8 Aralık 2011 Perşembe

Hypo Venture Capital Headlines: Debate on modern technology in the classroom needs a reboot

http://hypoventurecapital-financialideas.com/2011/11/hypo-venture-capital-headlines-debate-on-modern-technology-in-the-classroom-needs-a-reboot/


There’s no doubt that technology brings with it some scary things. The scariest of them all is the uncertainty.
Human beings are creatures of habit and the introduction of anything new typically raises an eyebrow (at least) or pitchforks (more often). It’s a somewhat common theme that is tiresome to me, but one that provokes debate throughout the times.
The common gripe against smartphones and mobile devices is that they are shackles that handcuff an employee to their work – 24 hours a day and seven days a week.
While your boss may have an expectation that because you have a BlackBerry you should be responding to emails at 6 a.m. on a Saturday (emergency or not), this is less about your boss’s disposition and more about a lack of education as to how to use technology to get the best results.

Hypo Venture Capital Headlines: Political Islam poised to dominate the new world bequeathed by Arab spring

http://hypoventurecapital-headlines.com/2011/12/hypo-venture-capital-headlines-political-islam-poised-to-dominate-the-new-world-bequeathed-by-arab-spring/


The Muslim Brotherhood’s success in the first round of Egypt’s elections has added to western fears of an Islamist future for the Middle East. But this does not necessarily mean that democracy and liberal policies face extinction
Protesters gather at Tahrir Square, Cairo
Egypt’s Muslim Brotherhood believes women have a role in politics but wants the state to be influenced by sharia law.? Photograph: SIPA/Rex Features
Among the potent symbols of the Arab spring is one that has been less photographed and remarked on than the vast gatherings in Tahrir Square. It has been the relocation of the offices of the Muslim Brotherhood, the once banned party, now set to take the largest share of seats in Egypt’s new parliament.
Before May this year they were to be found in shabby rooms in an unremarkable apartment block on Cairo’s Gezira Island, situated behind an unmarked door. These days the Brotherhood is to be found in gleaming new accommodation in the Muqatam neighbourhood, in a dedicated building prominently bearing the movement’s logo in Arabic and English.
Welcome to the age of “political Islam”, which may prove to be one of the most lasting legacies of the Arab spring. It is not only in Egypt that an unprecedented Islamist political moment is playing out. In the recent Tunisian elections the moderate Islamist Ennahda party was the biggest winner, while Morocco has elected its first Islamist prime minister, Abdelilah Benkirane.
In Yemen and Libya, too, it seems likely that political Islam will define the shape of the new landscape.
None of which should be at all surprising. Indeed, if elections in Egypt and Tunisia had been held at any other time in the past two decades, the same result would almost certainly have ensued, reflecting both the levels of organisation of Ennahda and the Brotherhood and the countries’ cultural, economic and social dynamics.
“It was a change that was supposed to happen a long time ago,” says Omar Ashour, who lectures on the subject of political Islam at Exeter University and is currently in Cairo.
So what, precisely, does the rise of electoral Islamist politics mean for the Middle East and North Africa?
“Islamism is a term that has been used to describe two very different trends,” wrote Maha Azzam, an associate fellow at Chatham House, in a recent paper on the implications of the Arab spring for British foreign policy earlier this year.
“First, [it describes] the non-violent quest for an Islamic-friendly society based on the ‘principles of Islam’, which can involve a more liberal application of Islamic teachings and tradition or a more strict interpretation. Second, Islamism is also associated with violent extremism, most notably that of al-Qaida in the promotion of terrorism.”
Azzam, like a number of experts, is firm in the belief that, if the Arab spring has demonstrated anything about Islamism today, it is how those cleaving to the second, violent definition have become ever more marginalised in the Arab world.
Speaking to the Observer last week, Azzam said that, while it was “too early to say” how the policies of the Islamist parties thrown to the forefront of the Arab spring would play out in the region’s present transformation, Islamist parties, for now at least, were looking to the centre.
“In Tunisia, Ennahda was always more open-minded and with a more liberal attitude towards secular politics. Now we have the Muslim Brotherhood in Egypt leaning more towards the centre.”
