Seffi Kaminitz Advice to Startups

Seffi Kaminitz, Esq. is the founding partner at Kaminitz Law and has also written a number of blog posts intended to provide guidance to technology entrepreneurs, which can be found at www.founderset.com/blog.­  He spoke at our Friday October 24 Bootstrapper Breakfast in Mountain View and graciously provided this summary of his remarks on the key elements in negotiating licensing contracts for startups.

Negotiating Licensing Contracts

I. USE A CORPORATION

  1. When to Incorporate
    1. It is best to incorporate before starting any transaction, in order to protect your personal liability. Incorporation is often a fast process. Make sure to keep your personal and business assets separate to protect your liability.
    2. After sending the documents, incorporation in Delaware is processed quickly (48 hours) and in CA slightly slower (a week or two).
  2. Where to incorporate
    1. Delaware is the industry standard and has the best corporate infrastructure. You will have to pay a DE finance tax. DE is recommended for companies anticipating large growth, VC financing, or acquisitions.
    2. If you run your business in CA, regardless of where you incorporate, you will be subject to CA taxes. If you plan If you plan to stay smaller and more within CA, CA incorporation is a good option.

II. TERMINATION

  1. Convenience
    1. Often the other party will include in a contract that they may terminate for convenience at any time with no liability or penalty.
    2. If you have given them pricing based on a committed term, you must make sure to change this language so that they are locked in for pricing for the full term and are locked for the entire contract term. Otherwise, they can walk away despite the discount they received.

III. INTELLECTUAL PROPERTY OWNERSHIP

  1. Importance:
    1. IP Ownership is extremely important, and one of the few clauses that can kill a new business if executed incorrectly.
    2. If you “sell” them your base IP when you only intended to license it to them, they can claim ownership based on the contract and you will lose your product.
  2. Business Argument:
    1. When a customer pays for customizations, they sometime expect to have ownership in the deliverables; If the other party argues that they are paying for this IP, remind them that they are paying a much lower cost than they would pay to receive the IP exclusively.
    2. If you are dealing with a difficult party, you can offer limited time exclusivity (6 months or a year) or contract not to deal with their competitors for a limited time.

IV. LIMITATION OF LIABILITY (LOL)

  1. Purpose: The purpose of an LoL is to limit the liability of your company to a certain amount in case of a breach of contract.
  2. Parts:
    1. Base Cap: The base cap is the general cap, which is usually fees paid, or x2, x3 fees paid, as negotiated.
    2. Carve-outs: The other party will seek to carve out some items from your base cap, leaving these with unlimited liability. These usually include: Fraud, willful misconduct, gross negligence, infringement on a 3rd party’s IP, breach of confidentiality and breach of security. Instead of leaving these items unlimited, push back with a new cap just for those items that is higher than your base cap.
    3. Example: “IN NO EVENT SHALL OUR AGGREGATE LIABILITY ARISING OUT OF OR RELATED TO THIS AGREEMENT, WHETHER IN CONTRACT, TORT OR UNDER ANY OTHER THEORY OF LIABILITY, EXCEED THE TOTAL FEES PAID TO US BY YOU FOR USE OF THE SERVICES DURING THE PRECEDING TWELVE MONTH PERIOD, [? base cap] PROVIDED HOWEVER THAT WITH RESPECT TO (i) AN INTELLECTUAL PROPERTY INFRINGMENT CLAIM AGAINST OUR SERVICES, OR (ii) OUR BREACH OF OUR CONFIDENTIALITY OBLIGATIONS HEREUNDER, OUR TOTAL LIABILITY TO YOU WOULD BE LIMITED TO THREE MILLION US DOLLARS (US $3,000,000) [? higher cap for carve-outs].

