Preccelerator Company Lumenus and founder Jeremy Wall were featured this past week on Iot For All in an article discussing how AI takes wearables to the next level. The company started when the founder, Jeremy Wall, was almost killed while riding his bicycle. It was this life-changing event that pushed him to create products that use technology for something meaningful—to save lives. Today, Lumenus designs and produces apparel equipped with wearable LED lights for runners, bicyclists, and motorcyclists.
About Lumenus Lumenus is an IoT safety company, building a Smart Lighting Hardware/Software platform using the Internet of Things to provide real-time safety alerts and create actionable insights for both consumers (bike/run/motorcycle) as well as industrial usage (high-risk vocational workers).
Preccelerator Alumni Company RentSpree has just announced that they are partnering with the California Apartment Association (CAA). Together they offer a state of the art tenant screening platform to all CAA members. RentSpree’s standardized process will help CAA’s 15,000+ members work more efficiently with the verification process, while simultaneously reducing exposure to regulatory risks.
Amidst an atmosphere where faxing has been the norm for many, the new service will allow CAA members to seamlessly access a full credit report and score, eviction history report, completed rental application and more with the click of a button on any device.
All CAA members will also be given access to RentSpree PRO, a premium service offering from RentSpree that helps landlords and managers handle the tenant verification process. As part of the alliance, RentSpree will also be working closely with CAA to unveil a series of groundbreaking new features to provide unparalleled flexibility and convenience to members.
“As an organization that always puts our members’ interests first, we see tremendous value in the services RentSpree will provide for CAA members,” said CAA Senior Vice President Kevin Pellegrino. “Together, we will be able to deliver a platform that exceeds all current and future CAA member screening needs.”
“We are very proud to have CAA as a major partner where our combined efforts will provide CAA members with a technology platform that will significantly enhance their businesses,” said RentSpree Chief Operating Officer Michael Lucarelli. “Importantly, our solution makes it effortless for all CAA owners and managers to offer a digital screening process that most tenants expect in 2018.”
About RentSpree
RentSpree is a Los Angeles-based real estate tech company that has created a proprietary platform allowing landlords and property managers to seamlessly screen and verify tenants. The award-winning tool automates the lease application process for property representatives by providing a 24/7, one-stop system for screening applicants.
Stubbs Aderton & Markiles and the Preccelerator Program are proud to announce the launch of their Startup Superhero Video Series – featuring SA&M Attorneys, Preccelerator Mentors, and entrepreneurs on topics specific to entrepreneurship and lessons learned throughout the journey.
This week we’re featuring Stubbs Alderton & Markiles attorney Marc Kenny on “Selling Your Business.”
Marc Kenny is a partner at Stubbs Alderton & Markiles, LLP. Marc’s practice focuses on mergers and acquisitions, joint ventures, private securities offerings, cross-border transactions, and other strategic transactions representing private equity funds, independent sponsors, family offices as well as public and private corporations.
_____________________
Speaker: Marc Kenny
Moderator: Heidi Hubbeling
Heidi: Talk to me a little bit about your background, how you got to be in mergers and acquisitions and private equity. Also, how you came to be with the firm.
Marc: Sure, I have been practicing for a little over twenty years, specializing in mergers and acquisitions, representing private equity funds, financial sponsors, family offices, corporate strategic and a range of transactions, both here in LA, London and in Silicon Valley. I came to the firm recently after working at another large firm over the years.
Heidi: One of the things we are going to talk about today is with mergers and acquisitions on the seller side, we are going to talk about the ins and outs of that. What are some of the preliminary considerations that a business needs to think about when they go to sell their business.
Marc: I usually start when I meet with an owner who’s interested in selling. I usually start with a series of questions to understand a little more about how they are approaching the process. I ask them “why are you interested in selling?” “Do you intend to stay with the business after the sale?” “Can the business operate efficiently without you? If not, why not?” “What gaps do you have in managing the team?” “Are there family members or members of the management team who want to continue in the business after the sale?” On the operational side I also ask them, the financial history of the firm over the past 3-5 years of what their growth prospects are going forward. If there is customer concentration, I ask them about that. If they are in a regulated space I ask them regulatory issues they have had over the past few years. Going forward, what kind of regulatory issues they see having in their horizon.
