Tag Archives: venture capital

Crowdfunding Back On Track — As Milk Train, Not TGV

Crowdfunding Back On Track — As Milk Train, Not TGV

A few months ago, in the heat of debate over the JOBS Act in Congress, I penned an in-depth critique of the portion of the JOBS Act seeking to legalize crowdfunding in the United States. As I argued, the version of the JOBS Act initially approved by a bipartisan majority in the House of Representatives was a brash experiment in targeted radical deregulation of financial markets that would have come on the heels of one of the worst economic disasters in American history — itself attributable to deregulation with inadequate oversight — while the asthmatic U.S. economic recovery continued to wheeze and stumble through the smoldering wreckage of once-mighty financial institutions.

As background, JOBS Act-style crowdfunding legislation — which would more properly be dubbed “crowd investing” or “equity crowdfunding” to differentiate it from other models such as Kickstarter, a funding platform for creative projects — is a form of market deregulation aimed exclusively at investors who by definition have assets or income placing them squarely in the middle class and are making investments so small that in reality they have neither the leverage nor the economic incentive to demand adequate disclosure by issuers. As I wrote previously, an economics professor could hardly dream up a better textbook example of market failure for a final exam. Continue Reading

WSJ – Five Intellectual Property Mistakes Startups Should Avoid

WSJ – Five Intellectual Property Mistakes Startups Should Avoid

IP ownership gets complicated thanks to the natural fluidity of startups as business enterprises: A developer may start out with a side project, bring some of that knowledge to bear on a consulting engagement, and ultimately found or join a related startup.Continue Reading

The Great Crowdfunding Train Wreck of 2013

The Great Crowdfunding Train Wreck of 2013

What sort of business operators can we predict will be disproportionately drawn to using a funding mechanism that is designed from the ground up to leverage a large number of middle-class individual investors with minimal bargaining power under circumstances involving minimal disclosure, toothless corporate governance and little-to-no liability to shareholders?Continue Reading

Keep It Under Your Hat: Valuation Caps and the $650 Million Sale of MySpace for $125 Million

Keep It Under Your Hat: Valuation Caps and the $650 Million Sale of MySpace for $125 Million

Valuation caps can shape the fundamentals of an exit, redistribute value among stakeholders, or even kill a deal altogether. Never missing an opportunity for a good war story, I’d like to revisit one high-profile transaction, the $650 million acquisition of MySpace by Fox Interactive Media in 2005.Continue Reading

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