Essential Law for Entrepreneurs in Innovation-Driven Startups and Growth Companies (4Dx)
NEW FOR 2014
innovation-driven startup or growth company—one designed to commercialize a new technology or a
business model enabled by a new technology—faces distinctive law-sensitive
challenges. This program is a hands-on, focused “deep dive” into the
law-sensitive issues that face innovation-driven businesses at key junctures.
Essential Law for Entrepreneurs in Innovation-Driven Startups and Growth Companies (4Dx) Certificate Track: Management and Leadership Location:
$3,300 Program Days (for certificate credit): 2
This course will be delivered exclusively online in six 2-3 hour sessions taking place once a week over six weeks.
This program is a hands-on, focused “deep dive” into the
law-sensitive issues that face innovation-driven startups at key junctures. An innovation-driven startup–one designed to commercialize a new technology or a business model enabled by a new technology–faces distinctive law-sensitive challenges. Key stakeholders need to understand how the law shapes the risks and opportunities presented by innovation-driven start-ups and the
commercialization of new technologies. With a deeper understanding of legal issues,you will bring better judgment and more effective leadership to key junctures in the founding and growth of these exceptionally dynamic ventures. A partial
list of the strategic challenges considered in this program include:
In innovation-driven startups, there is often a team of entrepreneurs, rather than a single founder. The timeline for growth of the business is not linear–there is often a substantial period of no revenues and investment followed, hopefully, by extraordinary growth. This also creates a need for investors, and in particular investors who share the founders’ appetite for risk. How can this network of stakeholders, in an environment of radically shifting risks and opportunities, design an appropriate legal framework for ownership, compensation, incentives, responsibilities, commitment and control?
When the value of a venture is based upon an innovation, intellectual property (IP) rights are often key to growing that value. How can IP rights be acquired? How do legal considerations shape an effective IP strategy? How can IP be protected from threats such as the departure of key employees?
Some innovation-driven startups have as their goal growth into a fully mature enterprise. But often the goal is to develop a product or service to the point where its value is clear enough to attract a buyer for the entire venture. Negotiations with prospective buyers are typically very asymmetric–with the new venture sitting across the table from a counterparty with far more resources and experience. (This is also often true in negotiations with prospective investors.) What tools does the law provide to protect the entrepreneur in such settings?
As the innovation-driven startup matures, taking on investors and shifting its business focus beyond enabling the innovation, pressures are generated for shifts in governance and management. The board, which at the outset is typically just the founders, takes on new members, more formal functions, and a more complex set of legal responsibilities and liabilities. Founder-CEOs are often replaced even as a venture achieves early success (and sometimes precisely because of that success). What do key stakeholders need to understand about how the legal framework of the venture channels these changes?
Such ventures have an acute need for savvy legal advice and representation, but lawyers are expensive and resources are often very limited. How does the startup obtain and finance the legal services that it needs?
An innovation-driven startup is a high risk/high reward venture, and even those that are ultimately successful may suffer periods of financial distress. Financial distress creates major legal risks for a business entity and its managers. What legal pitfalls must be avoided during times of such distress, or during a winding down of the venture? Session Dates and Estimated Times (you must attend all):
Tuesday, November 11, 2014: 11am-2pm Eastern U.S. Time Tuesday, November 18, 2014: 11am-2pm Eastern U.S. Time Tuesday, November 25, 2014: 11am-2pm Eastern U.S. Time Tuesday, December 2, 2014: 11am-2pm Eastern U.S. Time Tuesday, December 9, 2014: 11am-2pm Eastern U.S. Time Tuesday, December 16, 2014: 11am-2pm Eastern U.S. Time
Participants will leave this program better prepared to:
Execute a legally clean departure from a prior employer, with an understanding of the legal implications of skills and information acquired on a prior job, and of any agreements (such as a non-competition agreement) which may have been executed with a prior employer.
Select and structure a business entity, which includes choosing between a corporation or limited liability company; timing considerations; tax and control features; key organizational documents; and the selection of a name for doing business.
Understand and negotiate key early contractual agreements such as invention assignment agreements, non-competition agreements, non-disclosure agreements, and shareholder agreements.
Design an ownership structure and equity-related compensation, with an understanding of the economic, control, and tax implications of different stock classifications, options, and vesting arrangements available to founders and early employees.
Serve on or work with a governing board, especially as its role evolves to reflect the interests of investors, and as independent directors are added.
Anticipate and deal constructively with the evolution of senior management roles, with special attention to the tensions that arise around pressures to replace a founder-CEO.
Develop and protect early IP, including understanding the role of patents, copyright and trade secrets; and the special problems posed by the departure of employees with IP-related responsibilities.
Design and negotiate early financing, including financing by founders, friends and family, angel investors, venture capital, and strategic partners; and how to evaluate a term sheet or a convertible note.
Prepare for and participate in the process of selling or buying a company, including the roles of financial and strategic buyers, and the special responsibilities of the seller’s board members.
Find and make good use of lawyers, including understanding the roles of company counsel and personal counsel; and financial arrangements with attorneys.