In Tunisia there has been a firm disavowal by the founder of Ennahda, Rachid Ghanouchi, of the Iranian theocratic model in favour of the Turkish one – represented by the moderate Islamist AKP of President Abdullah Gül and the prime minister, Recep Tayyip Erdogan.
While it has its critics, that Turkish Islamist model has seen an essentially pragmatic approach to the country’s largely secular institutions that has sought to avoid conflict with the military while attempting to raise both living standards and the economy.
If the example of Turkey is seen as a way forward, the case of the Muslim Brotherhood in Egypt vividly illustrates the huge challenges facing the newly resurgent Islamist parties as they attempt to govern. “It has learned from what happened in Algeria and also in Gaza with Hamas’s conflict with the west,” said Ashour.
Despite that, he believes that the Brotherhood will have to negotiate a difficult period of democratic transition in which the generals cling on to “power but not legitimacy” and its political arm, the Freedom and Justice party, dominates the new parliament with a “popular mandate but little power”.
Shadi Hamid, of the Brookings Doha Centre, has suggested strongly that the Brotherhood will concentrate on economic and social policies, rather than religious and cultural rhetoric.
The Freedom and Justice party, which includes a minority of Christian Copts, has gone out of its way to say it seeks a constitution that respects Muslims and non-Muslims, will not impose Islamic law and is committed to a pluralistic and democratic Egypt.
In the midst of this challenge, and with Egypt’s economy on the floor, the Brotherhood will operate in an entirely new political landscape, where a strong showing in the polls by the more fundamentalist Salafist al-Nour party exerts a gravitational pull on one side, while liberal secularists and Egypt’s middle classes and business community push for their own agenda.
It is this, perhaps, that explains the somewhat contradictory pick-and-mix affair that is the Freedom and Justice party’s “manifesto” as revealed in statements and releases – designed to appeal to as wide an audience as possible.
It insists it has no objection to women and Christians standing for any government position except the presidency.
Economically, the party appears to be attempting to steer a middle course. It supports free markets and private ownership, while insisting that the state needs to provide protection for underprivileged groups and asking trade unions to desist from action that might damage the country’s fragile economy.
In the most controversial areas of sharia law and women’s rights, the Brotherhood has insisted that women should participate in politics, while the state should be a “civil one”, led neither by the military nor clerics, but informed by the “makased” – the underlying objectives of sharia.
Maha Azzam also believes they will face “external pressures” that will affect how their policies and identity develop. “If there was an attack on Iran, for instance, we might see a more radical voice. The same goes if the Muslim Brotherhood feels as though it is being ostracised by the west. And at home they have huge problems ahead as well. The economy is a huge problem.” Despite all this, Azzam believes, the Brotherhood has recognised the need to make incremental progress.
“They want a civilian society and they don’t want Scaf [the military junta], but they are saying: ‘One step at a time’. They are playing it extremely well, which is in keeping with their approach and strategy. It is what allowed them to survive for so long. It is not just that they are adaptive, they have a goal in mind.”
All of which, as journalist Issandr El Amrani wrote in the wake of the election results in Egypt on his Arabist blog, “has profoundly depressed most educated, middle-class Cairenes … who had hoped that the overthrow of Hosni Mubarak would be followed by a relatively liberal democracy that would be inclusive of moderate Islamists.
“Among my Egyptian friends (most decidedly on the liberal side) there is now tremendous worry about a future in which politics is ruled on the one hand by identitarian Islamist politics and on the other by a populist, hyper-nationalistic army. I don’t think it has to be so, and we could very well see a transition to a democratic (but not liberal) system which allows for rotation of power.
“Personally,” Amrani concludes, “I think that there can be a positive outcome here: if the Muslim Brothers are serious about consolidating electoral democracy and work hard on addressing that issue, there will be other elections for those that disagree with their conservative views (or foreign policy, or economic liberalism) to make their case.”

