The venture world is growing faster than ever with more rounds of funding, larger rounds of funding and higher valuations than at any point in history. It has led to a fatal increase in the number of people moving around the unicorn, and has also forced regulators and venture law researchers to face challenging problems.
Naturally, as many companies remain private, retail investors are often prevented from participating in the most dynamic sectors of the global economy. That’s not all – the transparency of ads and boards, diversity in leaders as well as employees, whistleblower protection for fraud, and increasingly increasing in legal circles as Unicorn multiplies and transcends the boundaries that have been created to fulfill our current rules. Pushes.
To find out where the cutting edge of adventure law is today, TechCrunch has invited four law professors who specialize in the field and securities to talk about what they see in their work this year, and how they will change the rules going forward. Argues.
Our participants and their arguments:
- Yephat Aran“A new connection to the open cap table presents an opportunity for equity transparency,” argues an assistant law professor at the University of Haifa, arguing that we need a better format for cap table data to allow portability. It will increase transparency for shareholders, including employees, who remain in the dark about the true nature of a startup’s capital structure.
- Matthew Wensley, A professor of assistant law at the Cardozo School of Law, argues that “the next Theranos should be in short supply” argues that Unicorn’s private company shares should be verified and traded by a short seller. Since there is little incentive for venture investors to detect post-investment frauds, short sellers can bring valuable perspective to the market and increase capital efficiency.
- Jennifer Fan, A subsidiary law from the University of Washington, argues in “Diversifying Startups and VC Power Corridors” that in addition to diversity-related board orders (which have been passed in a number of states), startups need to create more incentives around diversity in all. Their relationship with their employees, with the VC and with their VC’s LP. A more comprehensive and systematic approach will open up the tech world better for many who ignore it.
- Finally, Alexander I. Plate, An associate law professor at the University of Kansas, argues that “the legal world needs to let go of its ‘unicorniphobia'” that we should hurry to change the rules of our securities when we have created too much value with startups. For every Therano, there is a moderna, and adding more rules and ads will not prevent the problems of the former, and indeed prevent the progress of the latter.
The once-quiet research of adventure law has been fueled by the advent of reform-thinking camps in the Hall of Power in DC. TechCrunch will continue to report and bring different perspectives on some of the most challenging legal and regulatory issues facing the tech and startup world.