Month: March 2019

As the saying goes, where you stand on an issue often rests on where you sit. Translated into startup law and finance, your views on how to approach fundraising are often heavily influenced by where your company and your investors are located. As a startup lawyer at Egan Nelson LLP (E/N), a leading boutique firm focused on tech markets outside of Silicon Valley — like Austin, Seattle, NYC, Denver, etc. — that’s the perspective I bring to this post. 

At a very high level, the three most common financing structures for startup seed rounds across the country are (i) equity, (ii) convertible notes and (iii) SAFEs. Others have come and gone, but never really achieved much traction. As to which one is appropriate for your company’s early funding, there’s no universal answer. It depends heavily on the context; not just of what the company’s own priorities and leverage are, but also the expectations and norms of the investors you plan to approach. Maintaining flexibility, and not getting bogged down by a rigid one-approach-fits-all mindset is important in that regard.

Here’s the TL;DR: When a client comes to me suggesting they might do a SAFE round, my first piece of advice is that a convertible note with a long maturity (three years) and low interest rate (like 2 percent or 3 percent) will give them functionally the same thing — while minimizing friction with more traditional investors.

Why? Read on for more details.

Convertible notes for smaller seed rounds

Convertible securities (convertible notes and SAFEs) are often favored, particularly for smaller rounds (less than $2 million), for their simplicity and speed to close. They defer a lot of the heavier terms and negotiation to a later date. The dominant convertible security (when equity is not being issued) across the country for seed funding is a convertible note, which is basically a debt instrument that is intended to convert into equity in the future when you close a larger round (usually a Series A). The note’s conversion economics are more favorable than what Series A investors pay, due to the greater risk the seed investors took on.

Source: Tech Crunch

Savvy early-stage startup founders are making plans to attend our flagship event, Disrupt San Francisco 2019, on October 2-4 at Moscone North. It’s three jam-packed days of connection, inspiration and discovery that you don’t want to miss. But here’s a hot tip for founders who want to wring every drop of opportunity out of their time at Disrupt. Apply to be a TC Top Pick. It’s easy to do, and it’s free.

Earning our TC Top Picks designation is a highly competitive and curated process. TechCrunch editors will thoroughly review each application and select up to five standout startups in each of the following categories: AI/Machine Learning, Biotech/Healthtech, Blockchain, Fintech, Mobility, Privacy/Security, Retail/E-commerce, Robotics/IoT/Hardware, SaaS and Social Impact & Education.

All TC Top Picks receive a free Startup Alley Exhibition package, prime real estate in the Startup Alley exhibition hall and invitations to VIP events. You’ll also be interviewed by a TechCrunch editor on the Showcase stage. The Top Pick startups garner an intense amount of media and investor attention, which can take your business to the next level. But hey, don’t take our word for it. Take it from someone who experienced the value of applying to TC Top Picks firsthand.

Australia-based Sonder Designs earned a TC Top Pick designation at Disrupt SF 2018. The startup designed a keyboard — using E-Ink technology — and the keyboard’s display changes dynamically based on whatever application or language you use.

In five days, three of which included Disrupt, founder Francisco Serra-Martins reports they held 41 meetings with venture capitalists and 11 meetings with B2B customers. The company received more investor interest than it initially forecasted, which led them to increase the investment round size. They’re currently working on due diligence and closing a $2.2 million round.

Top Picks receive a lot of media attention — the gift that keeps on giving — and that invaluable exposure landed Serra-Martins on the Forbes 30 Under 30 list.

“Being a TC Top Pick at Disrupt San Francisco not only helped us close out an additional $1 million investment for our seed round, it was an incredible opportunity to highlight our technology to an international community and to engage with the San Francisco startup ecosystem,” said Serra-Martins.

That’s some serious ROI, amirite? Looking for more ways to get the most out of your Disrupt experience? Want to win $100,00 in equity-free cash? Apply to compete in Startup Battlefield, our epic startup pitch competition.

You have absolutely nothing to lose and everything to gain. Disrupt San Francisco 2019 takes place on October 2-4, and this is your chance to take your startup to a new level. Apply to our TC Top Pick program today.

Is your company interested in sponsoring or exhibiting at Disrupt SF? Contact our sponsorship sales team by filling out this form.