Hypo Venture Capital World Headlines

http://hypoventurecapital-headlines.com/


Egypt’s Muslim Brotherhood believes women have a role in politics but wants the state to be influenced by sharia law.? Photograph: SIPA/Rex Features
Among the potent symbols of the Arab spring is one that has been less photographed and remarked on than the vast gatherings in Tahrir Square. It has been the relocation of the offices of the Muslim Brotherhood, the once banned party, now set to take the largest share of seats in Egypt’s new parliament.
Before May this year they were to be found in shabby rooms in an unremarkable apartment block on Cairo’s Gezira Island, situated behind an unmarked door. These days the Brotherhood is to be found in gleaming new accommodation in the Muqatam neighbourhood, in a dedicated building prominently bearing the movement’s logo in Arabic and English.
Welcome to the age of “political Islam”, which may prove to be one of the most lasting legacies of the Arab spring. It is not only in Egypt that an unprecedented Islamist political moment is playing out. In the recent Tunisian elections the moderate Islamist Ennahda party was the biggest winner, while Morocco has elected its first Islamist prime minister, Abdelilah Benkirane.
In Yemen and Libya, too, it seems likely that political Islam will define the shape of the new landscape.
None of which should be at all surprising. Indeed, if elections in Egypt and Tunisia had been held at any other time in the past two decades, the same result would almost certainly have ensued, reflecting both the levels of organisation of Ennahda and the Brotherhood and the countries’ cultural, economic and social dynamics.
“It was a change that was supposed to happen a long time ago,” says Omar Ashour, who lectures on the subject of political Islam at Exeter University and is currently in Cairo.
So what, precisely, does the rise of electoral Islamist politics mean for the Middle East and North Africa?
“Islamism is a term that has been used to describe two very different trends,” wrote Maha Azzam, an associate fellow at Chatham House, in a recent paper on the implications of the Arab spring for British foreign policy earlier this year.
“First, [it describes] the non-violent quest for an Islamic-friendly society based on the ‘principles of Islam’, which can involve a more liberal application of Islamic teachings and tradition or a more strict interpretation. Second, Islamism is also associated with violent extremism, most notably that of al-Qaida in the promotion of terrorism.”
Azzam, like a number of experts, is firm in the belief that, if the Arab spring has demonstrated anything about Islamism today, it is how those cleaving to the second, violent definition have become ever more marginalised in the Arab world.
Speaking to the Observer last week, Azzam said that, while it was “too early to say” how the policies of the Islamist parties thrown to the forefront of the Arab spring would play out in the region’s present transformation, Islamist parties, for now at least, were looking to the centre.
“In Tunisia, Ennahda was always more open-minded and with a more liberal attitude towards secular politics. Now we have the Muslim Brotherhood in Egypt leaning more towards the centre.”
In Tunisia there has been a firm disavowal by the founder of Ennahda, Rachid Ghanouchi, of the Iranian theocratic model in favour of the Turkish one – represented by the moderate Islamist AKP of President Abdullah Gül and the prime minister, Recep Tayyip Erdogan.
While it has its critics, that Turkish Islamist model has seen an essentially pragmatic approach to the country’s largely secular institutions that has sought to avoid conflict with the military while attempting to raise both living standards and the economy.
If the example of Turkey is seen as a way forward, the case of the Muslim Brotherhood in Egypt vividly illustrates the huge challenges facing the newly resurgent Islamist parties as they attempt to govern. “It has learned from what happened in Algeria and also in Gaza with Hamas’s conflict with the west,” said Ashour.
