Vivek Rao

Just wrapped up an insightful few days at Legal Innovators California, focusing on AI/LLM in legaltech. Key takeaways: - AI is poised to disrupt the legal practice imminently. - Growing interest in automating routine tasks like SaaS contracts and NDAs. - Cyborg solutions, integrating humans for quality control, are being launched in legal services today - RAG is intriguing but not foolproof for precision in legal matters (very different from creating marketing copy for TikTok) I'm excited about the concept of autonomous agents negotiating contracts and streamlining core issues for human attention - a game-changer! Looking forward to more developments in this space! Lauren Bonner Jonathan Jetmundsen Juristat #LegalTech #AI #Innovation #LegalInnovatorsCalifornia

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Great data for #founders: “Back in yesteryear (circa 2016), startup founders would maybe do a small #angel round using the SAFE and then quickly jump on the priced equity track. ‌ Those days are long gone. ‌ In the current market, the #SAFE is the preferred financing mechanism for essentially all rounds that raise under $3 million. There is an estuary where SAFE meets priced from $2M-$3M raised which I think reflects investor preference more than anything else. ‌ SAFE rounds that raise under $1 million do so without side letters, by and large. But the bigger SAFE rounds are now accompanied by #sideletters in the majority of cases. Founders, read those carefully! MFN, pro rata, information rights - these are important terms to be aware of, if not negotiated. ‌ Interesting to note we are 10 years on from the beginning of the SAFE era…I wonder if there’s another financing innovation on the horizon?” Credit: Peter Walker @ Carta He’s right on side letters. And as for another financing innovation - see my post yesterday on my proposed “SAFE Preferred”! Let’s do this 😎 #DWProf

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Shifting gears from governance this week to talk about an economic term of a transaction that is more commonly seen in early stage venture deals.   “Liquidation Preference” determines how the pie is shared when a liquidity event occurs. It may be a participating LP or non-participating LP. The right will trigger in case of a liquidation or winding up of the Company and also in case of any other liquidity event like a sale or merger of the Company. If such an event occurs, the preference shares are entitled to receive, in preference to equity shares, an amount which is the higher of: (i) a pre-decided amount - typically 1x of the investment amount (this is the LP) or (ii) the amount they would be entitled to receive if they had converted to equity and did not have an LP.    There are three varieties of participation: full participation, capped participation and non-participating. Fully participating LP, will first receive their LP and thereafter share in the liquidation proceeds on a pro rata basis along with equity shares.   Capped participation indicates that the participation described above is capped until a certain return multiple is reached.   LP clauses are easy to understand when dealing with a series A term sheet, but things get complicated as a company matures and raises many follow-on rounds -  understanding how LP works between the different series is often mathematically (and structurally) challenging.   There are two primary approaches: (1) The follow-on investors will stack their preferences on top of each other: series B gets its preference first, then series A or (2) The series are equivalent in status (called pari passu) so that series A and B share pro-rata until the preferences are returned.   Pari-passu approach is the market practice for several reasons. Incentivizing the management / employees is also an important consideration as the greater the LP ahead of equity shares, the lower the potential value of the management / employee equity.   It is also important to note that investors get the higher of either the LP or what they would get on a fully converted equity holding, at their election; they do not get both. Depending on the valuation of the company, investors will elect to either convert to equity or stay with the LP. If an Investor has participated in several rounds, the election between taking LP or converting to equity may be different for each diff series of preference shares held by an investor - depending on issue price of the different series.   When drafting an LP clause it is important to link the right to the specific series of preference shares (LP goes with the shares not the investor). Defining clearly what qualifies as a “liquidity event” is important, as is how a distribution will be made if there are no cash proceeds but the transaction is a stock deal or other such structured deal. FEMA related pricing issues also need to be addressed when LPs are being enforced.

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Meet our Headline Sponsors! These trailblazers are leading the charge in the new era of #legaltechnology - and they're making Legal Innovators California even more magical. Take a look: 💥 Steno - #PrivatePractice Day Steno offers exceptional court reporting services combined with best-in-class technology and deferred payment options. Steno was built by tech and legal experts who saw a need for a better experience. They remove financial and technical hurdles so you can focus on the case. From creating bespoke solutions for your technical needs to providing flexible financing, Steno is revolutionizing the way court reporting is done. Dylan Ruga, Co-Founder, President and Chief Legal Officer, will kick off June 4th with an exclusive keynote. Later, Dan Anderson, Co-Founder & Chief Technology Officer, will join the panel, ‘Revolutionizing Litigation with #LLMs: Current Advances and Future Possibilities’ to give his unique perspective. 🦾 SimpleDocs - #InHouse Day Request, configure, negotiate, done! SimpleDocs is a workflow automation platform designed to streamline routine contracts and negotiations. With SimpleDocs, in-house teams maintain full control and visibility into all contract activity while empowering sales and business teams to request and send contracts in one-click. CEO & Co-Founder, Preston Clark, will jumpstart our #InHouse Day on June 5th with a thrilling keynote alongside Fiona Newell Kaufman, Deputy General Counsel at DataStax. Don’t miss ‘Unbundling #CLM: How DataStax Leverages AutoNDA to Streamline #NDA Requests’! Secure your place among these industry titans before it’s too late: https://lnkd.in/eMqvvptS Richard Tromans | Artificial Lawyer | #legalinnovatorscalifornia #LegalInnovation #LegalTech #LawTechConference #LegalDisruption #LegalTechSolutions #sanfransicoevents #legalevents #legalinnovators #LegalInsights #TechInLaw