Source: Tech Crunch

As Lyft gears up to list its stock on the NASDAQ, the transportation company is facing ongoing litigation regarding driver wages in New York City. Today, a judge denied Lyft’s motion for an injunction blocking the recent ruling that sets a minimum wage for drivers. Still, the judge said she’ll think it over and file a written ruling in the next 30 days. This comes shortly after a number of drivers protested Lyft’s lawsuit against the city of New York earlier this morning.

“We are pleased the judge denied Lyft’s motion to block the wage protection rules for now and we hope she will uphold the city’s rules in her written decision.” Independent Drivers Guild member and Lyft driver Tina Raveneau said in a statement. “Eighty thousand New Yorkers serve as professional drivers for apps like Lyft and we deserve the protection and the dignity of a livable minimum wage. It is like a punch in the gut to us, the drivers who helped build this company, that Lyft stood in court suing to block higher wages at the same time as they moved toward an IPO at a $23 billion valuation. We are finally making more than we have in years thanks to the new pay rules, but Lyft wants to bring it back to the way it was before, poverty wages.”

Lyft filed the lawsuit earlier this year, arguing the new rules give an advantage to Uber, will reduce driver earnings and exacerbate congestion. At the time, Lyft said its suit was “not directed at the law passed by New York City Council, but rather at the TLC’s complex formula for implementation.” Lyft is a proponent of a weekly pay standard but argues the TLC’s approach does not take into account things like drivers who use multiple apps and fluctuating demand.

“We support the New York City Council’s minimum earnings goal, but oppose the TLC’s specific rules because they actually hurt earning opportunities for drivers, and provide advantages to certain companies over others,” Lyft spokesperson Campbell Matthews said in a statement. “We appreciated the opportunity to make our case in court today, and look forward to the judge’s forthcoming ruling.”

The suit came after the NYC Taxi and Limousine Commission in December approved new rules to offer a minimum hourly wage of $17.22 (after expenses) to drivers who work for ride-hailing companies like Uber, Lyft, Via and Juno. The two-year-long campaign for minimum wage was spearheaded by The Independent Drivers Guild, a labor organization that advocates for drivers. The rules require companies to pay drivers according to a formula based on mileage, time and utilization rate (average percentage of time drivers have passengers in their cars),

Lyft has recently said that it is committed to increasing the earnings of drivers and supports the NYC council’s minimum earnings goal. But it filed the lawsuit, Lyft said in a recent blog post, “to correct the flawed implementation of the law by NYC’s Taxi & Limousine Commission.”

These rules legally went into effect in February. Since then, Lyft says there has been a negative impact on driver earnings. That’s because, Lyft says, the cost for passengers increased 24 percent, which led to rides dropping 26 percent and driver earnings dropping 15 percent. Lyft had to then take “action to stabilize the market largely through the use of passenger discounts. We won’t do this forever, but knew it was important for both the driver community and Lyft while the lawsuit progressed.”

Source: Tech Crunch

Kevin Tsujihara is leaving his role as chairman and CEO of Warner Bros. Entertainment.

He joined Warner Bros. back in 1994 and took charge of the film and TV studio in 2013. As part of broader leadership changes at WarnerMedia — which is now under the ownership of AT&T — his role was recently expanded to include Turner Classic Movies, digital-focused Otter Media and a new business unit that includes Warner’s properties for kids and young adults.

However, Tsujihara was also the subject of an exposé in the Hollywood Reporter earlier this month, which described his text messages with actress Charlotte Kirk. The two were apparently in a sexual relationship, and the messages show Kirk asking for Tsujihara’s help in landing film roles.

She was eventually cast in two small parts in two Warner Bros. films — “How to be Single” and “Ocean’s 8.” Tsujihara’s attorney insisted that he had “no direct role” in Kirk’s hiring on these films.

In a memo to sent to Warner Bros. staff, Tsujihara said, “After lengthy introspection, and discussions with John Stankey over the past week, we have decided that it is in Warner Bros.’ best interest that I step down as Chairman and CEO … The hard work of everyone within our organization is truly admirable, and I won’t let media attention on my past detract from all the great work the team is doing.”

The company has not yet announced a replacement.

Source: Tech Crunch

President Donald Trump is an automated-vehicle skeptic, a point of view that lies in stark contrast with agencies within his own administration, including the U.S. Department of Transportation .

According to a recent scoop by Axios, Trump has privately said he thinks the autonomous-vehicle revolution is “crazy.” Trump’s point of view isn’t exactly surprising. His recent tweets about airplanes becoming too complex illustrates his Luddite leanings.

