Last week, NVCA made a number of tools developed by members of its CFO Task Force available to all members. These tools, accessed through the NVCA members only website, are intended to shed light for firms having to choose - and then navigate - the Exempt Reporting Adviser (ERA) or Registered Investment Adviser (RIA) paths.

Examples of what these tools provide:

• a spreadsheet that can be used to evaluate whether your existing funds qualify for grandfathering as an ERA;
• a second spreadsheet which helps test whether a contemplated investment is “qualified” or must be counted as part of the non-qualified basket;
• prototype documents for the firm CFO to provide and discuss with their deal team

After the ERA/RIA rules were announced by the Securities and Exchange Commission, it became clear that, while many of the NVCA member firms would qualify for exemption from registration (ERA status), certain qualifications had to be met in a timely manner and certain rules would apply going forward to ensure and maintain exemption. While less extensive than the procedures and compliance duties of registered investment advisers (RIAs), there is still a process that applies to exempt reporting advisers (ERAs). Running amok of the ERA rules can have significant, and generally irreversible consequences.

Several members of the NVCA CFO Task Force, who have been working alongside NVCA staff since 2003, took the initiative to create templates, checklists, and other tools to use in their own firms. Recognizing the value of these as a starting point, NVCA made them available as-is for peer CFOs. We now are pleased to make these available as-is to all NVCA members for discussions with respective counsel and staff.  Any questions on these tools should be directed to John Taylor (jstaylor (at) nvca(dot) org).

NVCA is pleased to announce that our website has a new look and enhanced features. Check it out at http://www.nvca.org.

When we began the redesign process we had the following objectives in mind:

1. Develop a cleaner and less cluttered design enabling visitors to find the information they desire quickly.
2. Better communicate NVCA’s new brand: Funding Innovation. Empowering Entrepreneurs.
3. Enhance the resources available for our four key audiences: members, policymakers, the media and entrepreneurs.

As you will see from the new homepage, our new brand is featured prominently. The many industries that venture capital has helped to create are front and center as are quotes from venture-backed entrepreneurs that help tell the story of how venture investors empower their entrepreneurs beyond the capital they provide.

The new website features several additions, including information about our key policy issues, presentations that show the economic impact of venture capital by state, sections for each of our key audiences, and a new VC Blog roll.  If there is a VC blog that you think should be added, please send me an email at jmetzger@nvca.org.

It’s important to note that we plan to continually enhance the site –particularly the policy and industry stats sections.  So, keep a look out for new additions and send us your ideas for additional features that you would find helpful.

Those of you who follow the NVCA surely have noticed something different in the past few weeks. After more than two decades of employing our dark green logo, we unveiled a new look for the Association at this year’s annual meeting in Boston.  While the switch may have seemed quick to the general public, the process of developing our refreshed brand identity and designing our new logo took nearly a year.

Spearheaded by immediate past chairman Kate Mitchell and driven by the NVCA Board Communications Committee, our new brand initiative began with a series of NVCA member interviews as we sought to understand, from various perspectives, the essence of the venture capital industry and the stakeholders we represent. From these interviews we came to understand that the NVCA brand must convey a number of truths:

• Venture capital does not stand alone. Without entrepreneurs, there would be no venture capital.
• Venture capitalists are passionate about funding innovation and bringing new technologies to the marketplace.
• Venture capital remains a small and unique asset class.  We have indeed professionalized in the last twenty years, but we are far from institutionalized. 
• The value of membership in the NVCA is driven largely by the collective voice it has achieved in the market and on Capitol Hill. 

With these guiding principles, we developed a tag line that embodies these facts: “Funding Innovation. Empowering Entrepreneurs.”  The new logo, with the words "national" and "association" surrounding "venture capital", is a visual representation of NVCA’s mission to support and protect the industry - all in a color scheme consistent with the technology VC’s fund and the collective strength we bring to bear.

A special thanks to the NVCA Communications Committee comprised of Michael Greeley, Flybridge Capital Partners; Josh Green, Mohr Davidow Ventures, Jim Hale, FTV Capital; Jason Mendelson, Foundry Group; and Theresia Ranzetta, Accel Partners who provided strategic counsel along the way -- as well as our design firm Frost Miller who created the new look.

It is now up to us to carry this brand forward in our attitudes and actions, conveying the commitment of the venture industry to the public.  You will see this brand manifested in many ways over the next year - especially on our website and here at NVCAccess.  We look forward to conveying all that venture capital stands for and all the NVCA supports. 

NVCA is pleased to announce that our legal doc templates were recently reviewed and updated to incorporate feedback and the ever-changing legal environment. The  revisions contain some important and useful new provisions, a number of which come in response to recent Delaware Chancery Court decisions of importance to venture capitalists.

Thank you to all the general counsels (both within VC firms and outside counsels) who volunteered their time to review these docs and incorporate the changes. On behalf of NVCA, we greatly appreciate your time and effort!

Spearheaded by Sarah Reed of Charles River Ventures in 2003, these model docs are widely used and have been adopted by many of the law firms that are active in the venture capital ecosystem.  In fact, since they were posted the model docs webpage has been the most visited page on the NVCA website. Sarah received the NVCA Outstanding Service Award in 2007 for her work to launch this project.