Heidi: It’s a complicated process, a lot of people don’t quite understand. It’s not like selling personal property or your home. Can a business do this alone? Or do they need a team to back them up?
Marc: Yes, selling your company is a process that is complicated and intense – I often say it’s a marathon that feels like a sprint. The challenge for a business owner is to run an effective sales process and at the same time managing its business. Don’t jeopardize the business because you have been distracted on the sales process. A way for them to do that is two things: one is they have to assemble an internal team at the company – a small group that you can rely on and have confidence in to work with you on the sales process and at the same time. The goal is for you to keep running your business. The better your business grows during this process the more leverage you have with the buyers. In order to do that, you have to hire outside business advisors. Particularly, outside advisors that have done lots of M&A transactions. Second, you’d be well advised to hire external advisors who regularly work on M&A transactions. You need an investment banker, accounting firm, wealth management advisor. For all involved in a sale, it’s important to seek the advice of a wealth management advisor, investment banker – not only will a great banker get you in front of the right prospective buyers (strategic or financial), they’ll also be able to create a story that corresponds with your historical financial performance with your potential for future growth. And then law firms again, you may have used law firms for real estate, company contracts, but you need to have lawyers who are adept in M&A transactions.
Heidi: Internally what should these businesses do to prepare themselves. Both the owners as well as the team to prepare themselves for this kind of transaction.
Marc: The goal is to become “transaction ready” before engaging with the buyers. By “transaction ready” I mean you have looked both at the good, the bad, the ugly with your business. You should be very honest with yourself about the business, as financial, then as legal, etc. Really the reason for that is if you provide accurate information, to position correctly with your buyer, you will increase the confidence with your prospective buyers and increase the value of your company. We recommend “sell side” due diligence to basically start as if you were the buyer and you start with your management team and the external counsel or advisors, you start going through the due diligence list. Make sure that all the intellectual property in the business you own, that material customers contracts are all in order and they are not due to be terminated soon, that all regulatory issues have been resolved, confirm you have proper documentation for all stock issuances and equity grants. Again, it is a very exhausting process and that is the reason why you need to have external advisors to help you through the process to help you focus on your business.
_____________________
To learn more about the Preccelerator Program, contact Heidi Hubbeling at hhubbeling@stubbsalderton.com
Stubbs Aderton & Markiles and the Preccelerator Program are proud to announce the launch of their Startup Superhero Video Series – featuring SA&M Attorneys, Preccelerator Mentors, and entrepreneurs on topics specific to entrepreneurship and lessons learned throughout the journey.
This week we’re featuring Stubbs Alderton & Markiles attorney Caroline Cherkassky on “Convertible Notes vs. SAFES vs. Priced Round.”
Caroline Cherkassky is senior counsel of the Firm. Caroline’s practice focuses on advising emerging growth, development stage, and middle market companies on a variety of matters, including venture capital and other financings, employee compensation, securities laws compliance, technology transactions, corporate governance, and other general corporate matters. She also advises the funds and other investors that invest in these types of companies.
_____________________
Speaker: Caroline Cherkassky
Moderator: Heidi Hubbeling
Caroline: I started my practice up in Silicon Valley, where there is lots of emerging growth work and I spent a lot of time there in Big Law. I moved to LA a couple of years ago and really enjoy being part of the boutique law scene here. My practice focuses on emerging growth companies from start-up, incorporation, documents for employees, commercial agreements, fundraising and exit and the Venture Capitals and other people who invest in these early growth companies.
Heidi: On the deal side?
Caroline: Yes, exactly.
Heidi: Okay. Let’s talk a little bit about the fundraising process one of the major lack of education for a lot of startups is the type of vehicle they should use. The type of instrument they should use, when going for funding. There’s a priced round, there’s a convertible note and there is S.A.F.E They are the standard ones for early stage companies, so talk a little bit about the differences and how each is applied.