Despite that, he believes that the Brotherhood will have to negotiate a difficult period of democratic transition in which the generals cling on to “power but not legitimacy” and its political arm, the Freedom and Justice party, dominates the new parliament with a “popular mandate but little power”.
Shadi Hamid, of the Brookings Doha Centre, has suggested strongly that the Brotherhood will concentrate on economic and social policies, rather than religious and cultural rhetoric.
The Freedom and Justice party, which includes a minority of Christian Copts, has gone out of its way to say it seeks a constitution that respects Muslims and non-Muslims, will not impose Islamic law and is committed to a pluralistic and democratic Egypt.
In the midst of this challenge, and with Egypt’s economy on the floor, the Brotherhood will operate in an entirely new political landscape, where a strong showing in the polls by the more fundamentalist Salafist al-Nour party exerts a gravitational pull on one side, while liberal secularists and Egypt’s middle classes and business community push for their own agenda.
It is this, perhaps, that explains the somewhat contradictory pick-and-mix affair that is the Freedom and Justice party’s “manifesto” as revealed in statements and releases – designed to appeal to as wide an audience as possible.
It insists it has no objection to women and Christians standing for any government position except the presidency.
Economically, the party appears to be attempting to steer a middle course. It supports free markets and private ownership, while insisting that the state needs to provide protection for underprivileged groups and asking trade unions to desist from action that might damage the country’s fragile economy.
In the most controversial areas of sharia law and women’s rights, the Brotherhood has insisted that women should participate in politics, while the state should be a “civil one”, led neither by the military nor clerics, but informed by the “makased” – the underlying objectives of sharia.
Maha Azzam also believes they will face “external pressures” that will affect how their policies and identity develop. “If there was an attack on Iran, for instance, we might see a more radical voice. The same goes if the Muslim Brotherhood feels as though it is being ostracised by the west. And at home they have huge problems ahead as well. The economy is a huge problem.” Despite all this, Azzam believes, the Brotherhood has recognised the need to make incremental progress.
“They want a civilian society and they don’t want Scaf [the military junta], but they are saying: ‘One step at a time’. They are playing it extremely well, which is in keeping with their approach and strategy. It is what allowed them to survive for so long. It is not just that they are adaptive, they have a goal in mind.”
All of which, as journalist Issandr El Amrani wrote in the wake of the election results in Egypt on his Arabist blog, “has profoundly depressed most educated, middle-class Cairenes … who had hoped that the overthrow of Hosni Mubarak would be followed by a relatively liberal democracy that would be inclusive of moderate Islamists.
“Among my Egyptian friends (most decidedly on the liberal side) there is now tremendous worry about a future in which politics is ruled on the one hand by identitarian Islamist politics and on the other by a populist, hyper-nationalistic army. I don’t think it has to be so, and we could very well see a transition to a democratic (but not liberal) system which allows for rotation of power.
“Personally,” Amrani concludes, “I think that there can be a positive outcome here: if the Muslim Brothers are serious about consolidating electoral democracy and work hard on addressing that issue, there will be other elections for those that disagree with their conservative views (or foreign policy, or economic liberalism) to make their case.”

