Browse Topics
Liquidation Preferences
When a startup is running low on cash, and can’t get profitable, it has two options: raise capital or sell the business. In a challenging funding market—like 2023, 2008, or 2001—both options are problematic. Raising more capital may require a down round. And as we’ve previously discussed, down rounds are incredibly painful. Selling the business and cashing out might look better than a down round. But let’s look a little closer at one of the…
Down Rounds
The pain is here. By volume, size, velocity, and valuation angel deals are down. Series A deals are down. The whole alphabet of deals is down. We’re seeing founders take a lot of meetings—a lot of meetings—without much success. And that seems to be the case in the midwest and everywhere else. One result is that when deals do happen, the terms aren’t great. If you’re raising capital you already know this. Valuations are taking a pounding!…
SAFEs
Let’s talk about Safes. If you’re not familiar, a Safe is an option contract that lets investors pre-pay for the right to receive equity in the future. Safe stands for Simple Agreement for Future Equity. Typically the Safe converts into equity in a later financing round and because the investor pre-paid she’s given better terms than the new investors. Safes are easy. The standard template—created by the startup accelerator, Y Combinator—is six pages. By contrast, the NVCA…
Navigating the High-Risk AI Waters in the EU
Our last issue invited you into the world of the EU’s new AI Act, exploring its intricate scope and definitions. We now illuminate the labyrinth of compliance requirements in the Act, pointing a spotlight at high-risk AI systems—the principal focus of the Act’s regulatory purview. (Recall that the Act’s regulatory framework divides AI into non-high-risk systems, high-risk systems, and prohibited AI practices.) Let’s take a look at the Act’s cornerstone principles of risk management, data…
The EU is regulating AI. Here’s what you need to know.
The European Union is leading the world in regulating artificial intelligence, just like it did with data protection and GDPR. AI-focused laws have been proposed in the US and around the world. But the EU law is the closest major law to implementation and is likely to set the bar for AI compliance worldwide. The EU’s AI Act is a comprehensive set of rules designed to ensure that AI systems play nice with humans, respect…
Your Robo-Receptionist – Implementing a Chatbot on Your Website
Few consumer experiences are more frustrating than chatting with online customer support. You know, in one of those little chat boxes. Too often it feels like you’re talking to a wall. Is it a language thing? Chat volume? You’ve probably been airing your gripes to a bot. More and more, companies are saving on labor costs by staffing their website chat boxes with cut-rate algorithmic chatbots. And it shows. But that’s changing. Recent advances in…
Get the Money!
How much should I raise? Every founder on the funded-startup path has asked this question. The basic answer is something like, enough to hit your next set of major milestones. Or enough to achieve impressive traction. Or—enough that you can do something so impressive that investors want to buy more of your stock for lots of dollars. That’s a good start. Assuming you can figure out what that advice is aiming at—month over month growth?…
Will the Real Artist Please Stand Up
Imagine a fiery collab between Drake, Jay-Z, and Eminem, orchestrated not by record labels and agents but by artificial intelligence. We are there. AI can now mimic an artist’s sound and style, raising both amazement and eyebrows. Already a few AI-generated songs have gotten attention because of the AI’s uncanny ability to replicate the sound and style of Jay-Zand Drake (maybe not so much for Eminem). No surprise, copyright takedown notices have already been delivered. But copyright laws—which requires…
AI is Aging
It’s only been a few months since Open AI released ChatGPT and already it feels like AI is an old trend. Everyone is talking about it. We’re guilty of it too—shamelessly so—and, you know what?, we’ll continue to be! Welcome to the first issue of the Neural Network Notebook: a regular, quick hit of our insights and speculation on the interaction of artificial intelligence and the law. Why this; why now? Sure, artificial intelligence has been around for…
