IoT Startups & Exits: CEOs & Investors Share Wins, Trade Scars

On Wednesday May 31st, the Boston Foley & Lardner office hosted the third installment of the Boston/New England IoT Meetup series. The Internet of Things (IoT) focuses on the vast network of devices connected to the internet, which collect and exchange data.  The event was widely attended by both entrepreneurs and investors from various parts of New England, with Dave Kantaros and Chris McKenna, co-chairs of the firm’s Technology Industry Team, moderating the two panels: The first focusing on the investor side including angels, VCs, and individuals with real IoT deal experience, and the second highlighting leading entrepreneurs and their companies within the greater Boston area.

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Looking Ahead: Top Issues Impacting the Tech Industry in 2017

As technology continues to reshape how business gets done and the way people live their lives, there are many reasons to be excited about the tech industry’s prospects heading into 2017. The more than 300 executives, investors, and advisors that recently convened in Boston for Foley & Lardner’s annual FoleyTECH Boston 2016 conference, discussed the opportunities in the current marketplace, as well as the key challenges facing companies in today’s dynamic data-driven economy.

Here are the highlights from the event’s two keynote speakers and six panel discussions.

1. Information Security Rises Above the Fray

Amid continued cyberattacks and rising volumes of data being generated and curated by companies, information security is a top priority for most organizations. Recent advancements – including Internet of Things (IoT) technologies and autonomous features in vehicles – have created new and unique challenges that affect the business models and risk profiles for those active in these spaces.

According to a panel of industry experts, IoT devices and systems expanding the points of entry into even the most protected homes and businesses, while also increasing the amount of sensitive data that can be collected. The panelists unanimously agreed that building security systems from the ground up is critical, as well as reconsidering the types of data worthy of protection due to more sophisticated consumer bases that are demanding to know when, how, and why their data is being collected, used, and shared.

Featured lunch keynote, Carlos Bhola, managing director of Celsius Capital, discussed the social, economic, and legal implications of the growing market for connected and autonomous vehicles. He noted that privacy and security issues are even more prevalent with the potential for hackers to take control of a car and the ability to track and collect copious amounts of information on drivers.

2. Finding Capital and Timely Exits

Later in the day, a panel discussion entitled “Exit Stage Left: Liquidity Success in Today’s Economy” focused on entrepreneurs seeking funding and strategies for successful exits. As one panelist aptly put it, “We are currently in the late innings of the best M&A market of the last several decades and many sellers are concerned about missing the high-value window by waiting to pursue an exit.” The panel also weighed the pros and cons of engaging strategic investors versus financial buyers in terms of retaining a company’s culture and reducing uncertainty. They noted the importance of understanding founders’ differing motivations and interests related to making the choice between cashing out and walking away or continuing to lead the company.

A separate panel on securing, preserving, and protecting capital shared the following tips for raising startup and growth capital in an increasingly competitive environment:

  • VCs look for entrepreneurs that embrace change, show true passion, and collaborate well with others.
  • It’s better to fail than to miss an opportunity. Successful entrepreneurs learn from their mistakes and build upon constructive criticism or rejection.
  • Raising less money can be a virtue. Early-stage companies sometimes make the mistake of asking for too much money, and giving up too much equity in return.

3. Extracting Maximum Value from Intellectual Property

In reflecting on the importance of IP to generate revenue and protect innovations, another panel discussion entitled, “The Business and Monetization of IP,” covered how to best leverage a firm’s assets. The panelists stressed the benefit of constantly identifying new innovations throughout the product development cycle and using various tools to protect IP, including patents, trademarks, copyrights, trade secrets, and contracts. They also suggested taking advantage of continuation applications – new applications based on an original patent application – to build and maintain a robust patent portfolio.

4. Global Compliance Pressure Mounts

During this era of globalization, companies that expand into international markets often find themselves in unfamiliar regulatory and compliance territory. Comprised of panelists from leading global companies, the discussion entitled, “International Expansion: Risks and Rewards,” yielded several pieces of guidance for those looking beyond the borders of the United States:

  • Conduct due diligence on your partners and customers.
  • Perform risk-based assessments in the jurisdictions and markets in which you operate and assess the corresponding compliance risks.
  • Document your due diligence in case you need to show a regulator that the company undertook all reasonable and necessary precautions.
  • Continually audit your compliance systems and assess effectiveness.

