but it is nevertheless vital.
Venture Capital Financing Contracts
The investment contract is a complicated legal instrument that consists of a number of key documents. As an investor, it is essential to negotiate the terms with the assistance of an investment lawyer who has a lot of experience to ensure that the terms are in your favor.
Lawyers at the SBEMP law firm serve clients from Palm Springs, Palm Desert, Rancho Mirage, Inland Empire, Orange County, Coachella Valley, Costa Mesa, San Diego, New Jersey, New York, and nearby locations for a range of legal practice areas.
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SBEMP LLP is a full service law firm with attorney offices in Palm Springs (Palm Desert, Inland Empire, Rancho Mirage, Indian Wells), CA; Indian Wells, CA; Costa Mesa (Orange County), CA; San Diego, CA; New Jersey, NJ; and New York, NY.
DISCLAIMER: This blog post does not constitute legal advice, and no attorney-client relationship is formed by reading it. This blog post may be considered ATTORNEY ADVERTISING in some states. Prior results do not guarantee a similar outcome. Additional facts or future developments may affect subjects contained within this blog post. Before acting or relying upon any information within this newsletter, seek the advice of an attorney.
