516-227-0700

Emerging Companies & Venture Capital

Focused representation to entrepreneurs, emerging growth companies, and the investors who fund them.

Our dedicated team of attorneys provides focused representation to entrepreneurs, public and private emerging growth companies, and the venture capital funds, angel investors, and investment banks that finance them.

We represent technology and other emerging high-growth businesses in various industries, including biotechnology, digital media, environmental, information technology, medical devices, software, clean energy and blockchain technology, and telecommunications, regularly advising them on:

  • Entity formation and development
  • Founder and shareholder agreements
  • Seed- and late-stage funding
  • Executive compensation and benefits, stock option and other equity-based compensation arrangements
  • Licensing and other technology transfer transactions
  • Mergers and acquisitions and other strategic transactions

We also advise venture capital firms and other fund sponsors on fund formation and administration and represent venture capital funds and angel investors in the negotiation of various stages of equity, debt, and convertible funding transactions, and the planning and implementation of exit strategies.

Valuable Investor & Industry Relationships

Our professional relationships are a valuable resource to our technology and emerging company clients. We have strong relationships with:

  • Venture capital firms, private equity firms, angel investors, investment banks, and other capital sources, several of whom have invested in our clients
  • All of Long Island’s universities, major laboratories, and other research institutions, including Cold Spring Harbor Laboratory, Brookhaven National Laboratory, Stony Brook University, Farmingdale State College, Hofstra University, the Feinstein Institute, and Winthrop-University Hospital
  • Numerous technology organizations and institutions, including Accelerate Long Island, the Center of Excellence in Wireless and Information Technology, i-Hamptons, the Long Island Software and Technology Network, the Long Island Forum for Technology, the Long Island Technology Hall of Fame, the New York State Governor’s Innovation and Industry Work Group, the Association for Corporate Growth, and COMETS

Farrell Fritz has assumed a leadership role in significant initiatives to build a robust innovation ecosystem on Long Island and promote the commercialization of Long Island-originated technology. Our attorneys have also taken active roles in advocating for private and public capital markets reform, including through public speaking and publication in various media, with the goal of making it easier for emerging companies to raise capital in the private markets and ultimately go public.

A Trusted Resource

Our emerging companies & venture capital practice group publishes the New York Venture Hub blog, a widely read resource devoted to issues important to high-growth entrepreneurs, investors, and their advisers.

Professionals

Robert C. Creighton

Partner
Uniondale

Alon Y. Kapen

Partner
Uniondale

Stephen F. Melore

Partner
Uniondale

Charles M. Strain

Partner
Uniondale

Joanna Lima

Associate
Uniondale

Richard Quatrano

Associate
Uniondale

Recent Blog Posts

Founder Fraud Case Study: Roundtrip Contracts and Other Revenue Recognition Schemes

The Securities and Exchange Commission filed a complaint last week against the founder of venture-backed mobile payments startup Jumio, Inc., charging…

April 08, 2019

Read more

April 08, 2019

Read more

Power Lyfting: Lyft IPO is Latest in Trend Giving Founders Disproportionate Voting Power

Lyft, Inc. last week completed its highly anticipated initial public offering, raising over $2.3 billion at a valuation of approximately…

April 01, 2019

Read more

April 01, 2019

Read more

Behind 2018’s Boom Year for Venture Capital

2018 was a historically good year for venture capital in the United States in terms of dollars invested by VC funds…

February 18, 2019

Read more

February 18, 2019

Read more

In my Backyard: Real Estate Developers can Use Equity Crowdfunding both to Fund Projects and Convert Opposition

Real estate developers should seriously consider equity crowdfunding to fund development projects for two major reasons, one of which has…

January 28, 2019

Read more

January 28, 2019

Read more

SEC Reporting Companies Now Regulation A+ Eligible

On December 19, 2018, the Securities and Exchange Commission issued final rules to permit reporting companies under the Securities Exchange Act…

December 26, 2018

Read more

December 26, 2018

Read more

First Federal Ruling Against SEC on Whether Digital Token is a Security

On November 27, 2018, the United States District Court for the Southern District of California denied the Securities and Exchange…

