The Prime Unicorn Index Announces Quarterly Reconstitution

Year to Date Return on the Index is 25.16% A record 15 private companies joined the Index, while five left.

The Prime Unicorn Index, the first index to track the share price performance of privately-funded U.S. companies, announced today its quarterly reconstitution. The index, which gives equal-weighting to its constituents, has added a record 15 companies that qualify as Unicorns or Approaching Unicorns. Five companies have left the index – two have had successful IPOs and three were acquired.

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Broker-Dealer and Investment Adviser Agrees to Settle SEC Enforcement Action Arising From a Data Security Incident

Guest post by William R. Daugherty and John Busch, Baker & Hostetler LLP

The U.S. Securities and Exchange Commission (SEC) recently announced a consent order settling an enforcement action brought by the SEC against Voya Financial Advisors Inc. (VFA) in connection with a data security incident that occurred in 2016. VFA is a registered broker-dealer and investment adviser with the SEC. The order memorializes the SEC’s agreement to accept $1 million in settlement of the charges alleging that VFA violated both the SEC’s “Safeguards Rule” and “Identify Theft Red Flags Rule.” This was the SEC’s first enforcement action under the Identity Theft Red Flags Rule.

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Responsibilities When Outsourcing to Third-Party Service Providers

Guest Post from REVERSE Inquires by Mayer Brown, VOLUME 01, ISSUE 05 | August 14, 2018

Discussions on regulatory requirements generally focus on substance. Less often highlighted is how the nuts and bolts of compliance and daily operations are actually carried out—often by third-party service providers. FINRA recognizes the role third-party service providers play and even hosts the Compliance Vendor Directory. We discuss FINRA’s guidelines for the use of third-party service providers below using examples relating to technology governance, cybersecurity and anti-money laundering (“AML”) programs. These topics were included in the FINRA 2018 Regulatory and Examination Priorities Letter and were chosen to highlight the role of outsourcing across various focus areas.

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Delaware Court of Chancery Finds a Material Adverse Effect and Permits Termination of Merger Agreement

Post from Insight & Analysis: Wilson Sonsini Goodrich & Rosati

In a 246-page post-trial decision issued this week, the Delaware Court of Chancery ruled that a buyer could terminate a $4.75 billion public company acquisition because of material adverse effects that had occurred at the seller following signing.1 The decision is the first Delaware case to reach such an outcome and provides critical guidance for such situations going forward.

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Takeaways from SEC’s First Ever Enforcement Actions Against Cryptocurrency Firms for Failing to Register as a Broker-Dealer and Investment Company

Guest post by Michael S. Dicke and Alexis I. Caloza of Fenwick & West LLP

Over the past year, the U.S. Securities and Exchange Commission has ramped up its scrutiny of cryptocurrencies and other digital token offerings. On Sept. 11, 2018, the SEC escalated its crackdown when it announced a pair of settled enforcement actions against non-issuers participating in the offer and sale of cryptocurrencies it deemed unregistered securities. As with prior cryptocurrency cases, the SEC charged the defendants with offering or selling securities without filing a registration statement or having a valid exemption from registration. However, these cases mark the SEC’s first cryptocurrency enforcement actions against non-issuers for failing to register as broker-dealers and investment companies. As such, they highlight the SEC’s continuing efforts to bring the purchase and sale of cryptocurrencies within a regulated framework, including by targeting third parties who facilitate the purchase and sale of such assets.

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Spotlight on Rising Stars in VC: Amy Gu

Post reprinted from NVCA BlogVentureForward

Name: Amy Gu

Location: I was born in Beijing, China, and I studied and worked in a number of countries before deciding to call the Bay Area my home.  The Bay Area is a hotbed for entrepreneurs: with innovations happening every day, it’s like a dream come true for me. Not only is this area great for my work, it’s also a beautiful place to relax and recharge –– when I’m not working, I enjoy being outside, hiking and breathing in the fresh air.

Hemi Ventures is based in Palo Alto and San Francisco. We also have satellite offices in New York and London.