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Startups raising a “bridge” round between equity rounds can use a standard SAFE or convertible note - simple, right? Not quite. If the next equity round is imminent, a no cap, no/very small discount SAFE works well. If the next round is further out, it gets complicated. SAFEs/notes were designed to be used before a priced equity round, so many of the terms don’t fit between equity rounds. This series on bridge rounds walks through the right changes to make to SAFEs/notes to reflect the right economics between equity rounds. Part 1 — The Valuation Cap The concept of a SAFE/note valuation cap is out of its element after a priced equity round. The cap allows the investor to convert at the lower of the valuation cap or the valuation of the next priced equity round. The SAFE investor doesn’t take any risk that the startup’s value may go down from the closing of the SAFE investment to the closing of the next priced equity round. The cap makes sense for early stage companies where the future is less certain, especially if the investors (friends and family, wealthy individuals, etc.) aren’t pros at valuing startups. Angel investors rely on the diligence, resources and experience of a later institutional investor to more appropriately determine the valuation in a priced equity round. Those later stage investors purchase equity with a fixed valuation, not a valuation cap, and take the risk that the valuation of the startup may go down in the future. This post explains what alternatives are available to align SAFE/note terms with the right economics for an investment after a priced equity round. Special thanks to Jeremy Raphael for his insights.

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Despite all the challenges and difficulties obtaining and enforcing a patent, it is still worth it for an early stage founder to get one. Here are 5 reasons why:

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LET THE INVESTOR SPEAK, part 1: "Find yourself a person who asks questions that hurt, and who pushes you to care about the dead boring stuff." That's Raoul Dobal's advice on how to spot the perfect investor and board member. As an angel investor, active board member and CTO of PMG Investment Solutions AG, Raoul is ready to get his hands dirty and to serve as an active and committed board member in the startups he invests in. It's also the best way for him to make sure his investees will succeed: giving them an experienced and hands-on support, and making sure the nitty-gritty aspects of growing a company are not neglected. We're talking compliance, data security, HR strategy, and the legal setup. Because while building an awesome product might be the most activating thing to do, setting the reliable groundwork is what's going to help limit future risk. As a startup that got ISO-27001-certified in its first year of existence, we at Neur.on couldn't agree more. In our case, legal and banking clients are only working with us because we can prove how secure our data flows are. That's super boring stuff. Until it isn't. ---------- In the ongoing series "Let the investor speak", I'll showcase personal insights from investors all across the board to help you diversify your search for an angel investor or VC company.

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Are SPACs making a comeback? It sure looks like it. See some stats below. Three SPAC IPOs priced this past week. LIONHEART CAPITAL-backed Lionheart Holdings (CUBWU) raised $200 million, Melar Acquisition I (MACIU) raised $150 million to target “emerging finance”, and Flag Ship Acquisition (FSHPU) raised $60 million to target middle-market growth businesses. Six IPOs submitted initial filings this past week. Hospital and health care clinic operator Ardent Health (ARDT) led the pack, filed to raise an estimated $500 million. Country club owner and operator Aureus Greenway Holdings (AGH) filed to raise $19 million at a $119 million market cap. Real estate platform Linkhome (LHAI) filed to raise $12 million. China-based TV program distributor Unitrend Entertainment Group (INHI) filed to raise $6 million at a $186 million market cap. Chinese business services provider YSX Tech (YSXT) filed to raise $6 million at a $116 million market cap. Chinese precision parts manufacturer ZJK Industrial (ZJK) filed to raise $5 million at a $305 million market cap. Seven SPACs submitted initial filings this week. Voyager Acquisition (VACHU) filed to raise $261 million to target healthcare. SIM Acquisition I (SIMAU), formed by Sauvegarder Investment Management, filed to raise $200 million to target healthcare. SilverBox IV (SBXD.U), the fourth SPAC formed by members of SilverBox Capital, filed to raise $200 million. HCM II Acquisition (HONDU), backed by Hondiu Capital Management, filed to raise $200 million. Tavia Acquisition (TAVAU.RC) filed to raise $175 million to target energy transition, the circular economy, and food tech. Black Spade Acquisition II (BSIIU) filed to raise $150 million to target entertainment, lifestyle, and technology. Future Vision II Acquisition (FVNNU) filed to raise $50 million to target the TMT industry in the Greater China region. #SPACS #IPO #MERGERSANDACQUISITIONS #CAPITALMARKETS Source: https://lnkd.in/eQ8XxrFc