December 03, 2018

Read more

December 03, 2018

Read more

Imitation Not Always Flattery: SEC Halts ICO that Falsely Claimed Approval by SEC and Self-Created “Blockchain Exchange Commission”

If you were looking for a safe blockchain investment and had the chance to invest in the “first licensed and…

October 14, 2018

Read more

October 14, 2018

Read more

Gig Stock: Extension of Rule 701 Exemption for Compensatory Equity Proposed for Gig Economy Participants

Private companies in the gig economy like Uber and Airbnb would love to issue compensatory equity to their platform participants, just…

September 25, 2018

Read more

September 25, 2018

Read more

“No Good Deed”: Free Tokens Issued in Airdrops, Bounty Programs Likely Violate Securities Laws

If you’re thinking of airdropping free tokens or implementing a cryptocurrency bounty program, be careful. The Securities and Exchange Commission…

August 19, 2018

Read more

August 19, 2018

Read more

“Third Time’s a Charm”: House Adopts JOBS Act 3.0 to Fix Earlier Capital Raising Reform Efforts

It’s not often that the House of Representatives votes nearly unanimously on anything noteworthy these days, but that’s exactly what…

July 24, 2018

Read more

July 24, 2018

Read more

SEC Expands Eligibility for Scaled Disclosure; Signals Possible Auditor Attestation Relief

On June 28, 2018, the Securities and Exchange Commission issued a release amending the definition of “smaller reporting company” (“SRC”) to…

July 16, 2018

Read more

July 16, 2018

Read more

Can a Digital Token Evolve? Head of Corp Fin Says “Yes”, if Network Becomes Decentralized

“Can a digital asset that was originally offered in a securities offering ever be later sold in a manner that…

June 26, 2018

Read more

June 26, 2018

Read more

SEC Reporting Companies Soon to be Regulation A+ Eligible

Buried in new legislation mainly intended to ease Dodd-Frank restrictions on small banks is an expansion of Regulation A eligibility to…

June 11, 2018

Read more

June 11, 2018

Read more

First S-1 Filing for an ICO: Going Legit or Just a Crypto Head Fake?

Initial coin offerings so far have gone through two major phases in their brief lifespan. The initial phase flew under…

May 07, 2018

Read more

May 07, 2018

Read more

Hand it Over: SAFT-Based ICOs Challenged by SEC Subpoenas

The Wall Street Journal ominously reported on February 28 that the Securities and Exchange Commission recently issued dozens of subpoenas…

March 22, 2018

Read more

March 22, 2018

Read more

Dropbox IPO Multi-Class Structure: Bad Corporate Governance or Good Long Term Focus?

Dual or multi-class capitalization structures generally allow companies to sell large amounts of shares to the public while maintaining control…

February 26, 2018

Read more

February 26, 2018

Read more

Regulation Crowdfunding Surpasses $100 Million but Still Needs Reform

A recent report on the state of Regulation Crowdfunding published by a major crowdfunding advisory firm is cause for both celebration…

February 20, 2018

Read more

February 20, 2018

Read more

Massachusetts’ First ICO Enforcement Action Offers Important Lessons for Offshore ICOs

Last month, Secretary of the Commonwealth of Massachusetts William Galvin made good on his promise to conduct an exam sweep of ICOs…

February 05, 2018

Read more

February 05, 2018

Read more

Better Part of Valor: Delaware Supreme Court Rules No Ratification Defense for Director Grants under Discretionary Plans

What happens when corporate directors approve their own awards under an equity incentive plan? Under Delaware law, so long as…

January 10, 2018

Read more

January 10, 2018

Read more

Company Abandons ICO, Agrees to Cease-and-Desist; SEC Chairman Issues ICO Warning

December 11, 2017 was a day of reckoning for entrepreneurs conducting or contemplating initial coin offerings, and for securities professionals who advise…

December 18, 2017

Read more

December 18, 2017

Read more

Is a Utility Token ICO a Sale of Securities?

