The other day, I had the pleasure of interviewing Brette Simon.
Brette is a partner at Jones Day, a top tier law firm with offices in New York, Los Angeles, Silicon Valley, and several major international cities.
Brette advises companies and investors in private equity and venture capital financings, and is on the Venture Capital and Private Equity Committee of the American Bar Association. She is also a member of the Los Angeles Venture Association. And Brette was recently recognized by The Deal - a popular venture capital and private equity publication - as one of the top 13 dealmakers in the country. Very impressive.
So, naturally based on her background, I thought Brette would be the perfect person to interview about the legal aspects of raising capital. I was right.
Brette started the interview by discussing the advantages and disadvantages of certain forms of incorporation, and noted that a C-Corporation is what most venture capitalists prefer. She did note, however, that there are many nuances with regards to the corporate structure with regards to tax treatment, so the choice of your type of entity could become more complex.
We then shifted topics and discussed how entrepreneurs can protect their business ideas and intellectual property. To this, Ms. Simon discussed non-disclosure and confidentiality agreements. She also made the key point that entrepreneurs must make sure to get their employees, consultants and vendors (and everybody else who may be working with them) to sign PIIAAs (Proprietary Information and Invention Assignment Agreements), in order to make sure that the company owns all the intellectual property that is being created.
Ms. Simon went on to discuss other items that can help protect one's intellectual property such as patents and staging diligence.
We then discussed several other key topics including:
* Some of the main laws and regulations that entrepreneurs need to know about and act in accordance with when raising capital
* The documentation needed to raise capital
* What you should be focusing on when you look at a VC's term sheet
* Misconceptions that entrepreneurs often have about the legal process
* The right time for the entrepreneur or management team to hire legal counsel during the process of raising capital
I really enjoyed conducting this interview. Brette Simon obviously knows the legal issues with regards to raising capital inside and out and is a wealth of knowledge! This is definitely information that all entrepreneurs must know when raising funding, particularly venture capital.
To listen to excerpts of this interview click the blue triangle on the player below.
To listen to the full interview and/or read the transcript, click here.