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The healthcare landscape is rapidly evolving, driven by advancements in technology and a deeper understanding of patient care. I had the pleasure of speaking with Ambar Bhattacharyya, Co-Managing Partner at Maverick Ventures, on the latest episode of The Full Ratchet. Ambar has partnered with numerous billion-dollar companies like hims & hers, Cityblock Health, Devoted Health, and ConcertAI. His unique journey from rural America to becoming a prominent figure in venture capital offers invaluable insights into the future of healthcare and technology. We discuss his investment strategy at Maverick Ventures, the megatrends shaping healthcare, the impact of AI on the industry, and the importance of integrated care. Ambar also shares his thoughts on the challenges and opportunities in healthcare investment, offering a comprehensive view of what lies ahead. Check out TFR Episode 438 to catch our conversation. You'll be glad you listened.

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I recently had an enlightening conversation with Alex Pattis, general partner of Riverside Ventures and author of the #1 VC syndicate newsletter, "Last Money In." Alex's journey from sales director to launching a syndicate that has completed over 300 deals is truly remarkable. He's deployed over $70 million in capital and built a network of thousands of LPs along the way. During our chat, Alex clarified the intricacies of syndicates, explaining how they differ from traditional venture funds and the unique value they bring to both founders and investors. Syndicates offer a flexible, deal-by-deal approach for LPs, allowing them to cherry-pick investments. Alex highlighted that having a tier-one VC co-investor can significantly boost LP interest in a syndicate deal. Transparency and managing expectations are crucial when working with founders, according to Alex. He also shared insights on how Special Purpose Vehicles (SPVs) can be a strategic tool for founders to consolidate smaller investors. These structures offer a way to simplify cap tables while still accessing a broader investor base. Alex offered his perspective on the current syndicate market, noting the increasing interest in growth-stage and pre-IPO deals due to shorter paths to liquidity. This trend reflects a shift in investor priorities and the evolving landscape of venture capital. Whether you're a founder looking to understand syndicates or an aspiring investor curious about this unique approach to venture capital, Alex's insights are invaluable. Check out Episode 48 of Fundraising Demystified to learn from Alex's experience and gain a deeper understanding of the syndicate ecosystem!

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Non-competes might be kaput. What does that mean for start-ups? Many start-ups may not feel the impact of this change. But, should the FTC’s ban hold up, start-ups should put more energy towards: 👉Retention Retention is already crucial in a start-up where losing 1 or 2 key employees can significantly hinder progress. But now there’s a new worry: What happens when someone with equity in your company leaves, keeps the equity, then works for or founds a competitor? To get in front of this issue, be more conscious about employees’ equity vesting terms. Keeping to multi-year vesting schedules will be even more useful if non-competes are not available. The FTC’s ban is still under review, but discipline and focus on retention and being rigorous about multi-year vesting schedules will help your start-up either way. What vesting schedules do you use for your team? #noncompete #FTC #startup #founder #legal #equity

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Its all about the PEOPLE … The PitchBook H1 2024 VC Tech Survey confirms, once again, that the most important factor for a VC when evaluating a new early-stage investment is … the founders and leadership team.

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🚀 Top Legal Tech Tools Every Attorney Should Be Using 🚀 In today's fast-paced legal landscape, staying ahead means leveraging the right technology. Here are some game-changing legal tech tools that attorneys are using to streamline their practice and enhance efficiency: 1. Clio 🖥️ Case Management Made Easy Clio is an all-in-one practice management software that helps you manage cases, clients, and documents with ease. Its cloud-based platform allows you to access your practice from anywhere, making it perfect for the modern, mobile attorney. 2. DocuSign ✍️ Simplify Signing Say goodbye to the hassle of physical signatures. With DocuSign, you can send, sign, and manage legal documents electronically. It’s secure, legally binding, and saves you and your clients valuable time. 3. Everlaw 🔍 Efficient E-Discovery Everlaw is a powerful e-discovery tool that simplifies the process of finding relevant documents in litigation. Its advanced search capabilities and user-friendly interface make document review faster and more efficient. 4. Westlaw Edge 📚 Research Reimagined Westlaw Edge offers cutting-edge legal research tools that provide faster and more accurate results. With features like AI-driven search and KeyCite Overruling Risk, you can be confident you’re relying on the most up-to-date legal information. 🌟 Embrace the Future of Law Practice 🌟 Integrating these tools into your practice can lead to increased efficiency, better client communication, and ultimately, a more successful legal career. 💬 DM us to learn more about how our services can elevate your legal practice. #LegalTech #LawFirmManagement #AttorneyTools #LegalInnovation #Lawyers #LegalPractice #SpeakeasyMarketingAuthority #AttorneyMarketing #SEOMarketing #LegalMarketing

