Founders University: Basic Tax Concepts


Welcome back to Founders University, our core curriculum designed to provide startup founders with the basics needed to launch a company while minimizing costly missteps or mistakes.


For our next session of Founders University, we provide a quick overview of basic tax concepts as they relate to compensation and investment income. Partner Lynda Galligan gives this overview as a way for founders to understand how stock options get taxed.

Founders Flash: Vive le Digital Currency! Bitcoin at the Vanguard of Looming “Economic Revolution”


This week The Flash checks in from WIRED Money 2015, where the headliners included MIT Media Lab director of digital currency Brian Forde. The most exciting innovations in digital currencies will come from developing countries, where financial infrastructure is not as strong, according to Forde. He believes Western consumers don’t fully appreciate the “economic revolution” that’s upon us in the form of digital currency. To wit: “Today, in 2015, I still can’t use Paypal to send money to friends in Nicaragua,” Forde said at the conference. “But I can send them Bitcoin instantly.”


The Flash also got its crowdfunding fix during a talk by Darren Westlake, co-founder and CEO of leading investment crowdfunding platform Crowdcube. Westlake said the future of crowdfunding is a more democratized platform that will “put the P back into IPO.”


The Flash hears that. These stories and more in this week’s Founders Flash!


Cloud Computing: Litigation


Our examination of common legal concerns in cloud transactions most recently focused on the broad range of government regulation of data that may constrain or alter the relationship between the company and its service providers. Additional legal issues in the cloud computing relationship often involve the rules of e-discovery and electronic evidence.


A company involved in litigation has a duty to comply with information requests, including government and private party subpoenas and discovery rules for anticipated, pending, or active litigation. As in the first two areas of legal concern – contractual issues and regulatory complications – such compliance is complicated by the delegation of control over outsourced data and the potential for multijurisdictional data storage and transfer.

Cloud Computing: Compliance Audits and Cloud Computing


Our examination of common legal concerns in cloud transactions most recently focused on specific contractual issues to resolve before finalizing a cloud provider relationship. Continuing this look at common legal concerns in cloud transactions, we turn our attention to the broad range of government regulations of data that may constrain or alter the relationship between a company and its service providers.


When considering cloud service providers, companies often face special regulatory challenges due to the related loss of direct control over data and infrastructure, and the multijurisdictional nature of many cloud computing offerings.

Founders Flash: Cybersecurity Startups Drawing Increased VC Attention


The Flash knows the importance of protecting important business and personal data from the ever-expanding reach of hackers – and now the market is paying attention, too. Andreessen Horowitz now sees cybersecurity startups as a lucrative tech niche, and Google Capital recently made its first cybersecurity investment. With data breaches taking place on a seemingly daily basis, VCs and other investors are starting to boost funding for all manners of cybersecurity startups.


The Flash also checks in on the Uber/”gig economy” labor fight. The most recent entrant to the ring this week hails from Washington, DC, and has the federal heft to make this a real heavyweight match. On July 15, the U.S. Department of Labor issued an “Administrator’s Interpretation” on the classification of independent contractors. More is sure to come in this slugfest…


Check out these and more in The Flash this week!


Cloud Computing: The Contractual Relationship with a Cloud Service Provider


In our most recent post on cloud computing, we looked at common legal concerns in cloud transactions. Today, we’re expanding on the topic with this post on researching and establishing a contractual relationship with a cloud service provider.


The primary risk of cloud computing is the threat of an operational disruption caused by elements entirely outside of a customer’s control. When companies depend on the cloud for core-business communications or processes, any service interruption can negatively impact business. A company’s cloud-stored data could be irretrievably lost, for example, or a cloud vendor could fail to protect trade secrets or the personally identifiable consumer information the company collects.

Founders Flash: Overdoing the “Party Rounds” Leaves a Lead Investor Gap


The Flash understands that entrepreneurs thrill on having multiple angel investors when fundraising. But too much of such “party rounds” can be a bad thing, as no one investor serves as lead and leaves startups wanting focused help if the company hits a rough patch. The Flash looks at compelling research suggesting that having many angels with no lead investor can be problematic for startups.


The Flash also remains fixated on Uber’s fight with the California labor commission, which seemingly sent a torpedo through the ride-share company’s hull recently when it determined that drivers are in fact employees – not contractors. The Flash has been expecting a forceful response by Uber, and this week we saw the first salvo when the company filed a motion seeking to deny class action status to plaintiffs in a major lawsuit relying on this determination. As we predicted, this one will go on for a while…


These and more in this week’s edition of The Flash!

Founders University: Incentive Stock Options vs. Non-qualified Stock Options


Welcome back to Founders University, our core curriculum designed to provide startup founders with the basics needed to launch a company while minimizing costly missteps or mistakes.


For our next session of Founders University, we share a comparison of Incentive Stock Options (ISOs) and Non-qualified – or Non-statutory – Stock Options (NSOs). In this course, partners John Egan and Lynda Galligan talk about some of the key definitions and common terminology that are used for stock options.

Cloud Computing: Common Legal Concerns in Cloud Transactions


Having recently examined scalability as a key motivation to founders’ use of cloud computing funding, we will now take a look at the various legal issues that may arise from cloud computing-based transactions.


Founders Flash: How Do I[PO] Love Thee? Let Match/Tinder/OkCupid Count the (Billions of) Ways


Though not overly partial to emojis, The Flash <hearts> a savvy IPO play – and that’s just what we’re seeing in the move to conjoin Tinder, and OkCupid for an upcoming IPO. Brought together by IAC/InteractiveCorp as The Match Group, this three-headed online dating hydra is led by Tinder, which may see its valuation top $1B this year. To The Flash, that seems like just the right foundation for wedded bliss.


We also checked in with the key labor issue faced by sharing economy startups and other companies: how and under what conditions an independent contractor must be considered an employee of the parent company. The Flash previously alerted readers to the California labor commissioner’s determination that an Uber driver is an employee of the company – not an independent contractor – and the related implications. Now we’re seeing other startups in the “1099 economy” space – including Instacart and Shyp – moving to reclassify contractors as part-time employees. This issue is surely one to watch.


Check out these and other posts in The Flash!