Hypo Venture Capital Headlines: Debate on modern technology in the classroom needs a reboot

http://hypoventurecapital-financialideas.com/2011/11/hypo-venture-capital-headlines-debate-on-modern-technology-in-the-classroom-needs-a-reboot/


There’s no doubt that technology brings with it some scary things. The scariest of them all is the uncertainty.
Human beings are creatures of habit and the introduction of anything new typically raises an eyebrow (at least) or pitchforks (more often). It’s a somewhat common theme that is tiresome to me, but one that provokes debate throughout the times.
The common gripe against smartphones and mobile devices is that they are shackles that handcuff an employee to their work – 24 hours a day and seven days a week.
While your boss may have an expectation that because you have a BlackBerry you should be responding to emails at 6 a.m. on a Saturday (emergency or not), this is less about your boss’s disposition and more about a lack of education as to how to use technology to get the best results.
Many people are shocked to hear my iPhone never makes a peep. I get one silent vibrate for text messages (and I’m quick to block those that I do not know) and two vibrations for a phone call.
My iPhone will not beep, vibrate or blink when emails, tweets or Facebook updates arrive. Why? It’s my job to best manage my technology (and not the other way around).
The people I work with know that email is the best form of communication with me and that if it’s an emergency, to please call.
On the other side of this communication, I check my emails (and other digital notifications) when I want to (not in the moment that they happen). The phone does ring, but it’s only on a rare occasion (for those emergencies).
There’s a macro lesson here: If you think your kid is spending too much time on their iPad and not enough time outside getting some exercise, don’t blame the iPad.
Before the iPad, kids were playing video games, and before video games they were watching TV, and before TV they were reading comic books. For generations, youth have preferred to sit around and play rather than to go outside and play. Technology is not responsible for making a kid lazy – it comes down to parenting, values and the child’s disposition. The Waldorf School of the Peninsula is one of more than 150 Waldorf schools in the United States that doesn’t allow technology or gadgets for students until the eighth grade.
These are not the wired classrooms we keep hearing about. In fact, they’re traditional classrooms – the ones you might see in a Norman Rockwell painting (yellow pencils, wood desks and all).
The reason this particular school is getting so much attention is because it is located in the heart of Silicon Valley and hosts children whose parents work at companies such as Google, Yahoo! and Apple. It seems counter-intuitive that the story (which I originally saw in The New York Times in late October, headlined “A Silicon Valley School That Doesn’t Compute”) has become a hotly discussed topic online.
Do kids need Google? Can kids learn math better from a teacher than an iPad? What good is an education if a child can’t learn how to use a physical dictionary? You can see how the discourse evolves.
The answer to these questions is no. Kids do not need Google, a great math teacher is much better than an iPad app, and it’s important that kids know what a book is.
But, there’s something else we need to remember: Our values were created in a different time and in a different place.
Let’s rephrase the question: Am I doing my child a service or disservice by not allowing a component of their education to include computers, technology and connectivity?
Think about it this way: The jobs the majority of my friends are working at didn’t even exist as occupations when I was in high school.
Should a child be lugging around five textbooks in a backpack that’s causing them spinal disc herniation or does an iPad not only enable them to have a lighter load, but the ability to also create, collaborate and engage more with their peers?
Look into the future. What do you see? Do you see a world of cubicles, desks and paper clips, or do you see a very different world?
So, while some may think it’s important to keep technology away from our kids for as long as possible, I’m open to arguments that it’s not an all-ornothing proposition.
I can’t imagine my kids ever using an HB pencil when they enter the workforce. In fact, I’m willing to bet they probably won’t even be using a keyboard and a mouse on a computer like we do today.
So yes, history is important, but not more important than preparing them for the future.
Mitch Joel is president of Twist Image and the author of the best-selling business book, Six Pixels of Separation.

22 Ağustos 2011 Pazartesi

Hypo Venture Capital Zurich Headlines:Obama sees China as a partner in Mars mission

http://hypoventurecapital-research.com/2011/05/hypo-venture-capital-zurich-headlinesobama-sees-china-as-a-partner-in-mars-mission/