Having an agreed upon starting point for legal docs necessary to complete venture capital transactions saves venture capitalists and entrepreneurs both time and money. These model docs establish an even playing field allowing venture capitalists and entrepreneurs to come together and focus their negotiations on the uniqueness of each particular deal.

We encourage you to download the updated versions of the templates.

Key Highlights:

MODEL CHARTER

• Added language to the protective provisions in response to Fletcher Int’l, Ltd. v. ION Geophysical Corp., Case No. C.A. 5109-VCP (Del. Ch. Ct. 5/ 28/10), stating that, if any of the listed items (which require Preferred consent) are entered into without the requisite consent of the Preferred, they shall be null and void ab initio, and of no force or effect.  In the Fletcher case, defendant company had issued a promissory Note without seeking the Preferred consent required under the charter protective provisions.  Rather than simply declaring the issuance void and ordering the transaction to be rescinded, the court applied an injunction standard and concluded that, although the Preferred holder had proven the likelihood that its consent right had been contravened, compensatory damages were calculable (or another equitable remedy might be available), and, in balancing the potential harms to the parties, held that the corporation would suffer the greater harm were it forced to return the borrowed funds.
  
  
• Revised the language in the redemption section in response to SV Investment Partners, LLC v. Thoughtworks, Inc., Case No. C.A. 2724  (Del. Ch. Ct. 11/10/10), in which the Chancery Court construed the words “funds legally available” in a manner unhelpful to investors.  The Court described a number of “additional protections” that the investors could have included to give their redemption rights more teeth, and (citing the NVCA Model Legal documents!) stated that “sophisticated investors understand that mandatory redemption rights provide limited protection and function imperfectly, particularly when a corporation is struggling financially.”  (The Thoughtworks case is currently on appeal.) 

MODEL INVESTOR RIGHTS AGREEMENT:

• added a portfolio company obligation to have any Insider Trading Policy permit so-called 10b5-1 trading plans
• Added a provision in the preemptive rights section that allows an investor to apportion its rights not just among Affiliates, but also among its LPs
• Added new (optional) provision to cause company to reimburse separate investor counsel in event of a sale of the company

RIGHT OF FIRST REFUSAL/CO-SALE AGREEMENT

• Added provision that permits investors to receive their liquidation preference, in the event the majority stockholder(s) sell directly to a third party.

Today, with hundreds of venture capitalists in attendance at the NVCA Annual Meeting in Boston, two professionals were recognized for their dedication and service to the venture industry.  Ted Schlein, Managing Partner at Kleiner Perkins Caufield & Byers (KPCB), was awarded the Outstanding Service Award and William Sahlman, Professor of Business Administration at Harvard Business School, accepted the American Spirit Award.

The Outstanding Service Award recognizes an NVCA member or firm that has committed an extraordinary amount of time, resources and dedication to Association efforts that in turn benefit the entire industry.  Ted has worked tirelessly to protect VC firms and portfolio companies from unintended consequences of regulation and legislation, specifically on the carried interest tax treatment issue.

The American Spirit Award recognizes individuals who have shown outstanding leadership by applying business skills, knowledge, expertise and resources to make a meaningful contribution to society. Mr. Sahlman’s work as a professor, researcher and thought leader in the area of venture capital and entrepreneurship has educated our country about the important impact of the start-up ecosystem for decades.

You can read the full press release here.

Today, at the 2011 NVCA Annual Meeting in Boston, Paul Maeder, Co-Founder and General Partner of Highland Capital Partners was elected to serve as the 2011-2012 Chair of the Board of Directors. 

Kate Mitchell, Managing General Partner of Scale Venture Partnerscompleted her one year term, helping lead the venture industry through a very challenging political environment.  During her leadership, Mitchell was instrumental in educating Congress on the importance of maintaining tax incentives for long term investment and exempting the venture capital industry from SEC registration under the Dodd Frank Act of 2010, formed the Medical Innovation and Competitiveness (MedIC) Coalition, and presided over a major marketing initiative for the NVCA, updating the Association’s overall brand and materials     

The NVCA also announced that it’s Chairman-elect for 2012-2013 is Ray Rothrock, General Partner of Venrock in Palo Alto, California.

Along with Maeder’s appointment, the NVCA announced six new members to its Board of Directors.  Beginning their four year terms today are Jon Callaghan, True Ventures; David Douglass, Delphi Ventures; Bob Goodman, Bessemer Venture Partners; Ray Leach, JumpStart, Inc.; Jonathan Leff, Warburg Pincus; and David Lincoln, Element Partners.

Retiring from the NVCA Board after serving four-year terms are: Ira Ehrenpreis, Technology Partners; Jim Hale, FTV Capital; Pascal Levensohn, Levensohn Venture Partners;  Kate Mitchell, Scale Venture Partners; Roger Novak, Novak Biddle Venture Partners; David Prend, RockPort Capital Partners; and Jonathan Root, U.S. Venture Partners.

The Association thanks these accomplished investors for their service and we look forward to working with those joining today.