Caroline: Sure! So, the priced round is really what most people think about when they think about venture financing. The investors in a company agree on a price, the investors write a check, the company gives them shares and they are now equity holders in the company. The investor owns a certain percentage of the company’s capitalization. They also typically get specific investor rights, company applications and lots of negotiation round specific obligations. The convertible note on the other hand is a debt instrument. It means that the investor does not get equity in the company to start with, they get a note which is an obligation that has to be repaid at maturity, but there are certain triggers in there set forth in which the note will convert into equity. Usually some sort of discount to the next round or a cap at evaluation. Last, we have the S.A.F.E which is an acronym for simple agreement for future equity and that’s exactly what it is. It’s document that sets forth the terms on which the investor will get equity in the company in the future. It’s very similar to a note in that it has typically a discount to the next round or some sort of cap in the evaluation in which the S.A.F.E will convert, but its different from a note in the sense that there is no maturity date. There’s no debt obligation and there’s no repayment. So, it is more flexible in that regard.
Heidi: Is one instrument preferred over the other?
Caroline: It really depends on the company and the circumstances. Typically, it comes down to timing and size of the round. The priced round provides a lot of certainty. The investors in the company know exactly how much equity is being exchanged and the amount of money that is being invested. Which is nice for everybody to have that certainty. On the flip side the convertible notes and S.A.F.Es can be really fast. The priced round requires a lot of documentation and often takes much higher fees and timing to negotiate. The notes and the S.A.F.Es on the other hand are pretty quick, but you lose that certainty. So, often we see that there is no hard fast number, but we often see a fluctuation point of around 1 million dollars on the side of financing where it makes sense to do that priced round.
Heidi: Are there certain pit falls that entrepreneurs should look out for each of those?
Caroline: Definitely! One of the big things is the S.A.F.Es and convertible notes they offer a lot of flexibility, but you have these caps and discounts that are negotiated and the investors and the companies don’t do the calculations to figure out how much of the company is being given around. Especially if you do multiple S.A.F.Es or convertible notes and succession, by the time you get to that priced round you may not realize how much equity has been given up. There are some founders who unfortunately, have realized too late that there has been a lot more equity. A lot of dilution.
Heidi: So, this is all important information for start-up companies as they get through their fundraising process so we appreciate you being here.
Caroline: Thanks.
_____________________
To learn more about the Preccelerator Program, contact Heidi Hubbeling at hhubbeling@stubbsalderton.com
LOS ANGELES, Calif., March 28, 2018 (Newswire.com) – The Preccelerator ® Program, a Santa Monica, California-based accelerator program for early- stage startup companies in the digital media and technology space, announced today that it has added its ninth class of companies featuring three innovative startups.
In 2012 Stubbs Alderton & Markiles launched the first-of-its- kind Preccelerator® Program to provide select start-ups with co-working space, mentorship, sophisticated legal services, curriculum and access to a strategic perks portfolio with the objective of helping grow a founder’s idea from business concept to a funded company. Over the past five years, 37 companies have graduated the Program, of which 24 have received funding totaling over $11.2M.
Louis Wharton, President of the Preccelerator states, “Class 9 is representative of the diverse Southern California tech ecosystem, showcasing fintech, e-commerce and social connectivity. We’re thrilled to partner with these founding teams as they accelerate development and deployment of their market solutions.”
Preccelerator® Program Class 9 companies include:
PayClub, Inc. – Payclub is the easiest way to organize and collect money with a group. Payclub can be used for any type of group, which we call “clubs.” Payclub enables you to manage the entire process directly from your phone with a few simple taps, empowering groups to come together and gain insight without the need for spreadsheets or outdated systems. Whether you are collecting for your club or organization, to planning that next getaway with friends, Payclub will help bring both your group’s finances and the people who matter most, together. Based out of Los Angeles, CA, the team is founded by tech, financial, and sales veterans who had a deep need for a solution to managing funds together. It’s time to #JoinTheClub.
