How to Choose a Good Business Name

One of the early defining moments in the life of a startup is choosing a name. It’s generally the first thing the public knows about you – your first business “pitch” when you really think about it. And it serves as the centerpiece of your brand, so it’s important that you select something that you’re proud to put out into the world.

You brainstorm, wait for inspiration, ask for feedback – the process can drag on and on. For a year, my best friend and I devoted the majority of our phone conversations to the all-important topic of what to name the various business ideas we were working to hatch. Finally, after settling on names that suited both of us, the real work began. Could we get the domain?

In today’s era of the Internet and mobile services, the reach of your company is only limited by your customers’ ability to find you. So it makes sense that most startup founders stake the company name on the availability of the domain. But with the ever growing scarcity of good “.com” options, what do you do when a top level domain is not available for your enterprise?

Many startups fall prey to these common pitfalls when forced to think outside the “.com” box.

So how can you choose a good business name?

1. Drop Vowels: Famous internet brands, like Flickr and Twitter (known as Twittr when it first launched), have popularized the trend of dropping the vowels in their company name, which makes it easier to score a .com domain. In fact, Flickr founder, Catarina Fake credits domain acquisition challenges as the driving motivations behind the name: “We tried to buy the domain from the prior owner… He wasn’t interested in selling…. We liked the name “Flicker” so much we dropped the E. It wasn’t very popular on the team, I had to do a lot of persuasion.” While some might argue that a deliberate misspelling makes for an edgier – more distinctive – identity, other founders have faced challenges with this approach. According to Ustav Agarwal, founder and CEO of the gamified music sharing app “nwplying.” “Nowplaying described the product in its simplest form, but it was too common a hashtag for us to possibly differentiate ourselves and create a brand around it – hence the term nwplyng, i.e. ‘nowplaying’ sans vowels,” he says. “Plus, the domain name nwplyng.com was easily available.” But would he recommend this approach to other entrepreneurs? No. “Users misspell it way too often,” he shares, “even the ones using it regularly – and that means you lose out on network effect and app downloads.”

2. Add a Verb: When DropBox wasn’t initially able to acquire DropBox.com, it settled for GetDropBox.com. Same for Atlanta-based startup Gather, which you can find at gatherhere.com. While this is may be a better alternative than abandoning a name you really love just because the .com version is unavailable, there are some practical downsides, explained in detail in this article. In short, be prepared for customer confusion – from lost emails sent to the official owner of the top level domain to less effective marketing campaigns, diluted by the traffic diverted to the domain reflecting your company’s name. Not to mention inevitable questions from investors, anxious to see your company legitimized by securing the straightforward “.com,” sans verb. For customers and potential investors, the “add a verb” approach can often amount to a red flag that begs a larger question – when will your company be legitimate enough to buy the original domain?

3. Choose a Country Code Domain. Enterprising companies like Bit.ly and About.me played the .com scarcity to their advantage, embracing country code domain alternatives to the point that they incorporated the whimsical suffix into their name. This trend is here to stay, with the creation of more and more generic top level domains to choose from (such as “bike,” “food,” and many other common nouns), but keep in mind the reality that customers still have to find you. And a trendy new domain – while it may work for your company name – can cause consumer confusion. As explained here by Eric Bieller, founder of Sqwiggle, “Letsfeast.com used to be found at lesfea.st, which is clever, but extremely difficult to explain to someone audibly.”

With a matter as critical to your company as its name, make sure to consult with a domain attorney before you settle for anything less than the top-level domain of your dreams. A solid understanding of the legal leverage you have – before you try to negotiate with a cybersquatter – can literally translate into a cost savings in the hundreds of thousands. At least that’s what it meant for a recent client.

This is especially true for companies that have expended considerable resources developing brand goodwill. Your hard work should be leveraged to make the acquisition of a top-level domain much easier and more affordable, so you don’t have to settle for the compromises listed above.

