Fan - Winter 2015 - University of Washington School of Law

LAW E511: Venture Capital Deals
Class Meetings:
Winter Quarter:
M & W, 10:30 a.m. - 12:20 p.m.
Room 118
Jennifer S. Fan
Room 249
(206) 685-2636 (office)
(206) 484-5258 (cell)
[email protected]
Office Hours:
Tuesdays, 10:30-12:30
By appointment
Course Website:
Course Objectives
Venture capital (VC) is part of the private equity asset class. It focuses on investments in private, early
stage, innovative companies with high growth potential. This course provides an in-depth look at the legal
issues you are likely to encounter as a lawyer for the company, investor or equity stakeholder in a VC deal.
In class, we will discuss the legal framework a company needs in place before seeking VC financing, funding
options before such a financing occurs and pre-VC funding implications for the financing itself. We will also
discuss the roles of the key players in a VC deal from legal and business perspectives. Additionally, you will
analyze relevant statutes and regulations, and learn about the standard set of negotiated terms in typical VC
deals. You will also negotiate and draft VC deal documents. By the end of term, you will have an
understanding of the important legal and business considerations in a VC deal. The drafting skills you learn
in VC deals and understanding of securities regulation law will provide the foundation you need in other
areas of transactional law.
Course Materials
Brad Feld & Jason Mendelson, Venture Deals: Be Smarter Than Your Lawyer and Venture Capitalist, Second
Edition, 2013 (available for purchase at the University Bookstore).
Harvard Business Review (HBR) Case Study: Michael J. Roberts, Funding New Ventures: Valuation Financing
and Capitalization Table (available for purchase at the University Bookstore).
Section 4(a)(2) of the Securities Act of 1933,
SEC Regulation D—Rules Governing the Limited Offer and Sale of Securities Without Registration Under the
Securities Act of 1933, 17 C.F.R. §§ 230.500-230.508 (2014), e-CFR,
SEC General—Accredited investor, 17 C.F.R. §230.215 (2014), e-CFR,
National Venture Capital Association, Model Legal Documents,
Series Seed documents:
Y Combinator, Series AA equity agreements:
I expect you to attend class regularly and to be prepared to participate in class discussions. Before class,
you should have: (1) completed all readings and assignments for the day; (2) thought about the topics
to be discussed; and (3) prepared questions and comments you would like to discuss. If you are not feeling
well, or have an emergency, you should notify me in advance.
You may only use laptops in class for class-related purposes. If I notice you using your laptop for an
unrelated purpose, it will adversely impact your grade.
Your final grade in this course is based on: (1) Two scheduled mid-quarter tests (60%); (2) drafting Series A
financing documents (25%); and (3) a four page venture capital event analytical paper and class participation
 The tests will take place in class on the dates noted below. Each quiz is worth 30% of your grade.
 Series A financing documents will be drafted in class on the day that the document is scheduled to be
 Each student is required to write a four page analysis after attending a venture capital-related
event; please use 12 point Times font, double space and one inch margins. You will present the paper
in class. Evaluation of class participation includes: (1) class attendance; and (2) quality (not quantity)
of contributions to class discussion.
Please pay attention to the due dates and times. Assignments will lose one full letter grade for each
24 hours (or portion thereof) that the assignment is late. For example, if a paper is due at 8:00 a.m.
on Wednesday, and you turn in an “A” paper between 8:01 a.m. Wednesday and 8:00 a.m. Thursday,
it will receive a “B.”
Office Hours: By appointment
I encourage you to come see me or to email me when you have questions or issues that you want to discuss
relating to the course. In addition to discussing course-related matters during office hours, I am happy to
meet with students to talk about other law-related issues.
Assigned Readings
The assigned readings will be posted on-line or via on-line links that can be found on the course website in
the “Assignments” folder. The reading assignments will be organized in the “Assignments” folder on the
website by week number and date due. You are responsible for all materials posted on Canvas.
Under UW Law’s attendance policy, if, at any time after the fifth week of the course, you have attended less than 80%
of the regularly-scheduled class sessions (not including any that have been cancelled), you will be required to drop the
Disability-Related Needs
To request academic accommodations due to a disability, please contact Disability Resources for Students
(DRS), 448 Schmitz, (206) 543-8924 (V), (206) 543-8925 (TTY). If you have a letter from DRS, please present
the letter to me so we can discuss the accommodations you might need in this class.
Course Calendar
Reading Assignments
1. Jan. 5
Venture Deals, Chapters 1 and 14
2. Jan. 7
Pre-VC Financing; Securities Regulation
Venture Deals, Chapter 2; Section 4(2) of
the Securities Act of 1933; Regulation D;
definition of “accredited investor”
3. Jan. 12
Angel Money, Seed & Bridge Financings
Venture Deals, Chapters 8 and 12
Series Seed Documents (Version 3.2),
Y Combinator Documents,
4. Jan. 14
Term Sheet & Certificate of
Venture Deals, Chapters 3, 4 and 5;
Review Term Sheet and Certificate of
Incorporation at
5. Jan. 21
A Venture Capitalist’s Perspective
Guest Speaker, Chris DeVore
Venture Deals, Chapters 9 and 11
6. Jan. 26
Investors’ Counsel Perspective
DLA Panel (Trent Dykes, Megan Muir and
Tyler Hollenbeck)
Venture Deals, Chapters 6 and 7
Jan. 28
Reading Assignments
Stock Purchase Agreement & Due
Review Stock Purchase Agreement at
Feb. 2
Capitalization Table
Guest Speaker: Eric Carnell
HBR Case Study
Feb. 4
Company Counsel’s Perspective
Guest Speaker: Craig Sherman, WSGR
Venture Deals, Chapter 10
10. Feb. 9
Investors’ Rights Agreement
Review Investors’ Rights Agreement at
11. Feb. 11
Right of First Refusal & Co-Sale
Review Right of First Refusal & Co-Sale Agreement
12. Feb. 18
Quiz #1
13. Feb. 23
Voting Rights Agreement
Review Voting Rights Agreement at
14. Feb. 25
Ancillary Documents; Closing
Review Indemnification Agreement,
Management Rights Letter and Indemnification
Agreement at
15. Mar. 2
Exit Strategies
Guest Speaker: Ben Straughan,
Perkins Coie
Venture Deals, Chapter 13
Due: Paper must be uploaded to Canvas by 8:00 a.m.
16. Mar. 4
Quiz #2
Reading Assignments
17. Mar. 9
Discuss papers
18. Mar. 11
Discuss papers; Wrap up