Bloomberg reported on October 16 that over $3 billion dollars have been raised in over 200 initial coin offerings so far this year.…

November 06, 2017

Read more

November 06, 2017

Read more

What Can’t be Cured, Must be Endured: Delaware Limits Defective Corporate Act Ratification

A recent Delaware Chancery Court decision provides important guidance on what types of defective corporate acts may be ratified under…

October 09, 2017

Read more

October 09, 2017

Read more

Cornell Tech Dedicates New Roosevelt Island Campus

Cornell Tech celebrated a historic milestone today with the dedication of its new campus on Roosevelt Island in New York…

September 13, 2017

Read more

September 13, 2017

Read more

Unchained: Delaware Authorizes Blockchain Technology for Corporate Records

On August 1, 2017, Delaware became the first state to allow corporations to record issuances, transfers and ownership of stock using…

August 24, 2017

Read more

August 24, 2017

Read more

SEC Provides Initial Coin Offering Guidance

On July 25, 2017, the SEC’s Division of Enforcement issued a Report of Investigation (the “Report”) that concluded that the…

August 09, 2017

Read more

August 09, 2017

Read more

Do Private Company M&A Intermediaries Need to Register with the SEC as Broker-Dealers?

Since 2014, many private company mergers and acquisitions intermediaries have chosen not to register as broker-dealers. That’s because a 2014…

July 17, 2017

Read more

July 17, 2017

Read more

Good Choice: Important Capital Formation Reforms in Financial CHOICE Act of 2017 Passed by House

On June 8, 2017, the House of Representatives passed the Financial CHOICE Act of 2017 on a vote of 233-186.…

June 25, 2017

Read more

June 25, 2017

Read more

Irredeemable: Delaware Case Will Make Redemption Rights Tougher to Enforce

Venture capital funds routinely negotiate for a right of redemption – the right to require the company to buy out…

May 30, 2017

Read more

May 30, 2017

Read more

Sellout: Why Control is Key in the Sale of VC-Backed Companies

Every founder of a growth startup dreams of a big, successful exit — a sale of the company for millions…

April 18, 2017

Read more

April 18, 2017

Read more

The JOBS Act at Five: Congressional Hearing Highlights Need for Further Reform

On March 22, the Subcommittee on Capital Markets, Securities, and Investment of the Financial Services Committee conducted a hearing entitled…

March 25, 2017

Read more

March 25, 2017

Read more

The Snap IPO: Speculation Without (Board) Representation

The just completed IPO of Snap Inc. has received enormous buzz and plenty of press coverage, mostly about its eye-popping…

March 06, 2017

Read more

March 06, 2017

Read more

Potential Relief for Employee Option Exercises

Employees generally must recognize income upon the receipt of employer stock to the extent that the fair market value of…

February 24, 2017

Read more

February 24, 2017

Read more

Valuation Disconnect Leads to 2016 IPO Drought

2016 turned out to be a terrible year for IPOs, both in terms of number of deals and aggregate proceeds.…

January 02, 2017

Read more

January 02, 2017

Read more

How Corporate Venture Capital Differs

Earlier this year, Union Square Ventures Managing Partner Fred Wilson famously referred to corporate VCs as “The Devil”, when he…

December 12, 2016

Read more

December 12, 2016

Read more

SEC Adopts Rules to Facilitate Intrastate and Regional Offerings

On October 26, 2016, the Securities and Exchange Commission adopted final rules intended to make intrastate and regional offerings more…

November 14, 2016

Read more

November 14, 2016

Read more

Seed Round Model Structures, Part II: Convertible Notes, KISSes and SAFEs

In Part I of this two part series on model structures for seed rounds, I explained how the dramatic decline in…

September 18, 2016

Read more

September 18, 2016

Read more

Seed Round Model Structures, Part I: Equity

The cost of launching an Internet-based startup has fallen dramatically over the last 15 years. This democratization of internet-based entrepreneurship…

August 22, 2016

Read more

August 22, 2016

Read more

Why is the SEC Investigating Tesla Motors?

