All posts in Startups

Angels Descend on D.C.

angel investmentThe Angel Capital Association is hosting its annual summit two weeks from now in Washington, D.C. If you are interested at all in angel investing, I think this will be a great conference to attend.

(Disclosure: I am on the ACA’s Public Policy Advisory Council)

The folks at the ACA have been critical in helping positively influence public policy on angel investing in the last several years.

Just to give you one example that you may or may not recall, but the first iteration of Dodd-Frank would have re-set the “accredited investor” financial thresholds for inflation going all the way back to the 80’s. That proposal, if it had been enacted, would have wiped out literally 3/4ths of all angel investors. The second iteration of Dodd-Frank was worse—it would have required all Rule 506 offerings to first be submitted to the SEC for 120 days for review, and if the SEC didn’t review then states would have been given the chance to review before offerings could go forward.

But for the involvement of the ACA, and folks like Dan Rosen and Senator Maria Cantwell, these things could have happened. Being involved is important. The upcoming ACA summit will be a great way to get started, if you are looking for a way.

Now is a critical time for angel investing in America. The SEC is currently evaluating a number of different issues that will have a dramatic impact on angel investing, such as:

  • The definition of “accredited investor.” It is possible that the SEC will propose to modify this definition to “define out of the game” a huge swath of the population that currently qualifies as accredited. See the ACA’s letter to the SEC.
  • The proposed Regulation D and Form D rules, that will require advance filings of Forms D and onerous consequences to companies if they file to advance file before they “generally solicit” their offerings.

(If you want to see the former Chair of the ACA, Catherine Mott in action, read the transcript of this SEC open meeting in which she questioned the SEC on whether demo days constituted “general solicitation.”) 

Policy makers need the input of people who are active in the early stage company ecosystem.

“We are hosting this meeting in Washington, D.C. for a reason,” ACA’s Chair David Verill said. “The Securities and Exchange Commission is not only assessing the underlying definition of who can be an accredited investor, but is also reviewing significant rules around the JOBS Act involving general solicitation and online crowdfunding platforms. Now more than ever is the time to join with angel colleagues to learn about, to shape, and to nurture this powerful economic engine.”

2014 ACA Summit

Angel Impact: Entrepreneurial and Economic Success

March 26th – 28th

Review the Agenda

If you plan to attend, please let me know and I can try to connect you to friends who will be there.

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Reduce Potential Liability for Data Breaches

Reduce Potential Liability for Data BreachesDWT partner Randy Gainer gave a presentation entitled “How to Improve Data Security and Reduce Potential Liability for Data Breaches.” The presentation focused on the following topics:

  • The risks of cyber attacks
  • Choosing cost-effective security measures
  • Evaluating cyber insurance coverage

Listen to the Webinar

Reduce Potential Liability for Data Breaches Randy Gainer, Attorney, CISSP February 12, 2014

Randy Gainer is a partner in the Seattle office of Davis Wright Tremaine. He represents businesses in litigation and in state and federal administrative proceedings after the businesses have suffered data breaches.

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“Demo Days” and General Solicitation

demo days and general solicitation1I’ve been writing an article on general solicitation, a long one, and doing a lot of research.  As part of that, I found the attached SEC No-Action letter that I wanted to share with everyone, because it directly hits on the question of whether “demo days” constitute general solicitation.

This has been a hot button issue for a lot of people.

You might recall that at the open meeting of the SEC’s Advisory Committee on Small and Emerging Companies held on Tuesday, September 17, 2013, that SEC staff refused to answer the question whether demo days constituted general solicitation.


(The key part starts at the 52:00 minute mark.)

Those who made comments to the SEC’s proposed Reg. D rules have also voiced alarm over the rules’ potentially adverse impact on demo days – a great thing in the startup ecosystem.  Mitch Kapor had this to say:

Practices that have worked well without incident for decades could suddenly become unintentional minefields for honest startups and sophisticated investors alike.  Demo days, where startups present to investors and press, will most certainly be called “general solicitation” by the law firms advising startups (and likely by SEC enforcement as well).  This means that some of the most high profile ways new startups raise money transparently may now cause those same startups to go out of business if the penalties are enforced.

Read the attached SEC No Action Letter, Michigan Growth Capital Symposium (May 4, 1995).  In the letter, the SEC concurs that presenting companies at the symposium won’t be deemed to have generally solicited. However, there are a number of key predicate facts that the SEC relies upon in reaching that conclusion, including “no specific financing details are a part of presentations made at the symposium and no private placement materials are distributed there…”

It is a helpful no-action letter, but I don’t think it will stop the debate.

Michigan Growth Capital Symposium SEC No-Action Letter (May 4, 1995)

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