Getting A New York Start-up Company Off the Ground is No Easy Task
Getting a New York start-up company off the ground can be a challenging task. In fact, 8 out of 10 entrepreneurs who start a business fail within the first 18 months.
Scarinci Hollenbeck’s Corporate Transactions & Business Practice Group regularly works with entrepreneurs and other business professionals to address the legal obstacles that New York start-ups face. Our attorneys also frequently share legal updates and insights on the firm website.
Below are six start-up tips that we provided throughout the past year:
(1) Pros/Cons of Incubators and Accelerators: By providing mentorship and other resources, incubators and accelerators can help start-ups avoid common entrepreneurial pitfalls and speed up the process of raising capital and growing a business. However, they are not right for every business, and it is important to do your research before signing on the dotted line.
(2) Using Finders to Secure Funding: A New York start-up company or private investment fund can face unintended liability when they use third-party “finders” to identify and solicit investors to provide capital via a private securities offering. Even the use of employees to solicit funds for their employers can fall afoul of securities laws if not structured properly. In many cases, these individuals perform activities that require registration with the Financial Industry Regulatory Authority (FINRA) and the Securities & Exchange Commission (SEC).
(3) Debt vs Equity Financing: There are several different types of financing structures that may be available for initial start-up investments. Most involve some combination of equity or debt. Start-ups should be aware of the relative benefits and disadvantages of taking on debt versus taking in equity. More importantly, when reviewing term sheets presented to them, it is imperative that start-up founders be able to fully understand the terms.
(4) Alter Ego Liability: Start-ups and other New York businesses should be aware that there are circumstances under which courts will hold an LLC or corporation’s owners, members, and shareholders personally liable for business debts by “piercing the corporate veil.” Liability typically arises when a plaintiff claims that an LLC or corporation is not a distinct entity, but rather an “alter-ego” being used by the owners, members, and/or shareholders to advance their own personal interests or to perpetrate a fraud.
(5) Confidential IPO Filing: In an effort to boost capital formation, the SEC announced in July that it will accept voluntary draft registration statement submissions from all issuers for nonpublic review. The ability to keep filings confidential in the early stages of an initial public offering (IPO) was previously limited to emerging growth companies. Filing confidentially allows companies to work out any issues with the SEC outside of the public spotlight and reduces the potential for lengthy exposure to competitive risks and market fluctuations that can negatively impact the offering process.
(6) Delay of International Entrepreneur Rule: The Obama-era International Entrepreneur Rule, which would allow immigrant start-up founders to enter the country for up to five years under certain conditions, was slated to take effect in July. The National Venture Capital Association and several startup companies are now suing the Trump Administration over its decision to delay the immigration regulation.
Of course, this post offers only a brief review. To learn more about the issues discussed, I encourage you to click through to the relevant blog post linked above. Otherwise, if you have any questions or if you would like to discuss the matter further, please contact me, Dan Brecher, at 201-806-3364.
Does Your Homeowners Insurance Provide Adequate Coverage?
Your home is likely your greatest asset, which is why it is so important to adequately protect it. Homeowners insurance protects you from the financial costs of unforeseen losses, such as theft, fire, and natural disasters, by helping you rebuild and replace possessions that were lost While the definition of “adequate” coverage depends upon a […]
Understanding the Importance of a Non-Contingent Offer
Making a non-contingent offer can dramatically increase your chances of securing a real estate transaction, particularly in competitive markets like New York City. However, buyers should understand that waiving contingencies, including those related to financing, or appraisals, also comes with significant risks. Determining your best strategy requires careful analysis of the property, the market, and […]
Fred D. Zemel Appointed Chair of Strategic Planning at Scarinci & Hollenbeck, LLC
Business Transactional Attorney Zemel to Spearhead Strategic Initiatives for Continued Growth and Innovation Little Falls, NJ – February 21, 2025 – Scarinci & Hollenbeck, LLC is pleased to announce that Partner Fred D. Zemel has been named Chair of the firm’s Strategic Planning Committee. In this role, Mr. Zemel will lead the committee in identifying, […]
Novation Agreement Process: Step-by-Step Guide for Businesses
Big changes sometimes occur during the life cycle of a contract. Cancelling a contract outright can be bad for your reputation and your bottom line. Businesses need to know how to best address a change in circumstances, while also protecting their legal rights. One option is to transfer the “benefits and the burdens” of a […]
What Is a Trade Secret? Key Elements and Legal Protections Explained
What is a trade secret and why you you protect them? Technology has made trade secret theft even easier and more prevalent. In fact, businesses lose billions of dollars every year due to trade secret theft committed by employees, competitors, and even foreign governments. But what is a trade secret? And how do you protect […]
What Is Title Insurance? Safeguarding Against Title Defects
If you are considering the purchase of a property, you may wonder — what is title insurance, do I need it, and why do I need it? Even seasoned property owners may question if the added expense and extra paperwork is really necessary, especially considering that people and entities insured by title insurance make fewer […]
No Aspect of the advertisement has been approved by the Supreme Court. Results may vary depending on your particular facts and legal circumstances.