On July 11, 2016, the Wall Street Journal reported that the Securities and Exchange Commission is investigating whether Tesla Motors…

July 30, 2016

Read more

July 30, 2016

Read more

House Passes Watered Down “Fix Crowdfunding Act”

On July 5, the House of Representatives passed a watered down version of the Fix Crowdfunding Act (the “FCA”) that…

July 11, 2016

Read more

July 11, 2016

Read more

Title III Crowdfunding Goes Live Today with Much Potential, but Different Reality

Ever since the Federal securities laws were enacted in 1933, all offers and sales of securities in the United States…

May 16, 2016

Read more

May 16, 2016

Read more

Fix Crowdfunding Act Would Cure Title III Crowdfunding Ills

Beginning on May 16, issuers for the first time will be able to offer and sell securities online to anyone, not just…

April 27, 2016

Read more

April 27, 2016

Read more

2016 Trends in Convertible Note Deal Terms

Seed stage investment deals, i.e., those in a range of approximately $100,000 on the low end and around $1.3 million…

April 03, 2016

Read more

April 03, 2016

Read more

Protecting Management from a Liquidation Preference Overhang

Lane Becker, Former CEO of Get Satisfaction “The Founder of a $50 Million Startup Just Sold His Company — And…

March 14, 2016

Read more

March 14, 2016

Read more

Working the Crowd: A Primer for Funding Portals

One of the key investor protections of Regulation Crowdfunding under JOBS Act Title III is the requirement that offerings must…

February 10, 2016

Read more

February 10, 2016

Read more

New Investor Exit Strategy Buried in Highway Bill

Buried in the recently enacted Highway Bill, officially the Fixing America’s Surface Transportation Act or FAST Act, is a new…

January 19, 2016

Read more

January 19, 2016

Read more

Regulation Crowdfunding Effective Date is May 16, 2016

It’s official: the new Regulation Crowdfunding rules will become effective on May 16, 2016.  The SEC’s final rules release of…

November 18, 2015

Read more

November 18, 2015

Read more

Trick or Treat? SEC Adopts Controversial Crowdfunding Rules

At an open meeting on October 30, 2015, the Securities and Exchange Commission by a three-to-one vote adopted final rules…

October 31, 2015

Read more

October 31, 2015

Read more

Proposed Reforms Would Allow Unregistered Finders to Receive Success Fees

In its most recent meeting on September 23, 2015, the Securities and Exchange Commission’s Advisory Committee on Small and Emerging…

October 04, 2015

Read more

October 04, 2015

Read more

New SEC Guidance on What Constitutes “General Solicitation”

August 6, 2015 was a productive day for the Staff of the Securities and Exchange Commission’s Division of Corporation Finance…

September 09, 2015

Read more

September 09, 2015

Read more

“It’s Complicated”: Establishing “Preexisting Relationships” with Prospective Investors

In my last post, I blogged about online funding platforms. In that post, I described the typical model of indirect…

August 16, 2015

Read more

August 16, 2015

Read more

What’s the Deal with Online Funding Platforms?

Lately I’ve been approached by current and prospective clients about online funding platforms, either by folks interested in forming and…

July 24, 2015

Read more

July 24, 2015

Read more

Weak First Quarter for U.S. Venture-Backed IPOs

The market for venture backed IPOs in the U.S. in the first quarter of 2015 was the weakest in two…

June 28, 2015

Read more

June 28, 2015

Read more

New Regulation A+ Published in Federal Register — Will Become Effective June 19

The Regulation A amendments adopted by the Securities Exchange Commission on March 25 are being published tomorrow, April 20, in…

April 19, 2015

Read more

April 19, 2015

Read more

SEC Adopts Final Reg A+ Rules for Mini Public Offerings of up to $50 Million without Registration

The SEC yesterday issued its highly anticipated final rules amending Regulation A to allow issuers to raise up to $50 million in…

March 26, 2015

Read more

March 26, 2015

Read more

Electronic Blue Sky Filing System Launched by North American Securities Administrators Association

On December 15, 2014, the North American Securities Administrators Association launched the Electronic Filing Depository (“EFD”), an internet accessible database…

February 04, 2015

Read more

February 04, 2015

Read more

Technology Licensing Primer for Entrepreneurs – Part I: Non-Financial Terms

If you’re developing a product that requires certain technology that can’t be developed in-house (because of cost, time, human resources…

January 13, 2015

Read more

January 13, 2015

Read more

“Birthing a Unicorn is Hard” and other Takeaways from the 2014 Cornell Entrepreneurship Summit

It’s never easy to take an entire business day out of the office, but the annual Cornell Entrepreneurship Summit is…

November 17, 2014

Read more

November 17, 2014

Read more

Are VCs incentivized to lose money?

