Emerging Enterprise Center Blog - Commentary and Analysis For Entrepreneurs and Startups

I have already tried to attack the delicate subject of the use of legal forms once. Certainly one of the more abused "forms" is the nondisclosure agreement or NDA. Clients often like to get a "standard" NDA which they then apply in all sorts of circumstances. Some clients are very savvy about NDAs and really know the issues and how to edit and negotiate them. Some clients have themselves developed a set of very sophisticated NDA forms covering the universe of business circumstances with which they deal. For may reasons, it is really nice to have clients who can and do deal with their own NDAs. For one, the need for an NDAs tends to come up fast and clients sometimes do not want to slow down a deal to negotiate one. This is especially true if getting their lawyer involved will mean the other party gets their lawyer and soon cycle times start going up. But, if you are not one of those clients that knows, you can make missteps. Here is an example:

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One of my favorite quotes is from Steve Jobs. I believe he said, "those overnight successes sure take a long time." As I, and others, have noted, the VC investment model is based on a ten year cycle of fund raising, investing and exiting. This model works well for a lot of companies, but one size does not fit all. A quick look at my client base, suggests a couple of issues with the time dimension of the VC model. (There are, of course, other dimensions to be considered such as the amount of money needing to find a home etc.)

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Twitter is still the hottest thing going, and the odd thing is that I have become something of a convert. After a long time, I got to place where I realized that it is useful and has different uses for different people.

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We  issued the latest edition of EEC Perspectives this week, looking at the first quarter of 2009.  I had the task of writing the (admitedly, somewhat rambling) cover piece titled "Get Your Pole Vaults Out," which I have pasted after the jump and welcome any comments on.   As you will see, numbers were down, but New England was not hit nearly as bad.  There have been a number of thought provoking blog posts about the numbers by others, for example:

Michael Greeley at Xconomy 
Furqan Nazeeri at Altgate
Adeo at TheFunded

Of course, beyond the broad numbers (which you can find elsewhere), their is valuable detail in EEC Perspectives about valuations and deal terms during the first quarter.      

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In the spirit of looking for good news on the economic front, here is something that seems more solid to me than other indicators I have pointed to before. There is more good stuff on my desk today than there was just a couple months ago. When I talk to other business lawyers (as opposed to litigators) here in Boston, they tell the same story. Incredibly, when I look at the actual stats for our firm’s business department, the hard cold numbers confirm the story. Why should you care? Because law firm activity, at least in the corporate finance area, is a lagging indicator of client activity. So, if anecdotes and statistics are right, the corner has been turned.

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I have just finished reading yet another article on the subject of the impending revival of the IPO market for venture financed companies. I also recently heard a partner in a prominent Massachusetts law firm, explain that the IPO market for venture financed companies was going to “come back” this fall. The recent IPOs of Rosetta Stone and Bridgepoint Education (neither of which was venture financed) seems to have people panting. Oh, yea, and there was a Chinese company that went public on the NASDAQ recently. Hence all the titilting trailers hoping to foment excitement for the movie to be released this fall. There has been a lot of discussion about why the IPO market is in the dumps, and it cannot be separated from the general economic collapse we are all experiencing, but people seem to be focusing on a few items as if “fixing” these will somehow bring back IPOs. It is not at all clear that these discussions are focusing on the right issues.

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One of o the issues that has plagued directors of all sorts of companies is the potential for personal liability. Over the last several decades, Delaware has enacted provisions in its corporate law that can limit the liability of directors and permit a corporation to provide indemnification to directors. One thing that has always been a “hole” in these protections has been that they depend upon having and keeping in place certain bylaw and charter provisions. To put a fine point in it, Delaware corporations have been able to change existing bylaw and charter protections to deny them to directors, who thought they were protected. Delaware has made an important change (effective August of this year) to improve the protection of directors. See our firm’s client alert on this topic which says in relevant part: “The statute now explicitly prohibits the elimination or impairment of any indemnification and advancement rights provided in the corporation’s charter and by-laws once the act or omission in question has occurred. Indemnification and advancement rights could only be eliminated or impaired retroactively where the by-law or charter provision, existing at the time of the act or omission in question, expressly authorized such elimination or impairment.”

In yesterday’s VentureWire there were two articles indicating more signs of life in the entrepreneurial world. One had to do with M&A activity and the other with the NVCA ‘s efforts (such as they are) to bring back IPO activity.   Based on my own subjective experience, ther is more postive buzz than there has been for some time.  These two articles fit this mode. 

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