The program will address the key legal junctures faced by innovation-driven startups from the different perspectives of all of the key players. As such, the program will be useful to those who are (or in the future may be) in any of the following roles:
Financial or strategic investor
Advisor or consultant
Potential buyer of the venture
As the critical role of innovation-driven startups in a region’s economic success has become more widely appreciated, many government agencies and NGOs have become involved in efforts to encourage these enterprises–to help build a technology-oriented entrepreneurial “ecosystem.” This course is designed to be of benefit to such policy-makers as well.
The focus of the program is U.S. law, but the materials in this course have been found to be useful to those outside the U.S. Many nations are adapting laws and policies that resemble those in the U.S. Even in countries with legal systems very different from the U.S., features of U.S. ventures can be replicated by private law arrangements. Entrepreneurs and investors are increasingly mobile, with a global view of opportunities. For all of these reasons, participants from outside the U.S. may find this course of value, and are welcome to participate.
This course will meet once a week for a single 2-3 hour session, and for six weeks. It will utilize a cutting-edge virtual interactive classroom through which participants can engage in conversation with the instructor and with each other, including breaking down into working groups. All a participant needs is access to the internet; there is no need to undertake the cost or disruption of a trip to MIT.
The one-session-a-week format makes it possible to integrate each session with written materials and assignments which synthesize lessons learned, and better prepare for upcoming sessions. Between sessions, participants can consult with one another. For busy entrepreneurs, this can be an advantage over the more conventional executive education format, which typically consists of a series of all-day sessions on consecutive days.
This is a hands-on program designed to provide practical tools and advice. (The instructor for many years practiced law, and was a partner in a leading U.S. law firm.) In addition to presentation of material by the instructor, the program will include the review of key contracts and business entity organizational documents, and simulations of negotiations among key stakeholders over ownership, finance, and control.
Essential Law for Entrepreneurs in Innovation-Driven Startups and Growth Companies (4Dx) will be conducted using AvayaLive EngageTM, a web-based, immersive collaboration environment which goes far beyond the typical one-to-many presentation dynamic of online education. Unlike the passive nature of most online courses whereby participants simply view a pre-recorded lecture, Essential Law for Entrepreneurs in Innovation-Driven Startups and Growth Companies (4Dx) will be a completely engaging, live experience in which participants interact in a “4D” virtual room with John Akula and fellow students via personalized “avatars.” The participants will be able to talk and move around, and they will feel like they, not just their avatars, are present in the classroom.
AvayaLive Engage utilizes a unique “4D” technology that allows visitors to the virtual space to not only move about in a 3D environment but also enjoy the added benefit of spatial/positional audio capability. Research shows that the way information is received aurally is critical to conveying a true “being-there” feeling. AvayaLive Engage delivers a genuinely spatial audio experience that enables listeners to become directionally attuned to the location of voices and sounds. As participants move about the room, the voices of other participants will become louder or softer, depending on proximity. This allows for smaller, break-out group discussions within the virtual classroom.
AvayaLive Engage was successfully used at TEDx Boston 2012 to allow people to attend the event virtually. This article describes what it was like to attend TEDx online.
The virtual classroom space includes a main auditorium where the live lecture portion can be attended and where questions can be asked of the professor and networking can be done between attendees.
Participants can move around the room, closer to or further from the main stage. They can also approach another participant if they would like to speak with them. The entrances marked A, B, C are a few of the break-out rooms used for smaller discussions and team projects.
Documents, presentations, and websites can be displayed on the screens. By clicking on any of the screens, the view expands to full-screen on your monitor.
A close up of a break-out room. These rooms are sound proof so conversations remain private. Participants are able to use the screen as a white board or load presentations, documents, and websites.
Please note that faculty are subject to change and not all faculty teach in each session of the program.
John Akula is a Senior Lecturer in Law at MIT Sloan, where he has primary responsibility for the business law curriculum. His courses focus on the law-sensitive skills needed by managers in both young and established companies, and the legal framework of entrepreneurship, technology, innovation, and finance. John has also taught in the Biomedical Enterprise Program of the Harvard/MIT Division of Health Sciences and Technology.
John earned a PhD at Harvard, where he was a National Science Foundation Fellow, and where his research focused on the evolution of effective legal commitments. After post-doctoral work and earning a law degree, both also at Harvard, he clerked for a Justice of the highest court in Massachusetts, and then spent 15 years practicing law. He was a partner at Herrick & Smith until that firm dissolved in 1985, and then joined Goodwin Procter, one of the nation’s leading law firms, as a partner in its business law department. As a practicing lawyer, he worked with senior managers and boards in a broad range of industries, including banking and health care. His typical role was as managing partner for clients for whom the firm was general counsel, and so he was involved in a great variety of matters. He had a substantial trade association practice, and was heavily involved in the drafting of legislation and regulation.
He left the practice of law in 1991 to return to the academic world. He divided his time between teaching at Harvard’s Kennedy School of Government and MIT Sloan, and is now full-time at MIT Sloan, where he is also heavily involved in the school’s executive education and international programs.
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