Loved Lots, Inc. – Loved lots offers the best in premium
pre-loved baby goods in one safe and easy to use marketplace. Buyers enjoy the best selection of top-of-the-line baby gear and Sellers benefit from a marketplace of Buyers who know the value of quality baby goods. We’ve eliminated awkward cash exchanges and offer a variety of shipping and delivery options to fit your needs. Rest assured with our Buyer and Seller Protection Programs and feel good knowing that a portion of each sale goes to help children and families in need.
Fork & Spoon, LLC – Connect. Cook. Share. Creating a culinary delight for someone is one of the most genuine expressions of care. Fork & Spoon revolutionizes the dating app paradigm by combining the joy of a home cooked meal with the convenience of a mobile app. Realize or extend your passion for cooking and experience what it’s like to Fork & Spoon. Put a spark in your day by sharing your culinary adventure stories and even your #kitchenfails with our unique community. Welcome to a place where relationships start with the magic of sharing.
About Stubbs Alderton & Markiles, LLP Stubbs Alderton & Markiles, LLP is a Southern California-based business law firm with robust corporate, public securities, mergers and acquisitions, entertainment, intellectual property, brand protection and business litigation practice groups focusing on the representation of, among others, venture- backed emerging growth companies, middle market public companies, large technology companies, entertainment and digital media companies, investors, venture capital funds, investment bankers and underwriters. The firm’s clients represent a broad range of industries with a concentration in the technology, entertainment, video game, apparel and medical device sectors. The firm’s mission is to provide technically excellent legal services in a consistent, highly-responsive and service-oriented manner with an entrepreneurial and practical business perspective. These principles are the hallmarks of the firm. For more information, visit https://preccelerator.com.
About the Preccelerator® Program The Preccelerator is a novel platform offered to select start-up companies out of the Stubbs Alderton & Markiles, LLP Santa Monica office that provides interim office space, sophisticated legal services, education, networking, mentorship and $350,000 in usable perks from Google Cloud for Startups, Amazon Web Services, and HubSpot among others, with the objective of helping grow a founder’s idea from business concept to funded startup. The program also retains more than 50 active strategic mentors providing free office hours and discounted services, and provides over 50-plus educational workshops and networking events each year. The Program expanded in 2017 to accept a greater number of companies in more formalized classes, depending upon where the companies are in their evolutionary growth, expand benefits to accepted companies, and will look to make strategic investments backed by strategic angel investors. To apply to the Preccelerator, visit www.www.sparkxyz.io/competitions/152.
Congratulations to SAM Preccelerator company nēdl on their official launch on Amazon Alexa Echo devices and Alexa Cars including Toyota, Lexus, BMW, Mini and Ford. nēdl (like the haystack) is a search engine designed to make live streams discoverable to radio listeners. They turn every word you broadcast and note you play into a magnet to attract new listeners in real-time. Search for “Needle Now..” to find them and start your modern radio experience.
About nēdl
nēdl uses proprietary Speech Recognition to let you search within 100,000+ live news, sports, talk, and music broadcast streams to find what you want and listen to the stream or add your unique voice to the global real-time database for instant discovery. Visit www.findnedl.com
For more about the Preccelerator® Program or to apply, contact Heidi Hubbeling, COO at (310) 746-9803 or hhubbeling@stubbsalderton.com
Stubbs Alderton & Markiles and the Preccelerator Program are proud to announce the launch of their Startup Superhero Video Series – featuring SA&M Attorneys, Preccelerator Mentors, and entrepreneurs on topics specific to entrepreneurship and lessons learned throughout the journey.
This week we’re featuring Preccelerator Mentor Sue Funkhouser on “Navigating Corporate Culture.”
Sue Funkhouser is a management consultant and coach at Pinwheel Performance. For 15 years, she has helped companies from Fortune 500, Startups and Non-Profits to improve organizational performance. Sue’s passion is helping founders grow their companies by developing leaders, teams and company culture. She mentors entrepreneurs and facilitates team and culture workshops at the SAM Preccelerator and Cross Campus. Sue also speaks to groups such as Young President’s Organization and has authored an e-booklet, Steering Company Culture during Growth. Connect with her on Twitter and Linked-In.