V. ASSIGNMENT

  1. Assignment will usually state that you cannot assign the agreement without the other party’s consent.
  2. Since you may wish to sell your startup, you must carve out this possibility from assignment. Otherwise, you will have to gain the consent of every person you contract with before you can sell.
  3. Example clause: “Notwithstanding the foregoing, either party may assign this Agreement in its entirety, without consent of the other party, to its Affiliate or in connection with a merger, acquisition, corporate reorganization, or sale of all or substantially all of its assets.”

 

About Seffi Kaminitz
Seffi has been representing technology companies and investors in a wide range of corporate and commercial matters over more than fifteen years. Working closely with serial entrepreneurs and investors for many years, both at a large law firm and as in house counsel at a VC firm, Seffi has developed a unique perspective on strategic business matters that mixes a unique legal perspective, business considerations, and technology. Before founding Kaminitz Law, Seffi was a senior member at a large law firm where Seffi had the opportunity to lead many transactions, including complex technology licensing deals, Venture Capital financing, and M&A transactions, representing companies such as AOL and Motorola and negotiating transactions with major VC funds such as Sequoia Capital.  Seffi is admitted to practice in the State of California, the State of New York. Seffi is also admitted to practice in Israel; LL.M graduate of the University of Pennsylvania; LL.B College of Management Academic Studies in Israel.

Andrew Boer: Kickstarter Video Campaign Essentials

Andrew Boer, CEO of Boer Digitalspoke at today’s breakfast in Sunnyvale and provided this handout.

Kickstarter Video Campaign Essentials

Step 1 – Know What You’re Getting Yourself Into

  • Familiarize yourself with crowd funding trends and success stories
  • Understand the basics of a Kickstarter page, and the differences, limitations and guidelines of each
  • Be prepared to put in some serious marketing efforts on your own (Social networking & word-of-

Step 2 – Develop and Tell Your Story

  • Don’t just ask for money. Inspire people to join your cause. Crowd funding isn’t a new platform
  • Humanize yourself
  • Don’t be afraid to tell your story. If you aren’t confident your story is a powerful

Step 3 – Start Spreading the Word

  • It’s never too early to announce your campaign to your friends and family. You don’t need to divulge
  • Blogs, Facebook posts, Tweets, and any other forms of media are a great way to start making people

Step 4 – Shoot a Powerful Video

  • A video is not only entirely necessary, it has to stand out.
  • Convey your story in a short, concise, personal, and emotional way.
  • The message of “why” people should help you/your business must be conveyed.

Step 5 – Have Something to Show, and Something to Give

  • If you are Kickstarting an app, the video has to show it in action. If you are Kickstarting a short film, the video needs to include a sneak peek.
  • Consider pledge incentives to be essential. It is most beneficial to have the incentives figured out prior to shooting your video, as well as incorporating them into the shoot.
  • People can tell when a campaign is heartless. Make it worth their while by either providing an actual product to them, or something of (related) value. (No iPad giveaways for your cookware startup)

Step 6 – Set a Realistic Goal

  • Test the waters with your campaign, and set the bar low. Don’t set your goal at a million dollars–it won’t be funded.
  • Your campaign will run for the same amount of time regardless of funding amount. If it’s a great project, you’ll be overfunded regardless.
  • Believe in your cause, and have a backup plan.

For more information contact: info@andrewboer.com / Mobile: (408) 728-1001

Seffi Kaminitz answers startup legal questions at Bootstrappers Breakfast

Seffi Kaminitz is the founding partner at Kaminitz Law and has also written a number of blog posts intended to provide guidance to technology entrepreneurs, which can be found at www.founderset.com/blog.­ He will share tips on startup legal questions related to technology licensing transactions and forming reseller and OEM business relationships.Bring your legal questions and join us!

