Vid Čibej

Check out this article from Carta on venture deal terms featuring some quotes from yours truly.

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Data and observations on recent trends in VC deal terms. Along with more "structure" (participating preferred, multiples on liquidation preference, and cumulative dividends), pre-money valuations have dropped significantly more and not recovered in later stage deals but early stage deals are much closer to 2022 pre-money values & raise sizes. https://lnkd.in/g2kcxznr

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Really well done explanation of pro rata rights and a lot of great discussion about how the play out in real life. "Venture capitalists who lean in and re-invest in their breakout portfolio companies are positioning themselves for outsized returns. By doubling/tripling down on their winners, VCs/Syndicates can increase (or hold) their ownership stake in companies that have already demonstrated market traction and growth potential, effectively doubling down on their most promising portfolio companies that have a chance to be fund -returners or outsized returns, and make up for the losers in the portfolio. This not only allows them to capture more value as these companies continue to scale but also sends a strong signal to other investors (more so for the VCs than syndicates) and the market about the company's prospects. As mentioned in the example at the top - NOT having a follow-on strategy can be costly; in the nine figures costly… " Pro rata rights are driven by the concept of "I would not want to be a member of any club that we would have me as a member" and therefore you negotiate the contractual right to be a member. In other words, if the venture has a range of potential funders (presumably due to great prospects for success) and would exclude me, that makes me want to be an investor even more. For top tier ventures, pro rata rights remain very valuable to maximizing investor returns. However, these days, the majority of venture rounds are note "suffering" from oversubscription. As a result, often times the more relevant investment term today is the "evil twin" of the pro rata provision - the "pay-to-play" provision where investors who fail to fund their pro rata are penalized. This can be an express term of the prior financing documents or, imposed "retroactively," as a condition of investment by new investors. The follow-on investment now becomes in part a defensive measure to avoid the punitive consequences. When this happens, investors who invested through an SPV are especially vulnerable. Funds can make an investment decision and usually have the ability to call capital to make their pro rata. In an SPV, there usually is no ability to call capital and each investor will make an independent investment decision about new investment. If not everyone re-ups, the SPV could struggle to meet its prorata funding obligation.

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⚖ JudgeAI We are thrilled to unveil the latest iteration of JudgeAI, now a fully independent software solution powered by advanced AI technology. This platform is designed not only to automate and optimize judicial processes but also to offer a dynamic environment for educational simulations. At Kozlaw X JudgeAI, we focus on implementing automated judicial processes using legal algorithms that leverage complex legal logic and extract the maximum amount of information from the documents provided by the parties. Our system is capable of analyzing not only direct facts but also indirect ones, establishing complex dependency structures between them. This enables us to create the most objective view of the case, which is crucial for making the correct judicial decisions. Comparing the actual behavior of the parties with an ideal behavioral model, calculated using pathological algorithms and Nash equilibrium, allows us to make reasoned and fair decisions. Descriptions of our legal algorithms can be found in two articles (published in SSRN): "Enhancing Fairness and Efficiency: The Advantages of Fully Automated Judicial Systems" and "Automated litigation: Machine Learning vs Algorithms". Check out our demonstration video to see JudgeAI in action, managing a mock judicial process and showcasing the extensive capabilities of the system. We are offering law schools free access to the JudgeAI prototype for academic and research purposes, aiming to assist in the education of future legal professionals by providing hands-on experience with advanced legal technologies. For more information or to participate in this innovative project, please contact us at [email protected]. We are excited to collaborate with educational institutions worldwide to advance the future of jurisprudence through technology. Legal Innovation Lab Wales Legal & Literary Society of Osgoode Hall Law School Legal Design Lab Institute of Advanced Legal Studies Centre for Legal Innovation Laboratoire de cyberjustice / Cyberjustice Laboratory European Legal Technology Association (ELTA) The Hague Institute for Global Justice Legal Innovation Zone (WLS) UCL Centre for Blockchain Technologies (CBT) Data & Society Research Institute RnD Legal Solutions Digital Legal Lab Innovation for Justice (i4J) Centre for Information and Innovation Law (CIIR) Artificial Intelligence Law Hub CodeX, The Stanford Center for Legal Informatics eLaw Center for Law and Digital Technologies InnoLawLab UER University of Sharjah Abu Dhabi School of Management (ADSM) Privacy & Technology Law Section | State Bar of Georgia dubai judicial institute معهد دبي القضائي Entrepreneurship & Innovation Clinic at Yale Law School Robert Bosch Centre for Data Science and Artificial Intelligence (RBCDSAI) #JudgeAI #LegalTech #AIandLaw