  Are VCs incentivized to lose money?  This is the provocative assertion made recently (and again) by Kaufman Foundation Senior…

September 24, 2014

Read more

September 24, 2014

Read more

Will Your Demo Day Presentation Violate the Securities Laws?

Your company is invited by a local meetup group to present at demo day with other startups, and you accept. …

August 11, 2014

Read more

August 11, 2014

Read more

Why Valuation is Overvalued, Part II: Liquidation Preferences

In Part I of this two-part series, I explained how a favorable pre-money valuation can be undercut by a large…

June 22, 2014

Read more

June 22, 2014

Read more

Why Valuation is Overvalued, Part I: The Option Pool

In any seed or early stage round negotiation between a company and a VC, one of the first and most…

May 19, 2014

Read more

May 19, 2014

Read more

Accelerator Mentoring and Money: On-Ramp for Startup Success

Building  a successful startup is challenging.  But the chances of success could be greatly enhanced through participation in a startup accelerator…

April 07, 2014

Read more

April 07, 2014

Read more

To Improve Small Company Liquidity, SEC Chairman Announces Tick-Size Pilot

SEC Chairman Mary Jo White SEC Chairman Mary Jo White gave her state of the Commission speech on Friday at the…

February 25, 2014

Read more

February 25, 2014

Read more

SBA Initiatives and Twisted Business at SBIA Northeast Private Equity Conference

  My partner Steve Melore and I braved the latest New York snow storm to attend the Small Business Investor…

January 23, 2014

Read more

January 23, 2014

Read more

FINRA Priorities for 2014: IPOs, General Solicitation, Crowdfunding Portals and Microcap Fraud

On January 2, 2014, the Financial Industry Regulatory Authority (“FINRA”) published its annual priorities letter for 2014, chief among which…

January 09, 2014

Read more

January 09, 2014

Read more

Close to the Vest: Founders’ Stock and Vesting

Your startup was launched only a few months ago and your co-founder has just informed you that he’s leaving.  It…

December 31, 2013

Read more

December 31, 2013

Read more

SEC Provides Guidance on General Solicitation Private Offerings

The Securities and Exchange Commission released helpful guidance on some of the practical aspects of the new Rule 506(c) exemption for private…

December 10, 2013

Read more

December 10, 2013

Read more

Wisdom of the Crowd: SEC Issues Proposed Rules on Equity Crowdfunding

In a massive 585 page release, the Securities Exchange Commission on October 23 issued its long overdue proposed rules on equity crowdfunding…

November 12, 2013

Read more

November 12, 2013

Read more

Cornell Entrepreneurship Summit 2013: “Cool Jar” Deposits and Frozen Custard

The second annual Cornell Entrepreneurship Summit was held on October 11 in New York City and I was thrilled to…

October 22, 2013

Read more

October 22, 2013

Read more

Free at Last: General Solicitation and Advertising in Private Offerings Begins September 23

The new SEC rules lifting the ban on general solicitation and general advertising in certain private offerings go into effect today,…

September 23, 2013

Read more

September 23, 2013

Read more

PE Funds Could be Liable for Certain Portfolio Company Pension Obligations

Sun Capital Partners was dealt a harsh blow by the United States Court of Appeals for the First Circuit in…

August 16, 2013

Read more

August 16, 2013

Read more

General Solicitation Ban Lifted from Rule 506 Private Offerings, But Issuers Must Verify all Purchasers are Accredited

The SEC on July 10 finally lifted its 80-year old ban on general solicitation and general advertising in Rule 506…

July 18, 2013

Read more

July 18, 2013

Read more

Convertible Valuation Caps: Loved by Angels, Tolerated by VCs and Hated by Entrepreneurs