Friday October 24 9am

RSVP Button

About Seffi Kaminitz

Founder
Seffi has been representing technology companies and investors in a wide range of corporate and commercial matters over more than fifteen years. Working closely with serial entrepreneurs and investors for many years, both at a large law firm and as in house counsel at a VC firm, Seffi has developed a unique perspective on strategic business matters that mixes a unique legal perspective, business considerations, and technology. Before founding Kaminitz Law, Seffi was a senior member at a large law firm where Seffi had the opportunity to lead many transactions, including complex technology licensing deals, Venture Capital financing, and M&A transactions, representing companies such as AOL and Motorola and negotiating transactions with major VC funds such as Sequoia Capital.  Seffi is admitted to practice in the State of California, the State of New York. Seffi is also admitted to practice in Israel; LL.M graduate of the University of Pennsylvania; LL.B College of Management Academic Studies in Israel.

 

 

 

Bootstrappers Breakfast Talks about Kickstarter Videos

videoAndrew Boer, CEO of Boer Digital, will lead the discussion about videos for crowdfunding and will share his tips for making several videos for different crowdfunding projects. This is a round-table discussion so please bring your experience and questions.

The other attendees will all be early stage technology entrepreneurs, it will be a chance to compare notes on operational, development, and business issues with peers.

DATE/TIME:
Tuesday, October 21
7:30am-9:00am

LOCATION:
Coco’s Restaurant
1206 Oakmead Parkway
Sunnyvale, CA, 94086

COST/REGISTRATION:
Small fee + cost of breakfast + tip.
http://www.meetup.com/Bootstrappers-Breakfast-SV/events/207807822/

 

We meet in the back room, so space is limited – Please RSVP.  For more information about the group visit bootstrappersbreakfast.com

Founder Institute events in Silicon Valley!

The Bootstrappers Breakfast team in Silicon Valley would like to invite you to attend the following events hosted by the Founder Institute:

FI_logo
The 60 Minute MVP with Justin Wilcox CTO, Nimbus Health
2014-09-30, 06:30 PM
http://FI.co/e/26391

Founder Institute Information Session
2014-10-07, 06:30 PM
http://FI.co/e/26381

Startup Pitch Bootcamp with Adeo Ressi
2014-10-15, 06:30 PM
http://FI.co/e/26371
The Founder Institute is the world’s largest entrepreneur training and startup launch program, helping aspiring founders across the globe build enduring technology companies. – Learn more here.

 

Startup Shark Tank Showcase event in San Francisco – Demo and pitch – Sep 19

Startup pitch and demo event will be held at Ruby Sky in San Francisco on Friday Spetember 19th. Sign up and get tickets here -  https://www.eventbrite.com/e/september-startups-shark-tank-showcase-demopitch-expo-business-mixer-tickets-12782888965

Read more - http://www.meetup.com/Startups-Showcase/events/163211322/

Startups[Shank]Showcase Demo+Pitch Expo & Business Mixer  is open to all Startups in all business verticals! 

The event is judged by industry Pro’s, VC’s and Angels! 

AGENDA:
5:30 PM – Attendees Check-In
6:00 PM – Business Nworking Mixer
7:00 PM – Speaker(s)
7:15 PM – 2 Min – Pitching begins
8:45 PM – Voting for the Winner
8:45 PM – Winner Announced
9:00 PM – More Networking
10:00 - After – Party only RSVP’s allowed entry.

LIST of STARTUPS:
List coming Soon… Startups Apply to Demo+Pich – Click here <http://bit.ly/Startups-Apply >

LIST of INVESTORS:

Micro Ventures, Tim Sullivan, (Micro Ventures invests in qualified companies and also bring Accredited Investors to invest in those qualified companies)

SF Angels Group, Manny Fernandez (SF Angels Group, is a San Francisco-based angel investment firm. We help start-ups with financing, connections, business development, and mentorship.)

Voivoda Ventures, Peter Nedyalkov, (VoiVoda is a technology acceleration fund focused on B2B startup companies. We combine the resources of our own fund with those of a broad network of angel investors to assist companies in raising their first institutional round.)

