Entrepreneurship

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Greetings from Lyon, France, where I am presenting a work-in-process at an international conference on microfinance and crowdfunding organized by the Groupe ESC Dijon Borgogne (Burgundy School of Business) Chaire Banque Populaire en Microfinance.  As the only legal scholar, the only U.S. researcher, and the only presenter with an orange-casted arm (!), I stand out in the crowd.  So what is a one-armed U.S. law professor like me, with limited French language skills, doing in a place like this on my spring break?  Among other things, I am:

  • Broadening my academic and practical view of the world of business finance;
  • Making new connections, personally and substantively;
  • Getting different, pointed feedback on my ongoing crowdfunding work; 
  • Offering assistance and new perspectives (U.S.-centric, legal, regulatory, etc.) to scholars and industry participants from a spectrum of countries; and
  • Securing potential partners and resources for future projects.

Although most of the participants speak English, I am still living at the edge of my socio-lingual comfort zone.  It helps that I am an off-the-charts extrovert.  Regardless, however, the benefits of attendance have been immediate and meaningful.

Questions for our readers:

Do you participate in interdisciplinary research conferences?  

If not, why not?  

If so…

Today in my Energy Law Seminar, I sprung an exercise on my class.  I gave each member of the class a confidentiality and non-disclosure agreement (NDA).  Half the class works for a venture fund and the other half works for a technology inventor who was seeking investment. (I give them some more details about the proposed deal the NDA would help facilitate. (The exercise is based on an issue I worked on some years ago.)

I instruct them to read the  NDA, then they can meet with others assigned the same side. They can come up with their negotiating points, then I turn them loose with the other side.  

I always enjoy watching students work like this.  They are forced to react, and it lets them be a little creative.  I also like this exercise, because it has multiple layers. They get to ask me me what they need to know for the business points, and I later get to talk to them about the options they may not have considered.  

I have done this a few times, and the students always negotiate what they see as the key issues. Their issue spotting is usually good, but they…

As many of you know, both I and my co-blogger Joan Heminway have written several articles on crowdfunding. My articles are available here and Joan’s are available here. I think that a properly structured crowdfunding exemption (unfortunately, not the exemption Congress authorized in Title III of the JOBS Act) could revolutionize the finance of very small businesses. 

Professor Darian M. Ibrahim, of William & Mary Law School, has posted an interesting and important new paper on crowdfunding, Equity Crowdfunding: A Market for Lemons? It’s available here.

Professor Ibrahim discusses two types of “crowdfunding” approved by the JOBS Act: (1) sales to accredited investors pursuant to SEC Rule 506(c), adopted pursuant to Title II of the JOBS Act; and (2) sales to any investors pursuant to the crowdfunding exemption authorized by Title III of the JOBS Act, but not yet implemented by the SEC. I don’t think the former should be called crowdfunding, but many people call it that, so I’ll excuse Professor Ibrahim.

Title II “Crowdfunding”

Professor Ibrahim points out that traditional investing by venture capitalists and angel investors is characterized by contractual controls and direct personal attention to the business by the investors. This allows the investors…

Startupstash-icon-90x90

Via an Ethan Mollick (Wharton) tweet, I was recently introduced to Startup Stash.

Startup Stash is a beautifully simple set of curated resources for entrepreneurs. The categories of resources range from Naming to Hosting to Market Research to Marketing to Legal to Human Resources to Finance. And more.

As a law professor, I was obviously most curious about the legal resources. The list has the controversial and well-known Legal Zoom, but also has some relatively unknown resources. For example, UpCounsel (“get high-quality legal services from top business attorneys at reasonable rates”) was new to me. You can see the full list of legal resources here.

As previously stated, the Startup Stash list is curated, so there are only 10 legal resources, all of which look interesting, if also potentially dangerous for those without legal training. As I tell my business students, an ounce of prevention is worth a pound of cure and consulting with a knowledgeable attorney early in the start-up process can be invaluable. 

I serve on the Tennessee Bar Association Business Entity Study Committee (BESC) and Business Law Section Executive Committee (mouthfuls, but accurately descriptive).  The BESC was originated to vet proposed changes to business entity statutes in Tennessee.  It was initially populated by members of the Business Law Section and the Tax Law Section, although it’s evolved to mostly include members of the former with help from the latter.  The Executive Committee of the Business Law Section reviews the work of the BESC before Tennessee Bar Association leadership takes action.

