SaaS products have become extremely popular, however, most business folks under appreciate the complexity of the legal fine print and the legal issues behind SaaS. We want to share with you our legal checklist to help you understand the legal framework of SaaS products and solve potential legal bottlenecks.
The data collection/processing and privacy issues are usually the trigger when lawyers get involved in Saas. From a legal perspective it is crucial to understand the market roll out of SaaS product to new markets as each market has its own privacy and data protection regime. One size fits all regime for data collection really does not work in connection to SaaS products. SaaS products have to carefully tailored for each jurisdiction. In the US there is a mosaic of both federal and state law privacy laws, including Children Online Privacy Protection Act (COPA), Health Insurance Portability and Accountability Act (HIPAA), California Consumer Privacy Act (CCPA) and New York Shield Act. Another complexity for SaaS products is the cross-border storage and transfer of information that may increase the provider’s exposure to liability for non-compliance with unfamiliar regulatory laws. In particular a tricky area is data transfer between the US and the EU. …
Are you a startup CEO about to sign an LOI/MOU to sell your startup and you are scratching your head to figure out if the deal makes sense? Below we look at “small print” legal that translate into your money at exit. Our observations are mainly tailored for US style deals but can also be applicable to European deals.
Understanding your startup’s capital is crucial when preparing for an exit. What? This means that you need to verify your startup’s capitalization table against the Board of Directors actions, venture capital financing documents, ESOP as well as stock option grants. You need to verify that the company has enough authorized shares for any conversion preferred share conversion to cover the all fully diluted shares (see our Medium post about fully diluted capitalization here). This should allow you to confirm if the shares of stock have been properly authorized (you might be missing a signature of a director for example). In this step you can also verify if any option is going to accelerate upon the change control. Finally, as CEO founder you want to understand if if your shares are going to accelerate at a change of control. Who? If you are seasoned CEO you can do this yourself or delegate this to your COO. Next Steps? …
Polish VC Ecosystem & Funding Restrictions
Most Polish VCs have a restricted investment mandate (PFR restrictions) and can only invest in companies organized in the European Union or the United Kingdom. Nonetheless both Polish VCs and Polish startups acknowledge that future equity rounds into Polish startups will come most likely from US based investors that can only invest in a Delaware based entity. It’s a catch 22 situation, which is hard to solve and impedes the growth of the Polish tech and startup ecosystem.
In order to bridge this gap both parties may wish to structure future equity investments into Polish startups as a Phantom Rights transaction. Under the Phantom Rights structure a Polish VC can invest into a Polish company but can also acquire “phantom” preferred shares in a parallel US company funded by Silicon Valley VCs. This novel structure has been utilized in Silicon Valley by non-US VC funds that can not own US shares or for tax reasons can not hold US shares. …
Who are you? What’s your story?
That’s a pretty broad question. The short version is that I’m a 2x entrepreneur who started angel investing and transitioned in VC
How did you start to work with startups and how did you end up in Dreamit?
After exiting my first startup, I was trying to decide what to do next. I’d been so heads-down on that startup that I hadn’t really built my network nor my personal brand / platform. About the same time, I had started angel investing and decided to start blogging about it as part of a long term plan to establish an online presence. Soon after, a friend’s startup, AlleyWatch and asked me to (insisted that I) write a guest column. Looking for something unique to write about that would not be a massive time commitment, I decided to profile fellow angel investors. …
Our law firm participated in the term sheet stage, M&A negotiations and closing on behalf of the founders. This M&A transaction is one of the first large scale technology driven M&A transactions in the CEE region.
The Cytlaw team included Tytus Cytowski, Tomiwa Ogundipe and Kunal Kolhe.
In August 2020, scholarship funds were given by Cytowski & Partners to support financial aid for Central and Eastern European (CEE) students and academics studying for advanced degrees at Stanford Law School. This support was provided in memory of Marcel Konigsberg, a blind Polish Jewish lawyer and alumnus of Jan Kazimierz University, in Lviv, who died during the Holocaust.
The financial aid funds shall be available to students beginning in the 2020–21 academic year for three years. …
Whats up? In a landmark decision, on July 16, 2020, the Court of Justice of the European Union (“CJEU”) announced the immediate invalidation of the EU-U.S. Privacy Shield Framework between the EU and the US. The EU-U.S. Privacy Shield Framework was one of the most widely used mechanism that allowed U.S. companies to freely transfer the personal data of European citizens and residents outside of the EU. …
As you know our law firm supports ambitious founders from Poland and CEE heading to Silicon Valley. Our engagement over 10+ years with our clients has helped our law firm grow and allowed us to understand the magic of Silicon Valley and why it is the heart of innovation in the world.
We want to help the new generation of Polish and CEE entrepreneurs get this experience and change the trajectory of their ventures, so we decided to help startups get into YC W2021 batch.
When we say we decided to help, we mean don’t just review your application. Our goal is at least 3 new YC-backed companies for Poland and CEE. We’ll work on your product and hypotheses, on the application, the interview and when you get to YC — we’ll work on getting the most out of this unique experience, including introductions to top tier investors. …
We wanted to summarize our data set and trends in SAFE and convertible note financing from our law firm’s perspective in 2019–2020. In the ever-evolving world of startup financing, we have seen a considerable shift in market trends when it comes to convertible debt instruments. The biggest driver of changes has been the introduction of the SAFE and the advent of post-money SAFE.
Our client base consists predominantly of foreign entrepreneurs and investors using American style documents across various geographies (EU, LATAm). Our transactions originated in Silicon Valley and outside of the US. …
What’s the story of Karma? How did the fund start?
We started working on Karma Ventures together with Margus Uudam and Tommi Uhari in 2014. By that time me and Margus had managed Skype’s founding engineers family office’s (Ambient Sound Investments) early stage investment portfolio for 6 years and we had worked with Tommi on one of the investments in that portfolio (Tommi was a chairman of the board in that particular portfolio company). What brought us together to start a new venture fund together and made us a really strong and close team was the good personal match, diversity of our business backgrounds and how we complemented each other. …