In the constantly evolving tech industry, it remains to be seen how these issues will unfold in the coming year.  But, from the dynamic and thought-provoking discussions at FoleyTECH Boston 2016, we can be sure that these trends, challenges, and innovations will make for an intriguing 2017.

Exclusion for Qualified Small Business Stock

The Protecting Americans from Tax Hikes Act, passed in December 2015, extended an often overlooked provision of the tax code with the potential to provide significant savings to small business owners and non-corporate investors.  Section 1202 of the Internal Revenue Code permits the seller of a “qualified small business” to exclude up to 100% of the gain attributable to the sale or exchange of qualified small business stock from taxation.

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Navigating the Accelerator Acceptance Process


Accelerator programs can be critical to the success of a start-up company, but entrepreneurs face steep competition even being accepted to a top accelerator.

At FoleyTECH Chicago 2016, the speakers on the “Exploring the Role of Accelerators in the Entrepreneurial Ecosystem” panel discussed how an entrepreneur can strategically optimize a start-up company’s chances of being accepted into a top program.

Applying and being accepted into an accelerator program is not unlike trying to gain entrance to a university or securing that first job out of school. It’s a detailed process requiring attention and follow-through that should include the following:

  1. Narrow the list to accelerators that align with the company’s goals First, an entrepreneur must narrow the long list of accelerators to those that fit the company’s goals. There must be an understanding of what a particular accelerator accelerates and how this fits into the company’s goals. Consideration should also be given to the accelerator’s location because most accelerators will require a temporary relocation of the company during the program. Assuming a fit exists, an entrepreneur should target enough accelerator programs to ensure that the company has options or does not come up empty handed.
  1. Figure out the best time to apply Once a list of potential accelerator partners is developed, they should be ranked along with creating a strategy of when to apply. Each accelerator will have its own application deadlines, acceptance deadlines, and program start dates. An entrepreneur may want to avoid having to decide whether to accept its fourth choice before even having an interview with its first choice.
  1. Write a good application Time should be invested into writing a good application. While many accelerators may prefer a founding team with previous start-up successes, many applicants will be first-time entrepreneurs. In these cases, focus can be on past employment with a start-up (even if not as a founder) or experience in a relevant industry. An accelerator may require disclosure of specific employment or revenue figures, but most accelerators have no exact application requirements.
  1. Develop a relationship that goes beyond the paper While the “paper” application is important, an entrepreneur should strive to be known by an accelerator beyond the application. Take time to study the accelerator’s program in-depth prior to any in-person interview, and be ready to ask appropriate questions and show a high level of interest. Additionally, effort should be made to make contacts with the accelerator outside of the formal application process, including attending events at the accelerator or providing periodic e-mail updates. This “hustling” mentality will demonstrate an interest and full-time commitment to the program.

Throughout the process, an entrepreneur should be honest and upfront with the accelerator. Top accelerator programs review hundreds or thousands of applications per year and will recognize start-up puffering. Respect will be gained by pitching the company’s vision while being down to earth and open to feedback.

Accelerators present a great opportunity to leverage a valuable resource. While competition to work with top accelerator programs is increasing, an entrepreneur can take calculated steps to improve a start-up company’s chances of acceptance into a top program.

This piece originally appeared in Milwaukee Journal Sentinel’s OnRamp blog.

Leveraging Accelerators as a Valuable Resource


Entrepreneurs should seriously consider participating in an accelerator program to jumpstart the growth of a start-up company or as a potential funding source.

At FoleyTECH Chicago 2016, the speakers on the “Exploring the Role of Accelerators in the Entrepreneurial Ecosystem” panel discussed key considerations for an entrepreneur seeking to leverage an accelerator partner. Specifically, an entrepreneur should understand what an accelerator accelerates and how an accelerator can help to raise capital for a start-up company.

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