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The future of AI in the legal sector, and all enterprises, is indeed multi-modal and multi-model. Thank you, Richard Tromans, for a incisive article in Artificial Lawyer. Our acquisition of  Eigen Technologies is the next big thing in the Sirion journey as we move from contract intelligence to document intelligence. As I said to Richard, 'the wings of Eigen will let the bird of Sirion fly in the field of document intelligence.’ https://lnkd.in/gaeeDpe2 #TeamSirion #AI #conractAI #Sirion-Eigen #CLM #legaltech #multimodal #multimodel #IDP

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Good morning from sunny Silicon Valley! Despite a consistent slowdown, global venture capital investment held its ground this April, with a total of $22 billion in funding. Here are some points we can learn from last month's data: 🔹 Seed-stage companies saw $2.4B distributed among 1,000 startups, highlighting continued interest in early innovation. 🔹 As for mature startups, over $10.7B was allocated to more than 150 Series C and beyond companies. 🔹 Biotech and healthcare led the funding race with $5.7B, representing 26% of the total investments. AI followed with notable advancements, including a notable $1B funding round. 🔹 The IPO scene showed signs of warming up with significant entries, signaling a cautious yet optimistic outlook towards receptivity within the public market. 🔹 Generative AI is continuing to shape the landscape, benefiting established tech giants and new companies alike, and emphasizing the transformative potential of AI across sectors. As we move forward, these trends will likely dictate the pace and direction of innovation, making this an exciting time to be involved in the tech and venture capital space. Check out this Crunchbase article for more - https://lnkd.in/gk_HD2xf #mergersandacquisitions #venturecapital #innovation #artificialintelligence #fintech #techlaw #foleyforward #garage2global Foley & Lardner LLP

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Wiz Just Said No to a $23 Billion Google Takeover Offer "The fact that the four Wiz founders together own 38% of the shares would not appear to give them complete control, but in practice the foursome holds most of the voting rights in the company, and they make the decisions. So although some of the most experienced and sharpest investors in the world, such as Marc Andreessen and Doug Leone, are invested in Wiz, pressure by investors to sell the company is not a main factor in its behavior. Andreessen would have been very happy to see a 100% return in record time on the huge financing round he led in May, but if the four Israelis came to the conclusion that Google wasn’t the right option, even after the start of negotiations, exchanges of documents, the involvement of teams of lawyers and accountants, and the leak of news of the deal to the media, the decision was theirs alone." First, now that Google has some free cash, I know of a legal practice they could acquire at a reasonable price ... just sayin. But seriously, this highlights several things: ➡ Looking at the cap table by itself often is meaningless. You need to understand: (i) the voting structure at both the Board and Shareholder levels; (ii) the approval thresholds for various corporate actions; and (iii) the alignment of various shareholder blocks. ➡ I am sure that the blocking rights given the Wiz founders were viewed as a justified "cost of doing business" to get in on a hot financing with a hot venture and proven founders. Certainly VCs would have been reasonable in assuming that their interests were aligned with the founders if a proposed deal would make the founders billionaires. Not sure how they are really feeling about it today and only time will tell if this will become a long term regret. ➡ What is certain is that over the next year venture lawyers are going to be bombarded with founders requesting "Wiz blocking rights" in their next financing. Memo to founders: In 99%+ of the cases "You're No Wiz."

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Our latest Entrepreneurs Report is out! We’ve compiled data on VC, convertible note & SAFE transactions in which the firm was involved during Q3 2024. This edition also features a Q&A w/ Lang Liu, who discusses AI startups & insights for 2025.