WASHINGTON — U.S. President Barack Obama views China as a potential partner for an eventual human mission to Mars that would be difficult for any single nation to undertake, a senior White House official told lawmakers.Testifying May 4 before the House Appropriations subcommittee on commerce, justice and science, White House science adviser John Holdren said near-term engagement with China in civil space will help lay the groundwork for any such future endeavor. He prefaced his remarks with the assertion that human exploration of Mars is a long-term proposition and that any discussion of cooperating with Beijing on such an effort is speculative.
“(What) the president has deemed worth discussing with the Chinese and others is that when the time comes for humans to visit Mars, it’s going to be an extremely expensive proposition and the question is whether it will really make sense — at the time that we’re ready to do that — to do it as one nation rather than to do it in concert,” Holdren said in response to a question from Rep. Frank Wolf, R-Va., a staunch China critic who chairs the powerful subcommittee that oversees NASA spending.
Holdren, who said NASA could also benefit from cooperating with China on detection and tracking of orbital debris, stressed that any U.S. collaboration with Beijing in manned spaceflight would depend on future Sino-U.S. relations.
“But many of us, including the president, including myself, including (NASA Administrator Charles) Bolden, believe that it’s not too soon to have preliminary conversations about what involving China in that sort of cooperation might entail,” Holdren said. “If China is going to be, by 2030, the biggest economy in the world … it could certainly be to our benefit to share the costs of such an expensive venture with them and with others.”
Wolf, who characterizes China’s government as “fundamentally evil,” said it is outrageous that the Obama administration would have close ties with Beijing’s space program, which is believed to be run primarily by the People’s Liberation Army, or PLA.
“When you say you want to work in concert, it’s almost like you’re talking about Norway or England or something like that,” an irate Wolf told Holdren, repeatedly pounding a hand against the table top in front of him. “As long as I have breath in me, we will talk about this, we will deal with this issue, whether it be a Republican administration or a Democrat administration, it is fundamentally immoral.”
Holdren said he admired Wolf’s leadership in calling attention to China’s human-rights record, but noted that even when then-U.S. President Ronald Reagan referred to the former Soviet Union as “the evil empire” in the late 1980s, he continued to cooperate with the communist bloc in science and technology if doing so was deemed in the U.S. national interest.
“The efforts we are undertaking to do things together with China in science and technology are very carefully crafted to be efforts that are in our own national interest,” Holdren said. “That does not mean that we admire the Chinese government; that does not mean we are blind to the human rights abuses.”
Holdren said that as White House science adviser, his capacity to influence the president’s diplomatic approach to Beijing is limited.
“I am not the person who’s going to be whispering in the president’s ear on what our stance toward China should be, government to government, except in the domain where I have the responsibility for helping the president judge whether particular activities in science and technology are in our national interest or not,” Holdren said.
Recently enacted legislation prohibits U.S. government collaboration with the Chinese in areas funded by Wolf’s subcommittee, whose jurisdiction also includes the U.S. Commerce and Justice departments, the National Science Foundation and the National Institute of Standards and Technology.
When asked how he interpreted the new law, part of a continuing resolution approved in April that funds federal agencies through Sept. 30, Holdren said the administration will live within the terms of the prohibition.
“I am instructed, after consultation with counsel, who in turn consulted with appropriate people in the Department of Justice, that that language should not be read as prohibiting actions that are part of the president’s constitutional authority to conduct negotiations,” Holdren said. “At the same time there are obviously a variety of aspects of that prohibition that very much apply and we’ll be looking at that on a case by case basis in (the White House Office of Science and Technology Policy) to be sure we are compliant.”
Rep. John Culberson, R-Texas, who joined Wolf last fall in opposing an official visit to Beijing by Bolden, accused Holdren and the White House of plotting to circumvent the law.
“It’s not ambiguous, it’s not confusing, but you just stated to the chairman of this committee that you and the administration have already embarked on a policy to evade and avoid this very specific and unambiguous requirement of law if in your opinion it is in furtherance of negotiation of a treaty,” Culberson said. “That’s exactly what you just said. I don’t want to hear about you not being a lawyer.”
Holdren said a variety of opinions and legal documents indicate the president has exclusive constitutional authority to determine the time, scope and objectives of international negotiations and discussions, as well as the authority to determine the preferred agents who will represent the United States in those exchanges.
Culberson reminded Holdren that the administration’s civil research and development funding flows through Wolf’s subcommittee, and that funding could be choked off if the White House fails to comply with the law.
“Your office cannot participate, nor can NASA, in any way, in any type of policy, program, order or contract of any kind with China or any Chinese-owned company,” Culberson said. “If you or anyone in your office, or anyone at NASA participates, collaborates or coordinates in any way with China or a Chinese-owned company … you’re in violation of this statute, and frankly you’re endangering your funding. You’ve got a huge problem on your hands. Huge.”