 

If you are interested in more detail related to your situation it is best to speak with an attorney.

Megan K. Johnson is a business lawyer with over 7 years of experience. She helped champion securities crowdfunding at the local level and worked with the first company to successfully close an equity crowdfunding involving everyday investors. She is a partner at Founders Legal and can be reached at [email protected]

megan

Source: Smartup Legal

Airbus Files Patent for New Commercial Aircraft

Airbus, formerly known as the European aerospace and defense group, has filed a patent for a revolutionary commercial aircraft design. With its doughnut-like shape, the design is reminiscent of old science fiction space crafts, with a circular passenger cabin located behind the plane’s nose, and between its wings. The patent is meant to address an overarching issue among aircraft designers. The current cylindrical shape of airplanes is effective at handling the pressurized cabin, but strong reinforcements are needed at the front and rear ends of the plane to counter the stresses. This design will force other considerations including the alteration of in-flight trolleys to handle the curved isles, and redesigning the boarding/departure process. Airbus hopes to provide a simple and efficient solution that will reduce emissions, improve flight times, and better preserve energy. (Details for patent application)

 

If you are interested in more detail related to your situation it is best to speak with an attorney.

Andrei Tsygankov is the Co-Founder and COO of SmartUp® and a partner at Founders Legal (Bekiares Eliezer LLP). As an attorney, Andrei specializes in corporate, commercial, trademark, and international business matters.

andrei

Source: Smartup Legal

When to Seek Legal Advice | The Pros and Cons of Acting as Your Own Attorney

Can you be your own lawyer?

Yes. Maybe. No. Sort of.

In truth, it really depends on the situation. For the easy stuff? Sure. For the more difficult things? Probably not. The big problem is how do you know what is DIY-friendly and what isn’t?

A good comparison that I like to use is this: Can you fix your own car? Well, it depends on your automotive know-how, general handiness, the tools and equipment you have, and the scope of your project. A lay person with a modern car can typically replace the wiper blades, top off some of the fluids, maybe even change the oil. However, if the repair requires replacing worn piston rings, most people would recognize that as a big job and seek out a technician who knows what he’s doing.

The same thing can be said about doing your own legal work – you can (and should) do some things yourself, but other, more complex procedures are best left to those with the right skills and training. While this seems very intuitive, knowing when to turn to an expert and for what is a hard task. In law, like in modern auto repairs, the help a layperson needs is twofold:

  1. Diagnosing the problem; and
  2. Proposing and implementing the right solution.

Knowing when to seek some help only becomes more difficult with the mounds of available online advice and with many popular self-help websites. Many of them promise solutions without having any way to know what the underlying problems are. To again use an automotive analogy, this is akin to a mechanic offering to sell you a part or perform a service without even seeing your car or knowing anything about it. This is one of the underlying reasons for Consumer Reports finding that legal DIY websites are no match for hands-on legal professionals.

So, what can you do?

  1. Find a lawyer who focuses on working with people like you. For example, if you have a startup, find a lawyer who mostly works with startups. He or she is more likely to deal with your specific issues and will know to provide doable payment options.
  1. Find a lawyer who is technologically savvy, and uses the latest efficiency tools. Look at it this way: If your attorney knows how to use technology to become more efficient, then he or she has the ability to provide services to you at a lower cost.  For example, sending documents by mail for review or signature is more costly and time-consuming than using a secure electronic file transfer service.
  1. Look for a trusted website that efficiently puts you together with a lawyer. A simple lawyer listing or referral service is the modern equivalent of a phone book and is not very useful. Look for a trusted website that will walk you through part of an intake process and then put you together with an attorney. That is money saved for you.  If you can arrange a free consultation through the site, that is a bonus.

In conclusion, you will be better off consulting with a lawyer, especially for things that are important to you – such as your business, which is your livelihood. The key is finding and working with the right lawyer in a way that works for your needs and your budget.