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Join a panel of distinguished LegalTech industry leaders a week from today for a visionary discussion on the future of LegalTech, co-hosted by Alumni Ventures and HeyCounsel. Our very own Michael Ulin, Co-Founder and CTO of Paxton AI, will be one of the esteemed panelists! 👥 Featuring: Christian Brown, Lawyer at Code & Counsel Cecilia Ziniti, Founder/Lawyer at GC AI Michael Ulin, Co-Founder and CTO of Paxton AI Ray W., Investor at Alumni Ventures’ AI Fund 🎤 Moderated by: Brian Scherer, CEO and Founder of HeyCounsel 🔍 About the Webinar: Dive into the future of Legal AI with our expert panel as they explore untapped opportunities and envision the next 5-10 years in the legal field. They'll discuss potential breakthroughs and the challenges of integrating new technologies into a traditionally conservative arena. Register for free to join this visionary event—link in the comments below! #PaxtonAI #LegalTech #FutureOfLaw #Innovation #Webinar #AI

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Orgaimi is thrilled to be featured in the Legaltech News Legal Tech Rundown this week by ALM and Law.com! The big news is Faegre Drinker's announcement last week about its partnership with Orgaimi around AI-powered client intelligence. Some of the key goals of the partnership include "accelerating attorney and consulting professional collaboration across practice areas, reducing potential client churn and strengthening the client experience by improving how accounts are managed and services are delivered firm wide." We are honored to be mentioned alongside other leading industry players including descrybe.ai, Harbor, HELM360, Kalexius, K2 Services, Level Legal, Casepoint, Overture Law, QorusDocs, Traveling Coaches, Uncover, and Veritext Legal Solutions! Find out more here in this article by Isha Marathe and ALM / Law.com: https://lnkd.in/ey3baJHf | #LegalTechNews #Partnerships #ALM #AI #ClientIntel #FaegreDrinker #Rundown #GaimOn

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Join us at Legal Innovators California on June 4th - 5th, where over two dozen companies at the frontier of #legaltech and innovation will gather! Here’s a breakdown of our sponsors, courtesy of Artificial Lawyer: https://lnkd.in/g5apsv73 Discover the latest developments in legal technology and innovation this June! Don’t miss this opportunity to explore how the legal world is evolving and connect with the leading companies and innovators driving this transformation. 🎫 https://lnkd.in/eMqvvptS Richard Tromans | Artificial Lawyer | Redactable® | Steno | SimpleDocs | Relativity | Gravity Stack LLC | Tangible Global| LegalOn Technologies | Jus Mundi | Clearbrief | Flatiron Law Group | ClearyX | SkillBurst Interactive | DWF | eBrevia | Etain | LawDroid - Generative AI Legal Technology | Abstract | Coheso | Recital | FOSSA | Incorporight Inc. | Avvoka | SimpleClosure | Centari | CallidusAI | Clearbrief | Ivo | UnitedLex | Harvey | International Legal Technology Association (ILTA) | Association of Certified E-Discovery Specialists (ACEDS) #legalinnovatorscalifornia #LegalInnovation #LegalTech #LawTechConference #LegalDisruption #LegalTechSolutions #sanfransicoevents #legalevents #legalinnovators #LegalInsights #TechInLaw

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Not a lot of fun, but really important to do correctly. A poorly handled shutdown can be a source of liability for officers and directors. Among other things, turns out the government does not have a good sense of humor when it comes to unpaid compensation or taxes - make sure you are reserved for both. Also, make sure the D&O insurance is in place well before a shutdown decision is on the table and then make sure to get tail coverage. However, avoiding liability is just the start. How a founder handles a shutdown will determine their post-shutdown personal "post money valuation." The venture world is not that big - an irresponsibly handled shutdown will come back to bite you. More important, handling the process with sensitivity and integrity is just the right thing to do.

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In their article for Law360, Gary Weinstein and Hudson Peters cover all things big data, such as how companies should protect customers’ big data sets as strategic assets and how they can approach divvying up the rights to data. As part of their discussion, Gary and Hudson emphasize the importance of companies understanding the value of all the items they own and create, including their data.

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