Articles
Our knowledge, distilled.
Every step of the way, startups have a lot to think about. We help ease that burden by considering all the angles and providing clients with clear, forward-looking advice. We know just how quickly the startup landscape can change, so we proactively outline emerging issues and provide actionable recommendations for managing the challenges and opportunities those developments present.
Crowdfunding: What It Is and When to Utilize It for Your Business
Crowdfunding offers several benefits that make it an attractive option for startups. Understanding these advantages as well as the limitations of crowdfunding can help entrepreneurs determine when crowdfunding is the preferable means of fundraising for their ventures.
Estate Planning for Founders - Part II: Planning with Qualified Small Business Stock
If you own stock that is QSBS, you are probably aware that you may be eligible to receive a significant exclusion on capital gains taxes when you sell your company. What founders do not often know is that they can multiply this exemption using certain types of trusts.
Savings Plans for Startups
Opening a retirement savings plan for employees (including founders!) is often a low-priority issue for startups and small businesses, but several states, including California, are trying to change that.
Don’t be Fooled: Employers Cannot Circumvent Wage and Hour Rules by Classifying Workers as Contractors!
Although companies may be tempted to classify workers as contractors to circumvent wage and hour rules, misclassification of employees can lead to significant legal liabilities, including back payment of wages, taxes and penalties.
Estate Planning for Founders – Part I: The Core Estate Plan
The fundamentals of an estate plan include a Revocable Trust, a Will, Powers of Attorney and an Advance Health Care Directive. With these documents, you can proactively plan for the future and make critical decisions for yourself, your family and your company.
Choosing the Wrong Business Structure: A Startup’s Death Sentence?
Choosing the wrong business structure when starting your business can set your business on a path to failure before it even gets started.
Authorized vs. Issued Shares
Our startup clients are sometimes asked by investors or government agencies to provide their number of authorized and issued shares—the difference between the two isn’t always obvious but is critical to understand.
How This Multimillion-Dollar Tax Benefit Can Slip Through Your Fingers: Don’t Miss Out!
The Qualified Small Business Stock (QSBS) status under Section 1202 of the Internal Revenue Code allows for a 100% capital gain exclusion on the sale of small business stock, up to certain limits; however, maintaining this status requires strict adherence to several conditions.
Understanding the Basics of Cap Table Math in Startups
Capitalization tables, colloquially known as cap tables, are the foundational ledgers that illustrate a startup’s ownership structure and equity distribution. They serve not only as a historical record but also as a predictive tool for future equity changes. Cap tables are invaluable because they encapsulate the potential impact of financial decisions on equity dilution and ownership shifts.
M&A Investment Bank Engagement Letters
The investment bank engagement letter memorializes the relationship between a company and an investment banker as it relates to the potential sale of that company. A well-drafted engagement letter, among other things, clarifies the scope of the transaction, the specific services provided by the investment bank and the specific circumstances in which the investment bank receives its fee.
Pillsbury Releases Climatetech Investment Trends Report
Pillsbury has published the first installment of a new three-part climatetech research series based on PitchBook’s proprietary Venture Monitor methodology, also featuring exclusive commentary from three of the firm’s leading energy transition lawyers. “Climatetech: Investment Trends, Market Analysis & Authoritative Commentary” analyzes investment and exit trends within this burgeoning field.
Don’t Make the Mistake of Classifying Your Employees as Independent Contractors in California
Misclassification of employees as independent contractors can put you at risk of an audit or lawsuit and be expensive, time-consuming, and limit or delay your ability to raise capital.
BOSS Lab
As part of our commitment to help increase access and opportunity for Black-owned startups, Pillsbury formed the Black-Owned Startup Support (BOSS) Lab to address the systemic inequities that have resulted in Black founders representing only 1 percent of venture-backed startups.
A Reminder for Would-Be Founders: It Takes Time to Raise Money
Startups and other companies seeking financing often look to venture capital firms to raise funds and provide strategic assistance in the growth of their business. Founders should be aware that the funding process can take longer than anticipated.
Down Rounds—Potential Liabilities and Strategies to Address Them
As venture-backed companies increasingly face the prospect of a down round, directors, management and controlling shareholders must understand the lurking liabilities and follow appropriate procedures.
Episode #9: Virtual Currency, Digital Securities and Stablecoins (Daniel Budofsky)
Daniel Budofsky joins host Joel Simon to talk about cryptocurrencies—including Bitcoin and stablecoins—as well as digital securities and the death rattle of the SAFTs and ICOs.
Are SAFEs Dangerous?
Simple Agreements for Future Equity (SAFEs) were first introduced in late 2013 as a tool for startup companies, particularly those in early stages, to raise capital prior to a preferred equity financing and as an alternative to raising capital through convertible notes.
Priced Rounds and the Road to Increased Certainty
Most things that are done well require patience, time and effort. Scrambled eggs are better when you cook them low and slow. Priced rounds require a significant amount of upfront accounting but give you a better picture of how much your company is worth and consider possibilities for the future. But sometimes you’re starving, and you need breakfast. Sometimes you’re struggling, and you need cash fast.
VC Update—The Return of the Down Round
COVID-19 has brought back financing terms not seen in the VC market since the last financial crisis.
Foreign Investment Issues for Startup
U.S. companies considering foreign investor financing should assess the potential that the Committee on Foreign Investment in the United States (CFIUS) may have jurisdiction to review, and potentially disallow certain investments in U.S. companies on national security grounds.
SBA to Adjust Small Business Size Standards for Inflation
On July 18, 2019, the U.S. Small Business Administration (SBA) issued an interim final rule adjusting the revenue-based size standards for small business to account for inflation. The rule affects all small businesses, and will take effect on August 19, 2019.
Small Business Runway Act to Become Effective January 6, 2020
On December 5, 2019, the U.S. Small Business Administration (SBA) issued a final rule to implement the Small Business Runway Extension Act of 2018, which extends the period, from three to five years, for contractors under receipts-based size standards to determine eligibility for small business size status, including for set-aside contracts.
SBA Issues Final Rule Impacting Small Business Regulations
On November 29, 2019, the U.S. Small Business Administration (SBA) issued an extensive final rule that made numerous revisions to its small business regulations, including limitations on subcontracting and compliance with small business subcontracting plans. (See 84 Fed. Reg. 65647-65666). This final rule, which becomes effective on December 30, 2019, implements provisions of the National Defense Authorization Acts (NDAA) of 2016 and 2017 and the Recovery Improvements for Small Entities After Disaster Act of 2015. The final rule makes multiple changes to the SBA’s regulations, the most significant of which are described below.
A Rising Tide May Lift All Boats: SEC Adopts Rule 163B, Permitting All Issuers to “Test the Waters”
Effective as of December 3, 2019, under new Rule 163B (Rule 163B) adopted by the Securities and Exchange Commission (the SEC), any issuer contemplating a public offering of its securities, and those authorized to act on the issuer’s behalf, including underwriters, will be permitted to engage in oral or written communications with certain potential investors in order to gauge market interest in the offering on a confidential, commitment-free basis.