DoubleRock Venture Capital, Suraj Kumar Rajwani, (DoubleRock invests primarily in early and growth stage technology companies. We help successful, entrepreneurial businesses scale to become global market leaders)

Andrew B. Bartels, (Angel investor, Executive Director Nobility Ventures provides early round funding Nobility Ventures, , with experience in High Tech, Financial Markets, Global Energy and Healthcare sectors.)

Gary Starr, (Angel Investor that has been a founder and investor in over a dozen startups, two of which became public entities.  He is currently involved in Make A Stand, Inc, a social impact company that manufactures organic lemonade, and soon to introduce a mobile crowd funding APP for social impact.

Roger King, (Angel Investor, Founder of Bay Angels and currently raising 1M for www.pree.it Also searching for the next great startup)

Allen Young, Angel Investor, Founder of Runway one of the largest technology co-working spaces

Bhrigu Raj Jhabua, is a social entrepreneur and Angel Investor based out of India & San Francisco.  Along with several Silicon Valley angel groups and think tanks.

Keiretsu Forum, (Keiretsu Forum is a global angel investor network with over 1000 accredited investor members throughout 26 chapters on 3 continents!) Nearly 1Billion invested to date.

Baltimore Bootstrappers Breakfast – Welcome Startups!

Coming Soon - BaltimoreI’m pretty excited about starting the Bootstrappers Breakfast in Baltimore. The program has brought together many like-minded entrepreneurs in cities across the country. The conversation is among peers – bootstrapping entrepreneurs helping one another. (Please, no soliciting.)

We’ve had to cap attendance at 36 – three tables of 12. Bigger tables make it difficult to have a conversation. Since the event is free, I know that people will not show. We expect to be at capacity, so if you’ve registered for the event on Sept 19, please keep your RSVP updated – and change your registration if it turns out you won’t be attending.

While the event is free, you are responsible for your own breakfast. City Cafe will do separate checks, even if you just have a coffee. They have a great space for us. We don’t take sponsorships (so you won’t be sold to) and use the restaurant without cost, so breakfast is a small price to have access to this opportunity.

Each of the three tables will have a moderator. Alex Kutsishin of human will join me in moderating. I am in the process of getting one other to help.

Also, check out the Baltimore Super Meetup that Technical.ly Baltimore runs at the beginning of Innovation Week. We’re all invited to network with all of the other Meetups that will be participating during the week-long event.

Thanks! Looking forward to meeting everyone. If you can’t make this first meeting, we’ll be doing it once a month – but if you’re like many of us, you won’t want to miss one :-)

Mike

 

First Midland Breakfast was a great success

Thanks to all the bootstrappers that made it out and to Chris Moultrup and Mid Michigan Innovation Center for hosting!

A quick wrap up of today’s breakfast

  • A young developer is looking to start working on his own project. We say go for it! The world really needs more talented developers building the next new thing!
  • Dustin and Steve who have started a marketing agency have ambitions beyond Midland and want to grow nationally! Reach out if you are in the need of an agency.
  • A young PR executive has thoughts on starting her own company. Currently she manages a blog and produces a lot of great content. If you are a startup in need of content again let me know I will connect.
  • A fellow bootstrapper is considering coming out of retirement and is looking to fill an industrial site that is a large consumer of electricity. One suggestion was to check out data centers!
  • http://www.mythoughtsandthankyous.com/ just launched its website that allows people to order custom one off greating cards. Additionally you can schedule your cards throughout the year. The founder needed some direction on how to test. Lets help him test by ordering a few custom cards! Any feedback please give through their web page.
  • A microbiologist is currently looking for ways to market a new cigarette smoke odor eraser that actually works. The group throughout hundreds of possible channels. To some up he is going to work on making a simple website to serve as an MVP to sell direct to the consumer to test multiple different target audiences. This is a major change from their current channel.
  • An internet connected bluetooth enabled toothbrush with an accelerometer! That puts my electric toothbrush to shame. They are looking for help refining the tech behind the accelerometer portion.
  • An experienced bootstrapper says his biggest challenge is getting customers to divorce them from their ‘bad’ ways/ideas. One solution discussed is to approach the client and an opportune time. Much easier to ask for a raise when the boss is whistling then when their in a bad mood!

