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25

Sep

2013

The SEC’s Proposed New Rules on General Solicitation PDF Print E-mail

Jennifer Dowling

Written by Jennifer Connell Dowling   
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Among the many bills packaged together in 2012 to form the JOBS Act was a measure that forced the Securities and Exchange Commission (SEC) to revisit its long-time ban on “general solicitation” – i.e. advertising – for private offerings.  Although it has taken the SEC more than a year to craft final rules lifting the ban, those new rules took effect on Sept. 23, 2013.

Throughout the legislative and regulatory phase of this debate, NVCA has kept a finger on the pulse of member opinion regarding this issue, and has found little interest in using the new general solicitation regime.  However, at its meeting in July of this year – the meeting at which the final rules were issued – the SEC asked for comment on additional proposed rules that deal with reporting requirements for firms that do generally solicit, as well as those that continue to operate under the “old” rules (no general solicitation.)

In our view, several aspects of the new proposal are troubling and could produce unintended effects on the industry.  First, the proposed rule would require ALL firms to file a closing amendment to their Form D within 30 days after the termination of a Rule 506 offering.  The proposal would also amend Form D, again for ALL firms, to require significant additional information including:

  • Identification of the issuer’s website
  • Expanded information on the issuer
  • The offered securities
  • The types of investors in the offering
  • The use of proceeds from the offering

Additionally, for 506(c) offerings (those using general solicitation), the Form D would have to include:

  • Information on the types of general solicitation used, and
  • The methods used to verify the accredited investor status.

Finally, the SEC proposal, if adopted without change, would require firms that do want to use general solicitation to file an initial Form D 15 days prior to engaging in any general solicitation, and would require, for the first two years, submission of written general solicitation materials.

Despite what we believe will be limited application of the new regime regarding our member firms, NVCA believes that the proposed additional requirements are an over-reach by the SEC in terms of the depth and breadth of material requested from both soliciting and non-soliciting firms. As a result, NVCA will file a formal comment letter with the SEC on these topics and further concerns.  We will post our comment letter on the NVCA website as soon as it is finalized.  For further questions, contact Jennifer Connell Dowling, NVCA’s SVP of Federal Policy at jcdowling@nvca.org.

 

19

Sep

2013

NVCA Presents: Managing a VC Firm PDF Print E-mail

Emily Mendell

Written by Emily Mendell   
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In May 2013, immediately following VentureScape, the NVCA gathered together seven veteran venture investors for a frank discussion about the challenges and opportunities of managing a venture capital firm today.  Sponsored by Wilson Sonsini Goodrich & Rosati , the roundtable discussion covered topics such as the right skill set for managing partners, mentoring, culture, time management, succession planning, LP relations, and decision making.

We captured the conversation, transcribed it, and today present to you a summary of the discussion that took place among:

Norm Fogelsong, Institutional Venture Partners
Diana Frazier, FLAG Capital Management (moderator)
Joe Horowitz, Jafco Ventures
Dick Kramlich, New Enterprise Associates
Bob Latta, Wilson Sonsini Goodrich & Rosati
Terry McGuire, Polaris Partners
Ray Rothrock, Venrock
Craig Taylor, Alloy Ventures

You will find that the document is a quick read with many insights.  Our hope is that this piece benefits both current managing partners as well as general partners who aspire to join their ranks.  You can download Managing a VC Firm here.  Please enjoy it with our compliments.

 

03

Sep

2013

Day 1 at NVCA PDF Print E-mail

Bobby Franklin

Written by Bobby Franklin   
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Dear Members and Friends of NVCA:

As you all return from what has hopefully been a productive and rejuvenating summer, so too do we at the NVCA, with a robust and exciting agenda for the coming weeks and months.  Today, the staff and I are gathered in Washington D.C. discussing our top priorities and strategies in the areas of policy, research, communications and membership.  Today is officially my first day as President and CEO of the association, and I couldn’t be more enthusiastic about the promise that lies ahead.  It is a privilege to lead an organization comprised of individuals and firms that fuel the innovation economy, drive job creation and company growth, and change the way in which we live and work for the better.  Ours is a story worth telling – here in Washington D.C. – and across the country and I am looking forward to sharing that narrative with critical stakeholders and influencers who matter to the future of our ecosystem.

So what can you expect from me?

In my previous position with CTIA -The Wireless Association®, we had a motto which was simply, “Listen, Learn, and then Lead.”  My first 90 days as NVCA President and CEO will be committed to hearing from members, staff and other industry participants regarding the most pressing challenges and opportunities for your firms and portfolio companies – some of which I am already very much aware of and others I have yet to learn.  I hope to meet many of you in person as I begin to attend events across the country and immerse myself in the industry.  I will be working closely with NVCA President Emeritus Mark Heesen, our Board of Directors, and the very capable NVCA staff in setting a course for the coming year.  And I encourage you to reach out to me and share your thoughts and concerns about the future of the NVCA and the venture capital industry.

As always, there is much work to be done but I am confident we are building on a very solid foundation which would not have been formed without the support of our members.  Please expect to hear from me often – and I hope I can count on you to do the same.

 

30

Aug

2013

NVCA Gearing Up for an Active Fall in D.C. PDF Print E-mail

Jennifer Dowling

Written by Jennifer Connell Dowling   
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As we prepare for Congress to return to Washington D.C. next week, NVCA is anticipating a very active autumn. During this time, we will be faced with a few key opportunities for positive change, as well as a number of issues where we must avoid pitfalls for the venture capital and startup ecosystems.