 

If you are interested in more detail related to your situation it is best to speak with an attorney.

Andrei Tsygankov is the Co-Founder and COO of SmartUp® and a partner at Founders Legal (Bekiares Eliezer LLP). As an attorney, Andrei specializes in corporate, commercial, trademark, and international business matters.

andrei

Source: Smartup Legal

Equity Crowdfunding and SEC Rules

THE RISE OF “QUASI-PUBLIC OFFERINGS” REFLECTIONS FROM THE NASAA CONFERENCE

As I prepare to deliver remarks at the NASAA Corporation Finance Training Conference in St. Louis this weekend, it has provided a cause for reflection on over three years marking the rise of what I would term as “quasi-public offerings”. Trends in corporation finance laws at both the State and Federal levels have been loosening the regulatory grip on small and emerging business capital formation, and, in the process re-making over 80+ years of venerable securities laws. The rise of “quasi-public offerings” is a big part of this story.

What is a “Quasi-Public Offering”

A long accepted trope in the securities laws industry is that an offering of securities must be either “public” in that it is a transaction registered with the proper regulatory authorities (State and Federal, for a typical interstate offering), or “private” in that it is an unregistered offering that is only open to select persons, who, generally, have a prior existing relationship with the company issuing securities.

But the ever increasing costs of conducting a public-offering, coupled with the meteoric rise in the popularity of crowdfunding as an aspect of a holistic capital formation plan have led to a chorus of voices, at all levels, calling for a more sensible and affordable route to public capital raising. The responses to these calls have been variable by State, and also at the Federal level. What is emerging, however, are regulatory seems in the legal fabric that are allowing businesses (primarily small and medium sized enterprises) to raise capital from the broader public without registering the transaction, provided that certain important regulatory safeguards are abided. Collectively, these emerging exemptions are what I have termed as “quasi-public offerings”. These channels have taken on various forms, including the following discussed below.

Intrastate Crowdfunding

In 2011, with little fanfare, few spectators, and essentially no press concern, the securities administrator in the State of Kansas quietly enacted a new exemption from the registration requirements for public offerings of securities within its borders. The “Invest Kansas Exemption” (IKE), as originally enacted, permitted capital raises in Kansas of up to $1,000,000 by means of general solicitation (to both accredited and non-accredited investors) without registration and with minimal regulatory compliance features. Whether the administrator knew it at the time or not, Kansas had, in effect passed the United States’ very first securities based  “crowdfunding” exemption.

Today, over three years later, fully 14 State jurisdictions have adopted some form of intrastate crowdfunding (by legislative or regulatory means), meaning small public capital raises involving only business and only investors from that specific State. This trend of expansion is continuing apace. Why? Because State regulators are becoming increasingly comfortable that these types of small “quasi-public offerings” can be a safe and effective manner for capital starved businesses to build important community based organizations that can establish and thrive without the necessity for scarce outside capital. I expect this trend to accelerate.1

Accredited Investor Crowdfunding – Rule 506(c)

In late 2013, the Securities and Exchange Commission put in force the first major set of “quasi-public offering” regulations on the Federal level—those relating to the new Rule 506(c) registration exemption (See 17 CFR 230.506(c)). The new Rule 506(c) permits offers to be made on an interstate basis to everyone, provided that the ultimate purchaser base is restricted to “accredited investors” only. This new Rule essentially establishes “accredited investor” crowdfunding, and creates a “quasi-public offering”, albeit with an ultimately restrictive purchaser base.

