Venture Briefing: December 14, 2016 Venture Briefing: December 14, 2016

Venture Briefing: December 14, 2016

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High Court Bankruptcy Case Decision Could Have Wide Implications
The Supreme Court will hear arguments in a case that could upend the common practice that ranks lenders, employees and other creditors in order of priority as they try to recover their money when a company files for bankruptcy. A decision could affect how much power bankruptcy courts have to approve settlements that do not follow the conventional order of creditor priority and potentially block some parties, in this case the company's former employees, from any financial recovery.
(Source: The New York Times, 2016-12-06) Read the full article
V.C. Declines Hitting Recently Hot Startups Particularly Hard
Declines in the venture capital market are hitting startups of all sizes, but the ones left particularly vulnerable are the thousands of young companies that raised seed funding during headier times just a year or two ago. The seed frenzy peaked in the first quarter of 2015 when more than 1,500 startups raised their first rounds of capital, according to research firm PitchBook Data, and many of those companies are now running out of cash, and most won't be able to get more.
(Source: Chicago Tribune, 2016-11-30) Read the full article
Study Says V.C.-Backed Startups Perform Better than Bank-Financed
Startups backed by venture capital fare better than those financed by bank loans, university researchers have found. Florida Atlantic University, York University and the University of Hong Kong teamed up to analyze data on small businesses compiled by the U.S. Census Bureau dating back to 1995 and found a strong causal link between higher levels of venture capital investment and the growth rates of companies in terms of employment, payroll and number of firms.
(Source: South Florida Business Journal, 2016-12-08) Read the full article
Quick Flip Appears to Be Returning to Private Equity
When private equity giant Blackstone sold luxury hotel group Strategic Hotels & Resorts to Chinese insurance group Anbang for around $6.5 billion earlier this year, many observers took the deal as further evidence of China's mad scramble for foreign assets, especially U.S. real estate. But the deal was also the start of another scramble that investment bankers across all sectors stateside have begun to notice: the return of the quick flip.
(Source: Forbes.com, 2016-12-05) Read the full article
Report Says Corporate Venture Capital Investments Increasing
Investment by the venture capital arms of big corporations is growing and should reach a little more than a third of all total global venture capital by 2025, a report disseminated by Telstra Ventures claims. The report says corporate venture capital (CVC) providers are assuming a bigger role because, apart from financing, they bring to the table support for a venture that is being financed.
(Source: IT Wire, 2016-12-07) Read the full article
High Court Rules on Case Involving Insider Trading Tips
The Supreme Court's much-anticipated opinion on insider trading, in Salman v. United States, ended almost like an Emily Litella editorial on Saturday Night Live: "Never mind." After speculation that the decision might rewrite the rules for how the government pursues tips of confidential information, or at least provide clarification about what type of relationship suffices to prove a violation, the court ended up saying that the law was pretty much what everyone thought it was.
(Source: The New York Times, 2016-12-07) Read the full article
Small Businesses Finding Merchant Cash Advances Troublesome
Short-term financing known as merchant cash advances are getting some small businesses into hot water financially. Marketed as a fast way to access cash, merchant cash advances can help some entrepreneurs get out of a tough spot -- but consumer advocates and government officials say that too often, that's not the case.
(Source: CNNMoney.com, 2016-12-01) Read the full article
One in Five Global Businesses Hit by Ransomware Attack in 2016
The number of ransomware attacks targeting companies increased threefold from January to September, affecting one in every five businesses worldwide. According to a new report from security company Kaspersky Lab, the rate of ransomware attacks against businesses increased from one every two minutes to one every 40 seconds during that period.
(Source: Computerworld, 2016-12-09) Read the full article
Firms Don't Disclose Sustainability Risk to Investor Satisfaction
A majority of U.S. listed companies are disclosing sustainability risks to investors, but not in any meaningful detail, according to a study by the Sustainability Accounting Standards Board, or SASB. The SASB, a nonprofit group that develops reporting guidelines that help companies account for environmental and social risks, found that 81 percent addressed social and environmental risks, but 52 percent of the companies used vague, boilerplate language to flag the risks without articulating management response strategies.
(Source: The Wall Street Journal, 2016-12-01) Read the full article
New License Will Allow Financial Tech Startups to Expand Banking
Online credit companies and paperless lenders would be able to get federal charters to do business nationwide under a plan outlined by a U.S. banking regulator. The Office of the Comptroller of the Currency (OCC), the main regulator for federal banks, said it hoped offering a charter for "fintech" companies would spur banking sector innovation.
(Source: Reuters, 2016-12-02) Read the full article
 
 
 
Headlines
The Ostensible Agency Theory – a Threat to Franchisor Liability?

Franchise agreements typically provide that a franchisee is a separate and distinct entity from the franchisor and that the franchisor is not liable for the franchise’s employment practices. Traditionally, this language has been sufficient for franchisors to avoid liability as “co-employers” with their franchisees. Two recent decisions, however, threaten to disrupt this longstanding presumption through a novel application of the “ostensible agency” doctrine. Read full article online.

 

By The Numbers

The federal government spent $82 billion this year on information technology, which is about eight times Apple Inc.’s research and development budget.
Source: Bloomberg Technology - Tech Startups Struggle to Tap $82 Billion in Federal Contracts

 

 

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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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