Sign up to get the latest from our attorneys!
Explore What Matters Most to You.
Consider subscribing to our Firm Insights mailing list by clicking the button below so you can keep up to date with the firm`s latest articles covering various legal topics.
Stay informed and inspired with the latest updates, insights, and events from Scarinci Hollenbeck. Our resource library provides valuable content across a range of categories to keep you connected and ahead of the curve.
Top Six New York Start-up Tips
Author: Dan Brecher
Getting A New York Start-up Company Off the Ground is No Easy Task
Getting a New York start-up company off the ground can be a challenging task. In fact, 8 out of 10 entrepreneurs who start a business fail within the first 18 months.
Scarinci Hollenbeck’s Corporate Transactions & Business Practice Group regularly works with entrepreneurs and other business professionals to address the legal obstacles that New York start-ups face. Our attorneys also frequently share legal updates and insights on the firm website.
Below are six start-up tips that we provided throughout the past year:
(1) Pros/Cons of Incubators and Accelerators: By providing mentorship and other resources, incubators and accelerators can help start-ups avoid common entrepreneurial pitfalls and speed up the process of raising capital and growing a business. However, they are not right for every business, and it is important to do your research before signing on the dotted line.
(2) Using Finders to Secure Funding: A New York start-up company or private investment fund can face unintended liability when they use third-party “finders” to identify and solicit investors to provide capital via a private securities offering. Even the use of employees to solicit funds for their employers can fall afoul of securities laws if not structured properly. In many cases, these individuals perform activities that require registration with the Financial Industry Regulatory Authority (FINRA) and the Securities & Exchange Commission (SEC).
(3) Debt vs Equity Financing: There are several different types of financing structures that may be available for initial start-up investments. Most involve some combination of equity or debt. Start-ups should be aware of the relative benefits and disadvantages of taking on debt versus taking in equity. More importantly, when reviewing term sheets presented to them, it is imperative that start-up founders be able to fully understand the terms.
(4) Alter Ego Liability: Start-ups and other New York businesses should be aware that there are circumstances under which courts will hold an LLC or corporation’s owners, members, and shareholders personally liable for business debts by “piercing the corporate veil.” Liability typically arises when a plaintiff claims that an LLC or corporation is not a distinct entity, but rather an “alter-ego” being used by the owners, members, and/or shareholders to advance their own personal interests or to perpetrate a fraud.
(5) Confidential IPO Filing: In an effort to boost capital formation, the SEC announced in July that it will accept voluntary draft registration statement submissions from all issuers for nonpublic review. The ability to keep filings confidential in the early stages of an initial public offering (IPO) was previously limited to emerging growth companies. Filing confidentially allows companies to work out any issues with the SEC outside of the public spotlight and reduces the potential for lengthy exposure to competitive risks and market fluctuations that can negatively impact the offering process.
(6) Delay of International Entrepreneur Rule: The Obama-era International Entrepreneur Rule, which would allow immigrant start-up founders to enter the country for up to five years under certain conditions, was slated to take effect in July. The National Venture Capital Association and several startup companies are now suing the Trump Administration over its decision to delay the immigration regulation.
Of course, this post offers only a brief review. To learn more about the issues discussed, I encourage you to click through to the relevant blog post linked above. Otherwise, if you have any questions or if you would like to discuss the matter further, please contact me, Dan Brecher, at 201-806-3364.
Let`s get in touch!
Sign up to get the latest from the Scarinci Hollenbeck, LLC attorneys!
