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Startup Financial Disclosure Laws

5/24/2016

The Wall Street Journal has two articles today that are of interest to shareholders of startup companies, primarily former employees who hold shares of these startups. The articles "Startup Employees Invoke Obscure Law to Open Up Books" and "Own Startup Shares? Know Your Rights to Company Financials" discuss laws that may require some startup companies to deliver certain financial data to shareholders which may help these shareholders value their stock.

Specifically, the articles reference Section 220 of the Delaware General Corporations Law, Section 1501 of the California Corporations Code and Rule 701 of the Federal Securities Act of 1933. These provisions may provide certain shareholders of some private companies the ability to obtain selected financial statements.

Links:
http://www.wsj.com/articles/startup-employees-invoke-obscure-law-to-open-up-books-1464082202

http://www.wsj.com/articles/own-startup-shares-know-your-rights-to-company-financials-1464082203

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Fareed Zakaria: Why is the Number of U.S. Start-Ups Falling?

5/23/2016

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I enjoy watching the Sunday morning political news shows, and I often watch Fareed Zakaria's show GPS (Global Public Square) on CNN. This week he had an interesting segment on the decline of the US startup, and he has an accompanying op-ed piece in The Washington Post. Here's a link to the story:

https://www.washingtonpost.com/opinions/why-is-the-number-of-us-start-ups-falling/2016/05/19/53fe8e04-1ded-11e6-9c81-4be1c14fb8c8_story.html

The piece has some very interesting observations, including that the decline in start-ups may be generational. Baby boomers were great entrepreneurs, the article observes, but succeeding generations have been less likely to start their own companies.

I think it's an interesting piece and worth a read.

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The Steroid Era of Startups is Over - Business Insider Article

5/7/2016

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Business Insider had an article this week called "The steroid era of startups is over -- here's what 8 top VCs think will happen next" that made a number of good observations. In this article, eight venture capitalists discussed how the environment has been changing, and the article identifies a number of ways the changing environment will impact startups. The main categories are:

VCs may not be as supportive in the future
Expenses (and headcount) will be "slashed:
Some companies will fold
Startups that mainly sell to other startups will have problems
Large companies may acquire startups, but only if it's strategic and at a discounted valuation
Some startups will suffer a down round
Other startups will be forced to recapitalize, wiping out early investors and employees
Employees with huge paper profits (from options and/or restricted stock) will suffer
All of the above signals a return to normal

Each category is discussed in the article, with comments from the VCs. It's a good article and worth a read.

Link:
http://www.businessinsider.com/what-happens-when-tech-boom-turns-to-bust-2016-5

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Startup Financial Disclosure Laws

Fareed Zakaria: Why is the Number of U.S. Start-Ups Falling?

The Steroid Era of Startups is Over - Business Insider Article﻿

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The Steroid Era of Startups is Over - Business Insider Article