Years of VC experience: My first investment was years before I started the Hemi fund in 2016. I was inspired by an entrepreneur, and by investing in his mission, I felt like I was contributing to this rebel and his dreams to improve the world.  I realized this was my passion, and in order to continue investing, I would need to leverage other people’s money, so I founded Hemi.

Position description: I am currently the Managing Partner of the fund, working with a team of four in our Silicon Valley office. I oversee all of the firm ’s portfolios, driving Hemi’s mission to identify various sectors to bring in the biggest possible returns for our investors. I also oversee investor relations since it’s the most important piece of the fund besides the actual investments.

Q. How did you get into the VC industry and what were some pivotal programs, events, and/or organizations that helped pave the way?

For the past 15 years, my career was focused on running startups as well as coaching startups. Prior to founding Hemi, I was the first General Manager of Evernote China and grew the user base to 20 million in four years. I also served as a growth advisor to Udacity and a handful of scaling tech companies. Then, somewhere in the middle, I started angel investing. I enjoyed working with young entrepreneurs as they started their first companies. That led me to start the fund Hemi Ventures, which is focused on investing in people who want to bring new technology to an industry or disrupt an industry with unique ideas. We are one of the earliest funds to identify the investment opportunity in autonomous vehicles, with four investment made in this sector in 2016. It’s amazing to see the amount of capital flowing in, and the knowledge we gleaned in the past two years has made us key opinion leaders in the industry.

Q. What career advice would you give to your younger self?

My advice to my younger self would be to have more patience. When I was young, I didn’t have much patience with people who didn’t excel at their work, or who didn’t strive for excellence. I’m also not patient with myself as a business leader – I’m driven to find success in a short amount of time. I push myself as hard as I can every day to make sure that I am doing everything I can to be the best at what I do. However, sometimes I need to accept that success and excellence take time and no amount of effort can take the place of that time.

Q. What’s on the top of your bucket list?

There’s an Indycar race this September, and I am planning to attend together with our investors. I know how much planning and precision goes into a race and I love the thrill of seeing it all come together.  I’m looking forward to being a part of that action in person.

Q. Which books, articles, podcasts, and/or reports would you recommend for someone interested in learning more about the work that you do?

Running a company is not about excelling at just one thing but being excellent at all things. A great principle needs to be in everyone’s mind to build the company into a great success. This message rang true when I read Principles, by Ray Dalio, which is the book I would recommend. Building a great VC and a great startup both take a strong commitment to principles. At Hemi, our primary job is to invest, but that doesn’t mean the rest of our work can be mediocre. We have high standards in all of our business practices, including areas like marketing, hiring, culture, and internal data management.  We expect the startups we invest in to share these high standards throughout their business. It takes extra effort considering our limited resources but having high standards in everything we do is what sets our company apart from others.

Q. What qualities do you appreciate in the people you’ve worked with?

Venture Capital is as much about human capital as it is about financial capital; humans are the most important asset we have. A great VC team will attract great founders and great investors, thus a strong base of human capital is irreplaceable. The Hemi team is built on three critical values:

  • Integrity: It’s our bottom line at Hemi that everyone will maintain the highest level of integrity including respect for the entrepreneurs that take risks and a level of honesty and transparency in how we manage the fund.
  • Independent Thinking: Those who do not think independently are under the influence of others. The upside of investing usually comes from a freethinker with contrarian opinions at the right time.
  • Hunger for Excellence: Our brains can be lazy and it’s easy to become comfortable with achieving only the bare minimum. Small mistakes can have high costs, so we need to always be disciplined to hold ourselves to the highest of standards.

Q. What impact do you hope to make on the venture capital industry?

I am one of the few female founding partners in the industry, and this is by far the most challenging work I’ve ever had. I hope by seeing my success, people will realize that there are great female investors that can bring tremendous value to the table, not because of their gender, but because of their strength. I love working alongside our founders, sharing their adrenaline ride.  It’s a rush to close an investment in a new startup on a Friday, and then quickly bring the CEO to an important customer meeting the following Tuesday, just a few days later. The impact I want to make is to help our tech rebels trailblaze new markets as they push their industries forward to defy the limitations of today.

Keep up with Amy on LinkedIn!