The interesting bit — beyond a recounting of Trump pantomiming self-driving cars veering out of control — is how his personal views compare to the DOT.

Just last week during SXSW in Austin, Secretary of Transportation Elaine Chao announced the creation of the Non-Traditional and Emerging Transportation Technology (NETT) Council, an internal organization designed to resolve jurisdictional and regulatory gaps that may impede the deployment of new technology, such as tunneling, hyperloop, autonomous vehicles and other innovations.

“New technologies increasingly straddle more than one mode of transportation, so I’ve signed an order creating a new internal Department council to better coordinate the review of innovation that have multi-modal applications,” Chao said in a prepared statement at the time.

Meanwhile, other AV-related policies and legislation are in various stages of review.

The DOT’s National Highway Traffic Safety Administration (NHTSA) announced Friday that automated-vehicle petitions from Nuro and General Motors are advancing to the Federal Register for public review and comment.

The parallel viewpoints have yet to collide. There’s no evidence that Trump’s personal views on autonomous-vehicle technology has been inserted into DOT policy. Of course, that doesn’t mean it won’t.

AV companies are hip to this eventuality and are taking steps now to educate the masses — and Trump. Take the Partners for Automated Vehicle Education (PAVE) coalition, as one example. PAVE launched in January with a founding group that included a number of major automakers, technology companies and organizations with a stake in autonomous vehicles, including Audi, Aurora, Cruise, GM, Mobileye, Nvidia, Toyota, Waymo and Zoox to spread the word about advanced vehicle technologies and self-driving vehicles. Their message: This tech can transform transportation and make it safer and more sustainable.

Waymo has also teamed up with AAA on a public education campaign to spread the word about autonomous-vehicle technology and how it could impact safety and help people get around. The partnership, announced recently, is with AAA Northern California, Nevada & Utah (AAA NCNU), a regional organization that oversees operations in seven markets, including well-known hubs of autonomous vehicle development such as Arizona and California.

Source: Tech Crunch

If you live in a big city, you’ve probably had your fair share of battles with apartment intercom systems. Those electronic gatekeepers with their tiny screens, sticky buttons, and seemingly endless lists of names to tap through in search of a friend who can buzz you in.

Doorport wants to make those existing systems a bit smarter. They’ve built a device that can be wired into existing buzzer systems, allowing you to use your smartphone to unlock your building’s door for yourself and your guests with a quick tap. Once installed, the existing intercom system works just as it did before — just now with a bit more smarts.

The company’s current prototype hardware is about the size of a deck of cards, and is meant to be tucked into the empty space within an already in-place intercom system. The company’s founders tell me it takes about 5 to 10 minutes to install. You clamp the device onto the inside of the intercom box with a magnet, run two wires for power, and two wires to let the device control the door lock mechanism.

When you open Doorport’s app, it uses Bluetooth to search for nearby doors you have access to. Tapping the on-screen padlock will unlock the door as if you’d scanned your key fob or punched in your code. If a friend arrives with Doorport’s app setup, they’re able to ping you through the app so you can buzz them through the door. When a resident moves out of the building, the property manager just removes that resident’s profile via the admin panel to prevent future access.

The company initially set out to build a full-fledge hardware replacement for existing intercoms, with things like video calling and temporary, single-day access codes. In testing the market, however, they found that landlords weren’t interested in something quite so intense. A whole new system meant ripping out the old hardware, re-training employees, giving all of the residents new key fobs, etc. So they shifted focus to something that sits on top of existing systems, instead.

It’s still pretty early days for the 3-person team. It’s iterating on prototypes, each unit contained within a 3d-printed shell. Just months ago, when the company first got into Y Combinator’s Winter 2019 class, co-founder Reggie Jean-Brice tells me “the hardware was literally on a breadboard.” The device I saw recently, meanwhile, was a sleek little package with “Mark II” emblazoned across the side.

As with most new companies, Doorport is still figuring out exactly how much their product will cost, and are testing different pricing models. Through one model, they’d charge landlords about $350 up front for install, then $1.50 per apartment unit per month. Another model shifts the cost (about $30 a year per unit) to residents, allowing landlords to pitch it as an optional amenity. Co-founder Ben Taylor tells me that the company currently has prototype devices being tested in San Francisco, Oakland, and New York.

Source: Tech Crunch