On the positive side, full-scale immigration reform remains a real possibility, although admittedly, we have a long way to go.  The support for changes in immigration policy – particularly on the legal side of immigration where it matters most to our companies – continues to grow. This was evidenced in town meetings held across the country when members were on recess. Hopefully you’ve all read the study we finalized in July, American Made 2.0, that details the impact of immigrant entrepreneurs on the U.S. economy.  NVCA is also participating with a broad group of companies, associations and organizations that are all focused on working with members in the House of Representatives to move immigration reform forward.  We expect this issue to continue to be a major focus of ours through the fall.

Tax Reform discussions will also kick into higher gear between September and the end of the year. House Ways & Means Committee Chairman Dave Camp plans to introduce a complete tax reform package, and to move that through his committee by the end of the year.  While the Senate Finance Committee won’t act in that same timeframe, the construct of Chairman Camp’s package is critical to NVCA because it will define the specific areas of reform that will impact venture capital – and allow us to set our strategy for the coming year.  For instance, if the proposal eliminates capital gains incentives overall, our discussions will be at that level – as opposed to focusing on carried interest.  (Without capital gains tax rate, carried interest is a moot point.)  If maintaining a capital gains differential represents one of the challenges facing the industry in tax reform, our work on an energy innovation credit represents an opportunity, as members of Congress look to streamline and simplify the code’s many credits in this area.  The House package will be the opening move in what promises to be a very long “chess game.”  We intend to be at the table throughout.

In the area of patent reform, we are working closely with our members to crystallize the proposals currently on the legislative table that could have the most impact for venture-backed companies across the venture investing spectrum.  At the top of the list is the issue of patent trolls.  For this reason, we have been working with a law professor from UC-Hastings who has written on the topic of patent trolls to draft a survey for NVCA Members and their portfolio companies. This will mark the first time that we will have concrete data about the prevalence of troll behavior and its impact on venture backed companies. All members should expect to receive this survey in the next week.   It will give us some dynamic new information to take to congressional leaders as the next round of legislative activity gets under way.

One thing is certain:  The policy landscape from September through the end of the year will be packed. In addition to the issues above, we will see a showdown over funding the government for the new fiscal year, which begins October 1. We will have a similar fight over the debt limit when the federal government’s borrowing authority expires sometime between September and October.  In addition, we will continue to build support for the energy innovation credit as part of tax reform, and our Medical Innovation and Competitiveness (MedIC) Coalition will be working with the FDA and other organizations to continue the push on cementing a new approach to the risk-benefit equation for new drugs and new technologies. 

We look forward to building upon the work that has been done in the past year on all of these issues and will both inform and engage our membership as we move through the next several months.  Questions and concerns can always be directed to me at jcdowling@nvca.org.

 

26

Aug

2013

NVCA/MedIC Submits Comments on FDA Expedited Programs for Serious Conditions PDF Print E-mail

Kelly Sloane

Written by Kelly Slone   
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On August 26, MedIC submitted comments on FDA’s draft guidance on Expedited Programs for Serious Conditions for Drugs and Biologics.  The draft guidance is intended to facilitate and expedite development and review of new drugs to address unmet medical needs in the treatment of serious or life-threatening conditions. Elements include fast track designation, breakthrough therapy designation, accelerated approval, and priority review designation.  When finalized, the new guidance will replace the current Fast Track Drug Development Programs-Designation, Development, and Application Review and the Available Therapy guidance.

MedIC commends FDA’s proactive leadership to re-shape and modernize the drug development process by developing new tools and provide greater flexibly in the review process.  MedIC believes that FDA’s actions summarized in the guidance is precisely what Congress intended with the passage of the FDA Safety and Innovation Act of 2012—to empower FDA with greater flexibility to responsibly accelerate the development and availability of drugs to treat serous and life-threatening diseases, recognizing that new tools and approaches are necessary to strike the right balance on behalf patients.  MedIC believes that this guidance, along with CDER’s other initiatives, which include “Structured Approach to Benefit-Risk Assessment in drug Regulatory Decision-Making” and its “Patient-Focused Drug Development” initiative, represents a significant first step in re-framing the dialogue about drug development and regulation. We believe it will also allow FDA and drug developers to responsibly apply modern tools and innovative approaches to speed new therapies to patients.

 

14

Aug

2013

There's No Place Like Home Says NVCA/Deloitte Global Survey PDF Print E-mail

Mark Heesen

Written by Mark Heesen   
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Today the NVCA and Deloitte issued our 9th global venture capital survey results and, for the second consecutive year, we focused on confidence levels of investors around the world across a variety of topics.  The survey covered a number of important metrics and demonstrated once again that the psychology of venture capital is anything but stagnant.  Case in point, the biggest take away from this year’s survey is the waning collective enthusiasm for global investing.  Whereas five years ago, the majority of U.S. venture capital firms were considering if not already embarking upon an overseas investment strategy, today we see overall confidence levels in investing outside the U.S. fall from 2.77 in 2012 to 2.41 in 2013. (On a scale from 1-5 with 5 being the most confident.)

Why the change of heart?

There are many factors, including the troubled overseas economies and challenges associated with foreign policies and legal systems.  And many of these emerging regions such as China, India and Brazil are building their own indigenous venture capital ecosystems which are competing for deals with U.S. investors.  But more importantly, U.S. venture capital firms are getting smaller – with fewer dollars to spend on foreign investment strategies.  And there is no shortage of opportunities here in the United States.  So while there are some firms who continue to invest abroad – and they will likely be successful – fewer and fewer partnerships will take that leap.

The Confidence survey comprises a very rich data set and I encourage those interested to review the deck we put together. Take note of the low confidence levels of the capital markets systems – both domestic and global -- as well as the even more dismal confidence levels in our government’s ability to enact policies conducive to the VC ecosystem. Clearly these two metrics are interdependent and need to both rise considerably for the health of the industry. There are also VC fundraising and industry perspectives which mirror actual investment trends.

Questions about the survey can be directed to Emily Mendell (emendell@nvca.org).

 
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