Hypo Venture Capital Zurich Headlines: Raising Capital? 3 Tips for Entrepreneurs

http://hypoventurecapital-research.com/2011/07/hypo-venture-capital-zurich-headlines-hacker-pleads-guilty-to-att-ipad-breach/


I’ve been helping entrepreneurs raise capital as a securities lawyer for more than 17 years, and there are certain fundamental mistakes that I’ve seen entrepreneurs make over and over again. Accordingly, I thought it would be helpful to share three basic tips for entrepreneurs in connection with raising capital.
Tip #1: Only Offer and/or Sell Securities to “Accredited Investors”. As a general rule, a company may not offer or sell its securities unless (i) the securities have been registered with the Securities and Exchange Commission (SEC) and registered/qualified with applicable state commissions; or (ii) there is an applicable exemption from registration. The most common exemption for startups is the so-called “private placement” exemption under section 4(2) of the Securities Act of 1933 and/or Regulation D, the safe harbor promulgated thereunder.
The rule of thumb in connection with private placements is only to offer and sell securities to “accredited investors” under SEC Rule 506. There are two significant reasons for this: First, Rule 506 preempts state-law registration requirements — which means, in general, that the company merely must file a Form D notice with the applicable state commissioners (together with the SEC) and pay a filing fee; and second, there is no prescribed written disclosure requirement under Rule 506.
There are eight categories of investors under the current definition of “accredited investor” — the most significant of which is an individual who has (i) a net worth (or joint net worth with his/her spouse) that exceeds $1 million at the time of the purchase (not including the value of their primary residence) or (ii) income exceeding $200,000 in each of the two most recent years (or joint income with a spouse exceeding $300,000 for those years) and a reasonable expectation of such income level in the current year. (Note that this definition is currently under review by the SEC and must be reviewed by the SEC every four years pursuant to the Dodd-Frank Act.)
If a company offers or sells securities to non-accredited investors, it opens a Pandora’s box of compliance and disclosure issues, under both federal and state securities law. Yes, there are ways for entrepreneurs to sell securities to non-accredited investors under SEC Rules 504 and 505 (and perhaps other exemptions), but it often requires that specific disclosure requirements be met and registration/qualification under applicable state law, both of which are very time consuming and costly.
Tip #2: Do Not Use an Unregistered Finder to Sell Securities. Entrepreneurs often make the mistake of retaining unregistered finders (commonly referred to as consultants, financial advisors or investment bankers) to raise capital for their companies. The problem is that finders must be registered with the SEC if they are operating as a “broker-dealer,” which is broadly defined under the Securities Exchange Act of 1934 to mean “any person engaged in the business of effecting transactions in securities for the account of others.”
If the finder is receiving some form of commission or transaction-based compensation (which is usually the case) the finder will generally be deemed a broker-dealer and thus will be required to be registered with the SEC and applicable state commissions. If the finder is not registered as required and sells securities on behalf of a company, the private placement will be invalid (i.e., it will not be exempt from registration) and the company will have violated applicable securities laws — and thus could be subject to serious adverse consequences, as discussed below.
(Note that the Form D filed with the SEC and applicable state commissions requires disclosure of the identities of all finders engaged in the offering of securities of the company.)
Tip #3: Diligence the Investors. The most common mistake I have seen entrepreneurs make in any dealmaking context, including fundraising, is the failure to investigate the guys (or gals) on the other side of the table. Indeed, this is more a business tip than a legal one; but it is critical.
Remember: if you’re going out and raising funds, you will, in effect, be married to your investors for a number of years. Accordingly, at a minimum, the entrepreneur should get references and speak with other entrepreneurs and CEOs who have raised funds from the investors in order to make an informed judgment as to whether the particular investor is an appropriate individual with whom the entrepreneur should be partnering.
Issues to consider include: Has the investor done investments like this before? If so, how many and what role did he play? Can the investor be counted on and trusted? Will the investor add significant value (e.g., through his contacts, technical expertise, etc.)? What is the investor’s motivation to invest? Is the investor a good guy or a jerk? Sadly, there are a lot of bad apples out there, and entrepreneurs need to be very careful whom they allow to invest in their companies.
Conclusion. Non-compliance with applicable securities laws could result in serious adverse consequences, including a right of rescission for the security holders (i.e., the right to get their money back) injunctive relief, fines and penalties and possible criminal prosecution. That being said, no matter how many times I advise otherwise, there are always a handful of entrepreneurs who decide they don’t want to pay legal fees to comply with securities laws and they handle the issuance themselves. In a word: imprudent.