_____________________
Speaker: Sue Funkhouser
Moderator: Heidi Hubbeling
Sue: My background is that I for the last 12 years have been working with company’s leaders on their own leadership style, team effectiveness, and looking at the organization because culture is an organization as a whole. I have Master’s degree from Pepperdine University, the business school and that really taught me how to look at organization through a system’s lens and how does everything work together and that is how I approach my own work.
Heidi: You ‘ve been really beneficial to a lot of companies and we know that corporate culture can be a trigger for great success for a company long term or can be a trigger for failure. It’s one of those foundational items that these startup companies need to know, so why is corporate culture so important?
Sue: It’s your competitive advantage and it’s been proven in the marketplace. There’s research that shows that if you have an effective, greater company culture, you will get greater financial returns. You can look up Money Magazine’s research that shows that there is a 23% financial more return based on having a healthy effect of culture. There’s others if you want to know. Besides the financial research, it is something that can’t be replicated, something that can’t be duplicated not one culture is the same as the next. Your products and your capabilities can be copied, but your company’s culture can’t. The last thing is it acts as a magnet, you want to attract your people so if you have a healthy company culture you’re going to attract your top people as well as retain them.
Heidi: One of things that is a bedrock in company culture is the value systems of the company. How do you work with organization’ to develop your value system?
Sue: Its always helpful to provide a framework for people to look at so, I developed an acronym called WE ARE. Imagine a license plate called WE ARE and its we embody, so what is as a group we embody, and then articulate your values, reinforce your values and evaluate. I want to say one thing about the “we embody” so you have a culture no matter what and you want to find out as a collective what is most important here. I ask founders to please never take a piece of paper with words on it and say, “oh we are this, this and this” ask questions and stories about when have you made the most difficult decisions and what’s been most important. What have you weighed? That’s a way to draw that out. I have processes for each part of the we are, but I think that’s an important way to what do you embody? How do you articulate that value? How do you enforce it? Then later how do you evaluate it?
Heidi: Very important for companies building out that foundation for the long-term strategy of their company. I think that is a very powerful tool. What is some advice you give to companies wanting to build high performing teams?
Sue: One of the things, that I first like to talk to founders about is to understand that teams develop, much like individuals do. There are normal developmental stages for teams. Sometimes, they complain it’s like “this, this, this”, but its natural. Teams form and the they’ll storm and they must settle down and work on how they norm with each other and then they to perform. I remember I was working with a leader and they were prescribing this stuff and I explained that they were just storming. They’re trying to figure out how to work together and you need that if you’re going to get them to perform. That’s the first thing I tell people is to just know that its normal and you need it. Another thing I have found that a lot of people think its interpersonal. That all the problems are personal. As soon as we start working around what is your purpose or mission, what are the role clarities? What are the expectations of each other? A lot of that strife goes away.
Heidi: As a company grows, what do founders struggle with most?
Sue: There’s a lot to struggle. One common theme is about letting go. In a couple of ways, first in kind of a cognitive sense, leaders as they grow, have to let go of control and they have to move from being a technician to a strategist. I was talking to late David Goldberg, the former CEO of Survey Monkey and he said in his first venture when they went from 20 to 50 employees the hardest thing was to let go of the reigns. That’s one thing. The most heart wrenching thing that employers find is that they must let go of their early employees. What happens is as a company grows, some employees can’t scale their capabilities. You may try to develop them and move them around and eventually they just can’t or for a scaling company they don’t fit they’re just not interested in. It is so heart wrenching, every founder I talk to mentions that a person has been with them since day 1, but the fact of the matter is that if you do not let them go, there’s going to be some repercussions. One example, I was working with a company in New York and the CEO, heart of Gold, but when I interviewed his team they mentioned that for two years they had been shuffling people around every single department. The high performers said they didn’t have time to babysit, they’re getting in the way and he just had to cut it. It impedes performance and from what edmunds.com has told me is that you know in your gut. It’s hard but, you have got to do what is right for the company. What I advise people to do is how they let their early people go is do it in a way that shows that you care. You do care! Call-up your buddies and say, “I know this person they’re really good at this, would you meet with that person because you might know someone or you might have an opportunity”. Then go with that person and say “here is a list of 5 people that I have talked to, they’re ready for you and ready to take your call”.