Just about every legislative session of late, these committees of the Tennessee Bar Association have been asked to review proposed legislation on benefit corporations (termed variously depending on the sponsors).  A review request for a bill proposed for adoption for this session recently came in.  Since I serve on both committees, I get to see these proposed bills all the time.  So far, the proposals have pretty much tracked the B Lab model from a substantive perspective, as tailored to Tennessee law.  To date, we have advised the Tennessee Bar Association that we do not favor this proposed legislation.  Set forth below is a summary of the rationale I usually give.

On December 22 and again on January 9, I posted the first two installments of a three-part series featuring the wit and wisdom of my former student, Brandon Whiteley, who successfully organized a student group to draft, propose, and instigate passage of Invest Tennessee, a state crowdfunding bill in Tennessee.  The first post featured Brandon’s observations on the legislative process, and the second post addressed key influences on the bill-that-became-law.  This post, as earlier promised, includes Brandon’s description of the important role that communication played in the Invest Tennessee endeavor.  Here’s what he related to me in that regard (as before, slightly edited for republication here).

I have just returned from Dublin, which may be one of my new favorite cities. For the fifth year in a row, I have had the pleasure of participating as a mentor in the LawWithoutWalls (“LWOW”) program run by University of Miami with sponsorship from the Eversheds law firm. LWOW describes itself as follows:

LawWithoutWalls, devised and led by Michele DeStefano, is a part-virtual, global, multi-disciplinary collaboratory that focuses on tackling the cutting edge issues at the intersection of law, business, technology, and innovation.  LawWithoutWalls mission is to accelerate innovation in legal education and practice at the same time.  We collaborate with 30 law and business schools and over 450 academics, students, technologists, venture capitalists, entrepreneurs, business professionals, and lawyers from around the world. We seek to change how today’s lawyers approach their practice and how tomorrow’s lawyers are educated and, in so doing, sharpen the skills needed to meet the challenges posed by the economic pressures, technologization, and globalization of the international legal market. We seek to create the future of law, today. Utilizing a blend of virtual and in-person techniques, LawWithoutWalls offers six initiatives: LWOW Student Offerings,LWOW Live, LWOW INC., and LWOW Xed…

A few weeks ago, I described to you a really special extracurricular project undertaken by one of my students, Brandon Whiteley, now an alum, this past year.  The project?  Proposing and securing legislative passage of Invest Tennessee, a Tennessee state securities law exemption for intrastate offerings that incorporates key features of crowdfunding.  The legislation became effective on January 1.

In that first post, I described the project and Brandon’s observations on the legislative process.  This post highlights his description of the influences on the bill that became law.  Here they are, with a few slight edits (and hyperlink inserts) from me.

I had very limited time at AALS this year (unfortunately) but I still walked away with some great ideas (and a chance to say hello to a few, but not enough, friendly faces).  I am borrowing from many ideas shared in the panel cited below, as well as a few of my own.  As many of you prepare to teach BA/Corporations for the spring (or making notes on how to do it next time), here are a few fun new resources to help illustrate common concepts:

  • HBO’s The Newsroom.  A hostile takeover, negotiations with a white knight– all sorts of corporate drama unfolded on HBO’s Season 3 of The Newsroom.   I couldn’t find clips on youtube, but episode recaps (like this) are available and provide a good reference point/story line/hypo/exam problem for class.
  • This American Life– Wake Up Now Act 2 (Dec. 26, 2014).  This brief radio segment/podcast tells the story of two investors trying to reduce the pay of a company CEO.  The segment discusses board of director elections, board duties, board

    • …

    This week I received the notice below from Professor Jason Gordon. Professor Gordon is a legal studies and management professor at Georgia Gwinnett College, School of Business. As explained below, he is offering copies of two entrepreneurship books that he thought might be useful to BLPB readers.  

    Dear Colleagues,

    I recently published two texts entitled Business Plans for Growth-Based Ventures and Understanding Business Entities for Entrepreneurs and Managers. These books are designed for use by clinical law professors and as a supplement in entrepreneurship courses. The second text concerns entity selection considerations, but includes entity funding and conversion considerations and specific considerations for startup ventures.

    The texts also contain supplemental electronic material available for free at TheBusinessProfessor.com.

    If any of you would like a free copy of either text in Amazon e-book format, please send me your email address at jgordon10 [at] ggc [dot] edu.

    A preview of the Business Plans E-Book is available here.

    A preview of the Business Entities E-Book is available here.