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𝙒𝙝𝙮 𝙖 𝘾𝙡𝙤𝙨𝙚𝙙 𝙀𝙭𝙞𝙩 𝙈𝙖𝙧𝙠𝙚𝙩 𝙈𝙖𝙩𝙩𝙚𝙧𝙨 𝙛𝙤𝙧 𝙎𝙩𝙖𝙧𝙩𝙪𝙥𝙨 𝙏𝙤𝙙𝙖𝙮 — 𝙀𝙫𝙚𝙣 𝙄𝙛 𝙔𝙤𝙪’𝙧𝙚 𝙔𝙚𝙖𝙧𝙨 𝘼𝙬𝙖𝙮 𝙛𝙧𝙤𝙢 𝙖𝙣 𝙄𝙋𝙊 𝙤𝙧 𝙎𝙖𝙡𝙚 Founders, employees and investors realize returns on their startup equity when there is an exit -- typically through an IPO or a sale of the company (M&A). Driven by macroeconomic and other factors, the market for IPOs and M&A fluctuates like any other market, with periods of intense activity and periods of sluggishness. Right now, we’re navigating a prolonged "closed" exit market, meaning IPO and M&A opportunities are relatively diminished. For many early-stage startups, this may seem largely irrelevant since their own exits may still be many years away. So why should early-stage startups care? The reality is that a closed exit market has a cascading effect on the entire startup ecosystem that affects valuations across all stages. Here’s why: 🔻 𝐈𝐧𝐜𝐫𝐞𝐚𝐬𝐞𝐝 𝐑𝐢𝐬𝐤 𝐏𝐫𝐞𝐦𝐢𝐮𝐦: Investors value startups not just on growth potential but also on the likelihood and timing of an exit. When exits are delayed, the investment appears riskier, and investors demand a higher “risk premium” to compensate. This means they’ll push for lower valuations to balance the extended time horizon and market volatility, dampening valuations across stages. 🔻 𝗥𝗲𝗱𝘂𝗰𝗲𝗱 𝗖𝗮𝗽𝗶𝘁𝗮𝗹 𝗔𝘃𝗮𝗶𝗹𝗮𝗯𝗶𝗹𝗶𝘁𝘆: Slower exits mean less capital returns to LPs, reducing liquidity to reinvest in new VC funds. With fewer resources, VCs have limited capital for startups, reducing competition for deals and ultimately driving down valuations. 🔻 𝗦𝗵𝗶𝗳𝘁𝗲𝗱 𝗩𝗮𝗹𝘂𝗮𝘁𝗶𝗼𝗻 𝗕𝗲𝗻𝗰𝗵𝗺𝗮𝗿𝗸𝘀: Exit activity, especially in public markets, sets valuation benchmarks across stages. In periods of strong IPO performance, private valuations rise with high confidence in exit multiples. But when IPOs stall, private market benchmarks adjust downward, impacting valuations even in early rounds. 🔻 𝗟𝗼𝘄𝗲𝗿 𝗠𝗮𝗿𝗸𝗲𝘁 𝗖𝗼𝗻𝗳𝗶𝗱𝗲𝗻𝗰𝗲: The broader ecosystem’s optimism relies on visible exits. Scarcity of exits creates market stasis, making VCs and founders more cautious which leads to lower startup valuations . While we’ve been navigating a well-documented closed exit market, signs suggest it may open up in 2025. Lowering interest rates, stabilizing inflation, a completed election cycle and a pipeline of mature companies ready for IPOs are aligning to create a more favorable environment. If these trends hold, we could see exit markets opening up, improving liquidity and renewing confidence across the startup ecosystem. #VentureCapital #StartupFunding #ExitStrategy #MomentusLegal

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Here are two recent developments in web3 legal that I think are worth of paying attention to: 1/ Tornado Cash Victory Sets Important Precedent In a groundbreaking ruling, the court determined that immutable smart contracts cannot be classified as "property" or "services" subject to regulation. This is a significant victory establishing that code itself cannot be held liable for illicit use. However, it’s important to note that associated elements like interfaces and fee pools remain subject to regulation, especially regarding sanctions and money laundering compliance. 2/ Lido DAO Case Signals Need for Legal Protection The Lido case has exposed critical liability risks for profit-driven DAOs, highlighting that it's not just about treasury management. The case revealed how DAO member involvement in protocol improvements (like even posting on a forum!) creates token holder expectations about value tied to member efforts. This precedent suggests DAOs need comprehensive legal wrappers—both for treasury holdings and governance—to protect members from unlimited liability. You can read more about these updates and other notable news in our latest edition of Web3Blast: https://lnkd.in/eWkhb4wJ

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The times are a changing ... and so are the deal terms; read more below.

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Counterparty paper doesn’t have to be scary. Use these 6 easy steps to guide you through. Tell me what you would add or change.

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Is it just me or has there been surprisingly little coverage of Harvey's recent $100 million Series C round and Clio - Cloud-Based Legal Technology's $900 million Series F round in the press and/or on social media since their announcements last week? https://lnkd.in/gNqN4JMh   Given that these fundraises provide a clear glimpse of:   (A) the scale of capital that is set to continue flowing into legal and legal-adjacent businesses; and (B) the accelerated rate at which notable transformation is set to take place, across the legal industry, over the next few years,   I find this eerie silence quite disconcerting.   Are people just burying their heads in the sand and HOPING that this is hype that will pass?   Or are 95% of lawyers just such busy people that they haven’t had time to form a view on how significant a milestone this is for the legal industry as a whole?   One would hope that it’s not the former – but with many MNCs (notable international law firms included) currently seeking to manage costs, and reduce global headcount, it’s highly unlikely to be the latter.   #legaltech #technology #lawfirms #lawyers #legalprofession #legalservices  

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We've been spending a ton of time in Legal AI, speaking with over 70 startups and chatting with numerous practitioners (including Jonathan Gleklen, Adam Gleklen and Mia Gleklen...). We've distilled all of that work down into a quick post covering a few of the categories we're particularly excited about: 📚 Legal Research and Review ✍ Contract Drafting and Negotiation 🔍 Patents and Intellectual Property If you're building in this space Hailey Wilcox and I would love to chat!