Heidi: Very difficult, but very impactful advice, I think that’s a tough situation when that company gets to that stage of growth. The way that you respond, also affects your company culture overall and it’s a testament.
Sue: Those stories will ripple.
Heidi: You’ve been a mentor of the program for a couple of years now, what is the biggest give back to you, what do you enjoy most!
Sue: I love coming in here and thank you for having me. I just met with this new company whom I have never met before and we were supposed to meet for 20 minutes and we met for like an hour and half. I mean it was fabulous! What I love is that I learn so much. I get to meet with hot entrepreneurs that want to unleash stuff in the world and I get to learn about the new technology, I get my things opened. Just our interactions and the ability in such a short-time even though we expanded it to have fun, to get to know each other, but to have an impact and help them prepare for something, it so great. Thank you so much.
Congratulations to SAM Preccelerator alumni company nēdl for being admitted to Matter, a media-focused accelerator based in San Francisco, California. nēdl was a part of Class 7 at the Preccelerator and recently graduated after a fantastic presentation at Demo Day.
“As we sourced Matter [class] Eight, we were on the lookout for start-ups focused on amplifying voices that aren’t always being heard; building secure technologies to protect free speech; rebuilding trust; moving beyond targeted advertising to new business models; harnessing emerging technologies like augmented reality and artificial intelligence to create new models for understanding and empathy; and creating ways for individuals and media companies to own their online identities and relationships.”
About nēdl
nēdl uses proprietary Speech Recognition to let you search within 100,000+ live news, sports, talk, and music broadcast streams to find what you want and listen to the stream or add your unique voice to the global real-time database for instant discovery. Visit www.findnedl.com
For more information about the Preccelerator® Program contact Heidi Hubbeling, Director of Operations at hhubbeling@stubbsalderton.com
Stubbs Alderton & Markiles and the Preccelerator Program are proud to announce the launch of their Startup Superhero Video Series – featuring SA&M Attorneys, Preccelerator Mentors, and entrepreneurs on topics specific to entrepreneurship and lessons learned throughout the journey.
This week we’re featuring Preccelerator Mentor Mark Wald as he talks about “Mentor Partnership & Financial Modeling with BallParq.io.”
Mark is an innovative problem solver who values simplicity, efficiency, and collaboration between people and organizations, with strong experience in financial modeling and data analytics to inform and support quick decisions on complex issues. Specific experience developing, deploying, and supporting new technologies to thousands of retail locations using 3rd party logistics and service providers. Professional specialties: Financial strategy & fundraising, sourcing business opportunities, conserving resources, enabling people, satisfying customers, analyzing complex data.
_______________________
To learn more about the Preccelerator Program, contact Heidi Hubbeling at hhubbeling@stubbsalderton.com
Preccelerator Program Alumni Ballparq has announced the launch of their platform. Ballparq is a web-based platform that lets entrepreneurs create engaging financial models through an easy-to-use interactive process. The entrepreneur is able to demonstrate financial sophistication by telling the story of their business from the bottom up.
About the Preccelerator® Program The Preccelerator is a novel platform offered to select start-up companies out of the Stubbs Alderton & Markiles, LLP Santa Monica office that provides interim office space, sophisticated legal services, education, networking, mentorship and $250,000 in usable perks from Google Cloud for Startups, Amazon Web Services, and HubSpot among others, with the objective of helping grow a founder’s idea from business concept to funded startup. The program also retains more than 50 active strategic mentors providing free office hours and discounted services, and provides over 50+ educational workshops and networking events each year. The Program expanded in 2017 to accept a greater number of companies in more formalized classes, depending upon where the companies are in their evolutionary growth, expand benefits to accepted companies, and will look to make strategic investments backed by strategic angel investors.
For more about the Preccelerator® Program or to apply, contact Heidi Hubbeling, COO at (310) 746-9803 or hhubbeling@stubbsalderton.com