I’ve noticed a recent trend of angel investors demanding valuation caps on their convertible bridge loans, and I’ve received questions…

June 19, 2013

Read more

June 19, 2013

Read more

SEC Report on Small Business Capital Reform

Last month, the SEC released its Final Report on the 2012 SEC Government-Business Forum on Small Business Capital Formation, the…

May 15, 2013

Read more

May 15, 2013

Read more

Tax Me Now: Founder Stock and the 83(b) Election

Of the countless details and decisions that the founder of a startup company is inevitably juggling as he launches his…

May 05, 2013

Read more

May 05, 2013

Read more

SEC “Likes” Social Media Disclosure, So Long as Investors are Alerted

On July 3, 2012, Netflix CEO Reed Hastings kicked off the holiday weekend with some fireworks of his own by…

April 24, 2013

Read more

April 24, 2013

Read more

New York Emerges as Tech Powerhouse

In what may seem like a blink of an iPad, New York has emerged over the last few years as…

April 09, 2013

Read more

April 09, 2013

Read more

Startups’ Guide to JOBS Act

In perhaps the only successful bipartisan effort in 2012 to remove barriers to economic growth, Congress passed and the President…

March 27, 2013

Read more

March 27, 2013

Read more

Risks In Using Unregistered Finders To Find Capital

Using finders, instead of investment bankers that are registered broker-dealers, involves significant risks that could threaten a company’s ability to successfully…

March 20, 2013

Read more

March 20, 2013

Read more

Getting Carried Away With Carried Interest?

            The debate over the taxation of “carried interest” has been percolating for years and the release of Mitt Romney’s…

March 12, 2013

Read more

March 12, 2013

Read more

Read More

Articles & Advisories

Farrell Fritz: Joining in the effort to build Long Island’s innovation economy

Attorney Advertising – Long Island Business News A partner in Farrell Fritz’s corporate department, Alon Y. Kapen leads the firm’s…

June 08, 2015

Read more

News

LI firm seeks to cut costs by ending stock registration

Vicon Industries Inc. has filed to terminate the registration of its common stock, exempting the Hauppauge company from reporting requirements…

January 24, 2019

Read more

Air Industries to sell $7M in stock to boost liquidity

Alon Kapen, a securities lawyer at Farrell Fritz in Uniondale, said that Air Industries’ disclosures about internal financial controls brings…

June 29, 2017

Read more

Founders’ agreements can help partners avoid messy breakups

You must recognize each founder usually brings unique skills and value to a company, says Farrell Fritz law Alon Kapen,…

April 02, 2017

Read more

Digital Donations plans $13 million IPO by shareholders

Digital Donations Technologies Inc., whose digital crowdfunding systems help nonprofits raise money, has filed government documents for an initial public…

November 16, 2016

Read more

eGifter plans to raise up to $11 million from investors

“This is the future of capital raising,” said Alon Kapen, a corporate attorney at Uniondale-based law firm Farrell Fritz, which…

November 08, 2016

Read more

Three key factors to Kickstarter success, study finds

Starting May 16, entrepreneurs will have an additional avenue to raise money. They’ll be able to solicit up to $1…

April 24, 2016

Read more

Cemtrex sees Nasdaq listing as springboard for growth

“Listing on Nasdaq has a certain implied stability,” said Alon Kapen, a partner at the Uniondale law firm Farrell Fritz…

January 10, 2016

Read more

Small Business: Still waiting for SEC crowdfunding rules

Currently, public solicitation or advertising of a private equity offering is permitted only if all purchasers are accredited investors (i.e.,…

March 01, 2015

Read more

LI sizzles with $7 billion in mergers

Executives of public companies felt compelled to keep earnings per share rising to keep pace with the stock market, said…

January 04, 2015

Read more

Accelerate Long Island and the Long Island Emerging Technologies Fund Announce $500K in Funding for Five Biotech and Clean Energy Startups

June 09, 2014

Read more

Read More

Pro Bono

Keeping L.I. Green while Saving Sustainable Long Island Some Green

Sustainable Long Island is a not-for-profit organization founded in 1996 by a diverse group of stakeholders in the Long Island…

August 15, 2011

Read more