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In my last post on M&A term sheets, I mentioned that the term sheet must identify what is being sold and bought, the % of the company it translates to, and what the post-closing fully diluted cap table will look like.   One of the comments asked what “fully diluted cap table” means and so I think I should address this question because it is crucial to understand this concept when working on any M&A transaction.   A company’s capitalization table basically represents who owns what % of a company. To take a simple example, a Company has issued 100 shares, if 60 shares are held by A and 40 by B, then it is clear that A owns 60% and B owns 40% of the Company.   However, the Company may have issued C some warrants or convertible notes that entitle C to convert this warrant /note to a certain number of equity shares at a certain time. If this warrant entitles C to receive 30 shares upon conversion, now suddenly, A doesn’t hold 60% but actually holds 46% of the Company and B owns 31% and not 40%.   The Company may have also created an employee stock option pool and issued ESOPs to employees, which, upon vesting, will entitle the employees to exercise the options for shares. The ESOPs represent say another 10%, now A, B and C's shareholding is further diluted.   Fully diluted shares are the total equity shares of a company counting not only shares that are currently issued and outstanding but also shares that could be claimed through the conversion of convertible preferrence shares or through the exercise of outstanding options and warrants.   The calculation of “fully diluted” shares is important so that a shareholder can determine what it’s “fully diluted” ownership percentage is. This calculation is more meaningful than simply dividing a shareholder’s current shares against the company’s issued and outstanding equity shares because it captures the total number of potential equity shares. Depending on the context, fully diluted shares may also include shares reserved under a company’s equity incentive plan that are not yet allocated.   In addition to warrants, convertible notes and ESOPs, there may be convertible preference shares that the Company has issued with a pre-agreed conversion ratio which, for instance, entitles the holder to receive 2 equity shares for every 1 preference share. Or maybe it entitles the holder to 4 equity shares for each preference share if certain milestones are not met. In other jurisdictions there are additional instruments like SAFEs (Simple Agreement for Future Equity) which will also increase the denominator i.e. number of outstanding shares.   Therefore, it is also important to define what is meant by “fully-diluted” in a given context and what % of the cap table an acquirer will own post closing.   As an acquirer or investor and also as a target company, understanding the ownership structure in full detail is the key starting point of an M&A deal. 

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Another day, another very important ruling chipping away at #section230 immunity for tech companies. This time it's the 9th Circuit, which of course handles a disproportionate amount of #tech cases, holding that Meta’s duty arising from its promise to moderate third-party advertisements was unrelated to Meta’s status as a “publisher or speaker” of third-party advertisements, and therefore § 230(c)(1) does not bar plaintiffs’ contract claims. And in a striking concurrence, one member of the panel urged a wholesale re-evaluation of how courts have interpreted Section 230: "In a world ever evolving and with artificial intelligence raising the specter of lawless and limitless protections under § 230(c)(1), we should revisit our precedent and ensure we have grounded its application." Are we seeing the first real threat to Section 230 in decades? Curious to hear what my network thinks. #techlaw #liability #immunity #meta #bigtech Boies Schiller Flexner LLP https://aboutblaw.com/bekF

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Generative AI is disrupting legal services, according to ASML's Chief Legal Counsel, Sandrine Auffret. Meanwhile, Stanford University researchers tested Thomson Reuters Westlaw, LexisNexis, and Practical Law Global finding these software solutions bring accuracy rates between 20% and 65%. Tough to comprehend or maybe not the right AI tool? Insightful piece by Nick Muscavage from the Financial Times. Paper authored by Mirac Suzgun, Faiz Surani, Christopher D. Manning, @mattehewddhal, and of Stanford University and Yale University. https://lnkd.in/dZaWy4UU #GenerativeAI #LegalTech #ArtificialIntelligence #LegalInnovation #Stanford #Yale #LegalServices #AIResearch

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Exploring Technical Due Diligence with Daniel Jung from TechMiners If you’re a founder, investor, or acquirer, Technical Due Diligence is an important piece of the deal process. For founders, TechDD will give investors and acquirers an inside look at your technology and ultimately will, depending on the maintenance of your code, have a positive impact on the deal, or if you don’t maintain your code well, TechDD will negatively impact your deal. For investors and acquirers, TechDD is where you determine the viability of your investment from a technology standpoint. Check out this conversation on the SaaS Buyers’ Club podcast with Daniel Jung to get insights on TechDD and how to leverage TechDD to make great deals The episode can be found on Youtube, Spotify, and iTunes.

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Check out this article in Asia IP Magazine featuring Chris Rourk and Greg Lambert discussing retrieval-augmented generation (RAG), a cutting-edge AI technique reshaping how we interact with technology.

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