With a year of data in the books, it is clear that this Rule is working. Use of the Rule is trending upward, and it is emerging as the quasi-public offering of first instance for companies looking for capital beyond what intrastate crowdfunding can provide, and, specifically, in fields (such as technology and e-commerce) in which accredited investors are well versed. The fact that this represents a shift from a focus on who is being offered securities, to who is being sold securities is an extremely important fact, and, in my view, the most significant philosophical addition that Rule 506(c) has made to the body of securities laws.2

Regulation A+

Regulation A+ is an extension of and expansion on an existing securities registration exemption called, you guessed it, “Regulation A”. Reg A permits offerings up to $5M, with scaled (reduced) disclosure requirements in the registration statement. Although Reg A has been around for a long period of time, it is underused and much maligned, primarily because the disclosure requirements are still time consuming and expensive, and, more importantly, it does not preempt State law review. As proposed by the SEC, however, Reg A+ would create a new “quasi-public offering” category for raises up to $50M, which would enjoy scaled disclosure and Federal preemption. It remains to be seen how the SEC will ultimately treat the definition of “qualified purchaser” in these offerings, and whether the Federal preemption issue will be satisfactorily resolved, but, nevertheless, many commentators believe that this Section of the JOBS Act of 2012 holds the most potential for meaningful securities offering reform.3

Follow the Trends; But Remain Cautious

I applaud the forward leaning regulators who are greeting some or all of these techniques with a welcoming—if prudently cautious—point of view. I believe that each of the foregoing has the potential to unlock capital for worthy businesses, and be done in a safe manner which protects the interests of the investing public.

Quasi-public offerings are, as discussed ever too briefly above, a new and evolving area of the securities laws. They hold the promise of broader and more cost effective access to capital for small and emerging enterprises. They are, however, also fraught with uncertainty, and a deceiving level of complexity. Any company consider conducting a capital raise—including using any of the techniques described above—should consult competent securities counsel prior to taking any action.

 

If you are interested in more detail related to your situation it is best to speak with an attorney.

Jeffrey Bekiares is a securities lawyer with over 8+ years of experience, and is co-founder at both Founders Legal and SparkMarket. He can be reached at [email protected]

jeff

1 For a summary of laws/regulations enacted as of July, 2014, see: http://www.crowdcheck.com/sites/default/files/Summary%20of%20Intrastate%20Crowdfunding%20Exemptions_0.pdf

2 For helpful and interesting statistic on the use of new Rule 506(c) after approximately 1 year, see: http://www.mofojumpstarter.com/2014/09/29/new-data-on-rule-506-offerings/?utm_source=feedburner&utm_medium=email&utm_campaign=Feed%3A+MoFoJumpstarter+%28MoFo+Jumpstarter%29

3 For a good, concise (but now somewhat dated) explanation of Reg A+ as proposed, see

http://blogs.law.harvard.edu/corpgov/2014/01/15/regulation-a-offerings-a-new-era-at-the-sec/

Source: Smartup Legal

Creepiest Thanksgiving Patent

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Move over paper hand turkey! The search is finally over for the perfect Thanksgiving centerpiece. With the Gourd Head, you can fill your cornucopia with some familiar faces.

This strange invention patented in 1987, gives at-home gardeners the opportunity to add a dimension of uniqueness to their yield. The apparatus/method described, would allow gardeners to mold their product into a variety of interesting shapes. According to the inventor, these include “the image of a particular person; in the shape of a different type of produce (e.g., a summer squash grown in the shape of an ear of corn); a fanciful shape such as a heart, or a bottle of pop; or other simple or even quite detailed shapes.” The inventor also mentions how the natural texture/designs of the produce can add to the artistic design of the final product.

The method is quite simple. The gardener places a mostly transparent mold over the growing fruit or vegetable to enable sunlight to still reach it. A key component is the yieldable nature of the mold, allowing it to stretch and expand with the growing produce, and a larger opening to avoid constricting the plant as it grows. For best results, the time the plant is in the mold should be minimized, meaning the reshaping should begin when the plant it just big enough to fit in the mold without being restricted by it. Usually, it will take 10-20 days for the plant to fill the mold and be ready for harvest. http://bit.ly/1yBsbEM

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If you are interested in more detail related to your situation it is best to speak with an attorney.

