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VOL. 127 | NO. 145 | Thursday, July 26, 2012

Baker Donelson Lawyers Support Startup Programs

By Andy Meek

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The budding Memphis-area business accelerator programs Seed Hatchery and ZeroTo510 are continuing to pick up steam as they work to attract new investment and entrepreneurs with a knack for the hustle.

Meanwhile, the programs are able to do the work they do thanks in part to the boost they get from a source outside of the tech and startup worlds they inhabit.

It’s from the law firm of Baker, Donelson, Bearman, Caldwell & Berkowitz PC, whose attorneys help the programs lay the groundwork entrepreneurs need before getting their idea for a new company or product up and running.

The work is a natural fit for Memphis-based Baker Donelson, which actually has a vibrant emerging companies practice throughout the law firm’s Southeast footprint.

On a dedicated page within Baker Donelson’s main Internet site (bakerdonelson.com/emerging-companies), the firm posts entries in a video series called the “Entrepreneur Minute,” which offers quick tips from the firm’s lawyers and others active in the emerging companies area. The law firm also is partnering with Nashville venture capital firm Solidus statewide to do the legal work for other accelerators Solidus works with.

“The management of our firm is committed to developing the emerging companies practice,” said Emily Brackstone, an associate in the firm’s Memphis office who works with Seed Hatchery and ZeroTo510 in Memphis. “We want to be involved at every stage in the lifecycle of our business clients, so it only makes sense that we would focus on emerging companies.”

“We want to be involved at every stage in the lifecycle of our business clients, so it only makes sense that we would focus on emerging companies.”

–Emily Brackstone, Baker Donelson associate

Brackstone said her colleagues also are working with Wolf River Angels, which is under the local Launch Your City banner that also encompasses LaunchMemphis and Seed Hatchery and which is trying to provide a funding platform and training for angel investors.

From Baker Donelson’s perspective, the arrangement makes sense from many vantage points. If the firm wants to be there when a business is ready to take on investors, acquire other companies or find itself navigating the complexities of a lawsuit, it can only help to be there in the beginning, too – when the entity is formed and the first contract is drafted, for example.

Seed Hatchery is the startup accelerator housed in the EmergeMemphis building Downtown that basically offers entrepreneurs the equivalent of a 90-day boot camp. During that time, entrepreneurs draft a business plan, learn how to pitch to investors, get seed funding and more.

Brackstone, working under guidance from Baker Donelson shareholder Matt Heiter, works with all of the Seed Hatchery teams, preparing corporate formation documents for their respective companies as well as documents related to the $15,000 seed-stage investment from Solidus the companies get as part of the program.

Brackstone and fellow Baker Donelson attorney Trey Haire perform similar work with ZeroTo510, splitting up the work between them.

Heiter gives presentations about term sheets to the teams, so they know what to expect when they get further funding. He also covers negotiation points in term sheets like valuation, anti-dilution and investor rights, among others.

“I hold office hours a couple of times during the course of the 90-day program to discuss any legal issues that the (company) founders have questions about,” Brackstone said.

She also meets with the teams individually in a way that lets them ask any legal question they have. If it’s something outside of her expertise, she’ll take it back to her colleagues at the firm.

ZeroTo510, meanwhile, is a medical device accelerator program that uses the same platform as Seed Hatchery. It’s a 90-day program culminating in an Investor Day, when pitches for funding are made to investors.

ZeroTo510 participants receive an initial $50,000 investment from Innova and MB Ventures, and up to three of the six teams may receive a second round of funding of $100,000 at the end of the 90 days.

Baker Donelson’s attorneys offer the same package of services to ZeroTo510 that they do for Seed Hatchery.

“A lot of the founders have a background in academics and research, but have never been involved in running a business before,” Brackstone said. “They are very bright and just the sort of people we want to be attracting to Memphis.”

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