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

It’s not every day a top tier law firm offers a 91% discount on its legal services. Let’s face it, deals like that are usually reserved for commodity items, and excellent legal advice is no more a commodity than is brain surgery. When everything’s on the line, you want the best lawyer, not the cheapest.

But when our client SCVNGR asked if we’d be interested in participating in one of their groundbreaking new LevelUp promotions, we jumped at the opportunity. LevelUp is SCVNGR’s exciting new pilot for building customer loyalty by combining online daily deals and location-based gaming mechanics.

Here’s how it works. LevelUp works with merchants to create the best deals in your city – say, a special on burritos, rock climbing, or fitness centers. Each business has three levels of deals - Level 1, Level 2 and Level 3. Buying Level 1 not only gives you a great discount, but it automatically “unlocks” Level 2, allowing you to “level up” to a great deal for a second visit. If after the second visit you like what you’re experiencing, you can “level up” again and get a third great deal.

We think this is genius, and we wanted to be a part of the fun. Although LevelUp is usually retail-focused, we worked with SCVNGR to create “LevelUp Your Startup,” a special LevelUp deal for entrepreneurs with great ideas who could use discounted legal and accounting advice as well as coveted access to premier investors.  As part of Level 1, Foley Hoag attorneys will meet with entrepreneurs to help get their companies incorporated with a startup legal package.  Entrepreneurs who buy Level 1 will unlock Level 2, which includes a startup accounting package. Buying Level 2 unlocks Level 3, where top-notch investors like Rich Miner from Google Ventures, Alex Taussig from Highland Capital Partners and folks from Common Angels, Robin Hood Ventures and Dreamit Ventures will take the entrepreneurs out to lunch and hear their pitch.

LevelUp Your Startup launched on April 5th. We offered 10 startups $2,800 worth of legal services for $250 (no, there’s no comma missing there). What’s more, a share of the proceeds of this promotion goes to support a very deserving organization: MassChallenge.  Within about an hour, the deals had sold out.  

Given the numbers involved, it’s probably obvious that in the case of this LevelUp our goal was not necessarily to make money.  Instead, we wanted to be part of a great team and show how an awesome new program could be used to foster our local entrepreneurial ecosystem and help new businesses get off on the right path.  By every measure, LevelUp Your Startup has been a huge success for Foley Hoag, SCVNGR, our new entrepreneurial clients, and MassChallenge.  I think this is where I yell “Woot!”

We had a great kickoff to the new "season" of programs at the EEC on Tuesday night, when we hosted the IEEE Boston Entrepreneurs' Network (ENET) September meeting "Launching Your Successful Company."  There are many more upcoming events of interest to entrepreneurs at the EEC in September, so check out our events calendar.

The slides from the presenters will be posted to the ENET website shortly, so I won't try to summarize them in full, but some interesting take aways from the three presenters:

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Below you'll find my article from the March '09 issue of EEC Perspectives, entitled The End of Gloom and Doom.

I like my gloom and doom as much as the next guy, but a whole year of unrelenting gloom and doom is overdoing it. Looking back on a year’s worth of numbers, it occurs to me that there is a lot to say that is not in the numbers.

Entrepreneurs are like weeds

If you just look at the national numbers you could come to the conclusion that there are fewer deals than last year, that the VCs are taking longer to invest and are investing at lower and lower valuations, and that all of this just acts as disincentive for entrepreneurs to start new ventures. But, anecdotal evidence is to the contrary. I polled some of my partners, and we all agree there is steady stream of new start-ups in all industries. They are not necessarily getting financing from VCs. In fact, the pattern that I see evolving is that entrepreneurs spend a bunch of time (many months) hiking up and down Winter Street to no avail. After that, they figure out other ways to keep moving forward by self-funding and going to family and friends or others with special affinity, and they make do with less. In a number of cases, they seem to me to be happier and more productive once they accept that there will be no VC money and they figure out something else. Entrepreneurs are like weeds; it will take more than a long dry spell to kill them off.

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We present with pleasure the next issue of EEC Perspectives, our periodic look at venture activity in the New England region. With this issue we are back to Series A transactions, featuring those closing during the third quarter of 2008. (Prior issues of EEC Perspectives, which alternate between Series A and later rounds, can be found in the News and Publications section of  the EEC website.)

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Foley Hoag is excited to launch the Emerging Enterprise Center Blog. Here we cover topics that arise from our practice representing technology companies of all stripes, including issues facing startups, financed companies, and the entrepreneurial ecosystem as a whole. The Emerging Enterprise Center at Foley Hoag LLP is specifically equipped to work with the entrepreneurial community in tackling legal questions and complex business issues that technology companies face. Our lawyers are here to work with you as you strengthen your business plans, seek out funding, grow your business and eventually go public or merge with other businesses. We want to be your go-to source for advice and partnership during the entire process and beyond.

We also want to be a source of market analysis and insight, especially during these tough economic times. An active discussion about these topics and issues is what we’re hoping to foster so please don’t hesitate to ask questions or post your thoughts.

We look forward to the conversation.

The EEC's analysis of Series A transactions in New England for Q2 just came out.  It shows what is shows -- that there has been a decline in Series A deals compared to the same period in 2007.  As I look at our publication (which covers data through June -- three months ago), I have to note that so much changed so dramatically in Q3 that Q2 seems like it was thirty months ago.  We are in the process of finalizing our data for Q2 Series B and later stage financings and expect it to come out in the next couple or three weeks.  I have a sinking feeling that it also will feel like history rather than current events.  We have begun to gather the Q3 data but wont really know the numbers until well into November.  Stay tuned.  My sense is that (1) the number of Series A deals will continue to fall and (2) that we may start to see terms becoming more investor friendly, but don't hold me to it.