Andrei Tsygankov is the Co-Founder and COO of SmartUp® and a partner at Founders Legal (Bekiares Eliezer LLP). As an attorney, Andrei specializes in corporate, commercial, trademark, and international business matters.

andrei

Source: Smartup Legal

How to Protect Your Idea When Building a Team

An old African proverb comes to mind when writing on this topic: “By ourselves, we can move quickly. Together, we can go far.” Ideas aren’t meant to be confined to a single mind. They’re meant to be shared and formed into a common vision. I’ve seen many entrepreneurs with good ideas afraid to share their good ideas with others. They either believe that they can do it all themselves or, more often, fear misappropriation, loss of ownership, and competition.

As a result, they remain soloist amongst teams, undertaking the task of building a company with a fraction of the resources they need to realize their visions. Very few have succeeded as soloists… come to think of it, no one comes to mind.

This article hopes to provide those entrepreneurs with a means to ease and mange what I believe to be the most common cause of the soloist entrepreneur – the “I don’t want to share my idea mentality.”

Collaboration is a right of passage for entrepreneurs. It is the natural transition from a single person’s idea to a team mission of realizing a collaboratively improved idea. This right of passage represents the entrepreneur’s becoming of a leader.

As an Intellectual Property Attorney, I would encourage collaboration because it is a much more certain path to an ideas successful realization of an idea. But, as that same Intellectual Property Attorney, here is the order in which I would recommend your approach on – of course – an entrepreneur’s shoe string budget:

  • File for IP Protection – You can file these under your own name, claiming exclusive ownership. But a good strategy and incentive for building a company with committed team players is to license and assign the rights to the IP to your company. Now, everyone has some skin in the game and everyone is equally protected. Often times, you can first license the idea to your company, reserving the right to revoke the license if your team members don’t follow through with their contributions.
  • Don’t be afraid! Share your idea with those you trust. Get their feedback. Build their support. Start to build a team. So what if the idea ends up being not all yours and only yours? You’ve got a team! Now, I’m not saying to share your idea with big corporations. Rather, I’m suggesting that you reach out to your personal and professional network with your idea.
    • Pros: By adding more minds into the mix, you begin to build an idea into something worth protecting and pursuing. More importantly, in the process, you’ve enabled those collaborators to feel ownership in the idea – which I find to be the best motivator in getting people to help you realize the idea.
    • Cons: Your idea is completely unprotected at this point, and you aren’t asking ones you trust to sign a Non-Disclosure Agreement. Keep in mind though – this trustee may always betray your trust and steal away with your idea… and they law doesn’t provide you with any recourse to claim that idea as yours in such circumstances.
  • Solidify your commitment to the idea and, preferably, with a team sharing a common vision for the idea. Before spending money on forming a company and securing your intellectual property, you want to make sure you (and the rest of the team) are committed to realizing the idea. As a patent attorney, there is nothing that makes me feel worse than having my clients pay me for a patent on an idea that they don’t end up realizing.
  • Craft a Customized Non-Disclosure Agreement and IP Assignment Agreements – Not the template kind. But the kind that ensures that not only are your disclosures protected in confidence, but that any ideas that the recipient may derive from your disclosures are subject to your first right to use and ownership. Sometimes, this agreement is reached in exchange for reasonable compensation for the contributions. Having an NDA will enable you to reach out to individuals, contractors, and entities that you may need to contract with or employ in order to realize your idea. Without such an NDA coupled with an IP Assignment Agreement, you may reserve your IP rights, but will not have any rights to the contributions made by those who you’ve shared your idea with!

If you are interested in more detail related to your situation it is best to speak with an attorney.

Andrei Tsygankov is the Co-Founder and COO of SmartUp® and a partner at Founders Legal (Bekiares Eliezer LLP). As an attorney, Andrei specializes in corporate, commercial, trademark, and international business matters.

andrei

Source: Smartup Legal