Venture Briefing: April 5, 2017 Venture Briefing: April 5, 2017

Venture Briefing: April 5, 2017

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High Court Aims to Know Why 40% of Patent Suits are Filed in Texas
More than 40 percent of patent lawsuits are filed in a federal court in East Texas with a reputation for friendliness to plaintiffs. That curious fact was the backdrop for a Supreme Court argument over whether the court should halt what many big technology companies say is pernicious forum shopping in patent cases.
(Source: The New York Times, 2017-03-27) Read the full article
Supreme Court Ruling Removes Delay Defense in Patent Cases
A U.S. Supreme Court ruling in a lawsuit over adult diapers will make it more difficult for companies accused of patent infringement to shoot down lawsuits because the plaintiffs waited too long to bring them. In a 7-1 decision, the justices said SCA Hygiene Products AB, based in Stockholm, did not unreasonably delay in filing a lawsuit accusing First Quality Baby Products of copying its patented adult diapers.
(Source: Reuters, 2017-03-22) Read the full article
High Court Considers if Firms Can be Sued for Human Rights Abuses
The Supreme Court agreed to decide whether corporations may be sued in American courts for complicity in human rights abuses abroad. The case concerns Arab Bank, which is based in Jordan and has been accused of processing financial transactions through a branch in New York for groups linked to terrorism.
(Source: The New York Times, 2017-04-03) Read the full article
First Quarter Results Suggest IPO Comeback for Remainder of 2017
Propelled by the large Snap offering in early March, the first quarter of 2017 saw almost 15 times more IPO proceeds than the first quarter of 2016, according to Renaissance Capital, a manager of IPO-focused ETFs. The quarter had 25 IPOs compared with nine in the year-earlier period.
(Source: MarketWatch, 2017-03-31) Read the full article
First Quarter Cross-Border M&A Saw Strongest Start Since 2007
Cross-border M&A had its strongest start since 2007, driving first-quarter global volumes up seven percent, as optimism over U.S. President Donald Trump's economic agenda buoyed the stock market and the dollar, making foreign acquisitions cheaper than some U.S. targets. Many U.S. CEOs are feeling richer and more confident thanks to a rally in their companies' stock.
(Source: Reuters, 2017-03-30) Read the full article
Study Finds V.C., P.E. Investments Outperforming S&P 500
Venture capital and private equity investments are outperforming the S&P 500, according to Steve Kaplan, an economist from the University of Chicago. Kaplan recently did a study to measure returns on the two asset classes compared to the S&P 500 over 10 years (2003–2013).
(Source: Venture Beat, 2017-04-02) Read the full article
Shareholder Return Remains Leading Metric for Incentive Payouts
Relative total shareholder return (rTSR) -- a measure of TSR compared with that of other companies, usually a peer group of some kind -- emerged as the leading metric for determining long-term incentive payouts for named executive officers. That remains true, but after several years of rising influence for rTSR, usage of the metric in setting executive pay is flattening out, according to Equilar, an executive compensation research firm.
(Source:, 2017-03-31) Read the full article
Pre-Seed Stage Financing Is Experiencing Major Changes
In recent years, further declines in the cost of bringing new software products to market has continued to alter the world of financing early stage software companies in three fundamental ways: First, pre-seed stage valuations have fallen, even though later stage valuations have risen. Second, pre-seed stage investors have shifted the focus of their evaluation of companies from potential to traction. Third, accelerators have displaced angels as a key source of financing for pre-seed stage companies.
(Source: Small Business Trends, 2017-04-03) Read the full article
P.E. Firms Buying Debt in Struggling Companies to Turn a Profit
From Apollo Global Management to Bain Capital to Thomas H. Lee Partners, investors have bought hundreds of millions of dollars of debt in struggling businesses they took private, giving them positions as both stockholders and creditors. Now, more investment firms have taken notice and are starting to use the strategy as they desperately seek to salvage investments that are at risk of turning sour amid rising interest rates.
(Source: Bloomberg, 2017-03-29) Read the full article
Directors' List of Contacts Can Determine How Well-Paid They Are
In the wake of corporate financial scandals like those that transpired at Enron and WorldCom at the start of this century, companies began to boost the pay of directors in the hopes of finding sharp-eyed boards that could catch management criminals red-handed. Researchers have found that director compensation can explained by factors like director qualifications experience. But now comes evidence of another reason that determines what a corporation pays its directors: how impressive the directors' lists of contacts are.
(Source:, 2017-03-27) Read the full article
Uber and Lyft Lawsuits Reflect Seismic Nature of Independent Contractor v. Employee Battle

Earlier this month, a California court indicated it would approve a $27 million settlement of claims that app-based, ride-sharing service Lyft incorrectly categorized its drivers as independent contractors. This follows on the heels of Uber settlements on both coasts of the same types of claims for over $100 million. What is going on? Read full article here.


By The Numbers

Equity crowdfunding firm, FundersClub Inc.'s net multiple -- investor returns after the company's cut -- is 2.26 from its 2012 investments, 3.24 from the 2013 vintage, and 1.17 for 2014. The median VC firm's net multiple for the same vintages were 1.25, 1.14 and 1.04, respectively, according to the data from FundersClub and Cambridge Associates.
Source: - FundersClub, Where Folks Can Back Startups Online, Says It's Beating the Pros, Here's the caveat: Most of its returns are still on paper.


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Ice Miller has been one of the most active law firms in the private equity industry over the last decade, representing both entrepreneurs building great companies and the private equity firms and individuals that invest in them.  We have extensive experience with all types of funds (formations and operations); mezzanine and senior secured financing; leveraged buyouts, roll-ups, build-ups, and consolidations; divestitures and exits; and complex litigation on behalf of investors and privately financed companies.  In addition, over the past 10 years, Ice Miller has represented hundreds of emerging growth businesses in various industries on such matters as entity formation, capitalization, capital raising, alternative financing, intellectual property rights and protection, growth and exit strategies, corporate governance, tax matters, and many other legal issues that are critical to the growth and success of an emerging company.

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This publication is intended for general information purposes only and does not and is not intended to constitute legal advice.  The reader must consult with legal counsel to determine how laws or decisions discussed herein apply to the reader's specific circumstances.

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