Make sure to register for the next breakfast! http://www.meetup.com/Bootstrappers-Breakfast-Midland-Startups/

Ten Quotes for Bootstrappers From July 2014

  1. “It is not the employer who pays wages. He only handles the money. It is the product that pays the wages and it is the management that arranges production so that the product may pay the wages.”
    Henry Ford in “My Life and Work
    I think successful bootstrappers understand that hiring employees is only sustainable if customers are willing to pay for their labor either directly or embedded in product or service delivery chain.
  2. “There will always be a shortage of talented, self-motivated creative professionals who will unquestioningly follow orders.” James Halliday (@substack)
    We get folks at the breakfast from time to time who are looking for talented self-motivated technical co-founders who will implement the founder’s vision exactly and work for a small slice of equity. I have yet to have someone come who just wanted to follow orders in an equity-only relationship.
  3. “When the going gets weird, the weird turn pro.” Hunter S. Thompson
    It’s OK to be different, find out where you can be a pro in your own way.
  4. “In my experience, most people don’t schedule their work.
    They schedule the interruptions that prevent their work from happening.”
    Mike Monteiro in “The Chokehold of Calendars
    This is a fantastic insight. We now schedule intermediate working sessions in addition to putting due dates on the calendar: we will spend 30 minutes (or an hour or two hours) making progress on this project at 2pm next Tuesday if it’s due in three weeks.
  5. You have to roll up your sleeves and be a stonecutter before you can become a sculptor–command of craft always precedes art: apprentice, journeyman, master.” Philip Gerard
    This is true for all aspects of your business.
  6. “Scaling your business is all about having more people solve more problems for you.” Hugh MacLeod
    I paired these the next one because together they neatly capture a key growth principle and the sensation of having it happen<
  7. “Existential: Walking around the office, hearing other people having conversations that used to only be in my head.” Matt Wensing in “On Making the Transition to Growth
    If you want to scale up your business you have to share information and context and allow other members of your team to be able to have an informed discussion with you about risks and issues. And ultimately to have some of those discussions without your participation.
  8. “Every time I’ve seen someone create a business, with the ultimate intention of getting away from that business and its customers as quickly as possible, instead of moving towards that business and its customers, it fails.” Bryan Franklin in “Four Reasons Why Passive Income is a Destructive Fantasy
    I think the Four Hour Work Week has offered a mirage that has lured more bootstrappers onto the rocks than “build a better mousetrap and the world will beat a path to your door.” The belief that you don’t need to care about your customers and manage your business to succeed is at least as productive as “my product is so good I don’t need to learn how to market and sell it.”
  9. “I’m just preparing my impromptu remarks.” Winston Churchill
    The key to a good 30 second introduction is not just to practice but to deliver it in a way that seems fresh to everyone that you meet. OK, that’s probably not as important as keeping it to 30 seconds but it’s one of the keys to mastering the start of a good conversation.
  10. “The first hour of the morning is the rudder of the day.” Henry Ward Beecher

If you haven’t been to a Bootstrapper Breakfast in a while drop in and reconnect with “entrepreneurs who like to eat problems for breakfast.”®

Quotes take from “Quotes for Entrepreneurs–July 2014

Welcome to Bootstrappers Breakfast Midland!

Welcome MidlandBootstrappers Breakfast is a nationwide Meetup and we are very happy to bring the breakfast to Midland. At Bootstrappers we aim to provide a wealth of resources to help you through the challenges of starting/running/building a startup. At the breakfast you will be able to dive deep into any challenges you may have and receive actionable takeaways to continue to push up and to the right!

Our next breakfast will be Wednesday August 13th at 8:30am at the Mid Michigan Innovation Center in Midland. Link below for details and to RSVP.

http://www.meetup.com/Bootstrappers-Breakfast-Midland-Startups/