2. Speakers
 Greg Davidson, Partner, Gibson, Dunn & Crutcher LLP
 Bill Hambrecht, Founder, Chairman and CEO,
WR Hambrecht+Co
 Marshall Hawks, Deal Team Leader, Silicon Valley Bank
 Brian Lane, Partner, Gibson, Dunn & Crutcher LLP
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3. Agenda
 What does the JOBS Act do? Why did Congress pass it?
 What’s all the fuss about?
 What will the JOBS Act mean for early stage startups?
 How will it help later stage companies?
 Q&A
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4. What Does the JOBS Act Do?
Makes it easier to raise Allows general advertising
capital from for
sophisticated investors Reg D private placements
Creates an IPO “on ramp”
Makes it easier to go
Revises “Reg A” rules to permit
public
offerings up to $50M annually
Makes it easier to stay Raises 500 shareholder
private “cap”
Makes it easier to raise Allows crowdfunding for
capital from a broad base equity raises
of “normal” investors
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5. Why Did Congress Pass It?
IPO's in the United States by Size - Number of Deals
Deal Size 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012
0-$25 million 9 10 6 7 19 12 9 2 1 3 1 1
$25-$50 million 8 7 4 33 19 22 12 1 0 4 7 2
$50-$100 million 20 16 20 52 44 38 44 7 7 32 17 16
$100+ million 43 35 38 82 79 78 91 13 31 55 66 20
Total 80 68 68 174 161 150 156 23 39 94 91 39
IPO's in the United States by Size - Related Percentage of Total Number of Deals
2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012
0-$25 million 11% 15% 9% 4% 12% 8% 6% 9% 3% 3% 1% 3%
$25-$50 million 10% 10% 6% 19% 12% 15% 8% 4% 0% 4% 8% 5%
$50-$100 million 25% 24% 29% 30% 27% 25% 28% 30% 18% 34% 19% 41%
$100+ million 54% 51% 56% 47% 49% 52% 58% 57% 79% 59% 73% 51%
Sources: Dealogic, excludes ADRs and foreign US Listing Trend
issuers. Current as of April 11, 2012.
Number of Percentage
Year Listings Decrease
2000 9,100 -
2010 6,450 -29%
2012 5,165 -20%
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6. Entrepreneurs Care
 More than 700 entrepreneurs from more than 200 cities signed a
letter to Congress supporting the IPO on-ramp bill*
 More than 5,000 angel investors, entrepreneurs and venture
capitalists signed a petition urging the Senate to pass the JOBS Act*
 Startups who participated in SVB’s 2012 Startup Outlook Survey
consistently supported the types of reforms included in the JOBS Act
* Source: National Venture Capital Association
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7. 7

8. What’s All The Fuss About?
8

9. What Will the JOBS Act Mean
for Early Stage Startups?
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10. New Sources of Capital for High Growth
Startups
VCs Angels
Early Stage
Startups
Crowd- Corporate
funding Investors
High-End
Investors
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11. Crowdfunding: The JOBS Act’s Biggest Unknown
 How is it different from existing sites, such as Kickstarter?
 Is it real? Will the SEC let it happen?
 Will it work for high growth companies and professional investors?
CROWDFUNDING BASICS
• Can raise up to $1M per year
• Must go through “funding portals”
• Information requirements vary by amount of
capital raised
• Limits on how much each individual can
invest annually, which vary by income/net
worth
• One-year restriction on transfer of shares
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12. Private Placements:
Adapting to Modern Communications
 New rules focus on who you sell securities to, not who
sees the solicitation
 You can now make general solicitations and use
broad-based advertising, as long you sell securities only to
accredited investors (Reg. D) or to those you “reasonably
believe” are qualified institutional buyers (Rule 144A)
 No more password-protected websites or strict restrictions
on ads and press releases
 Not yet in place until SEC adopts regulations
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13. What Will the JOBS Act
Mean for Later Stage
Companies?
• Those who want to go public
• Those who want to stay private
• Those who aren’t sure
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14. What’s New?
Want to go • IPO on-ramp:
• Spend more time and money building your business
public? • Increase your probability of a successful IPO
• Reg “A+” reforms: Can they re-create the small cap IPO?
Want to stay • Changes to the “500 shareholder” rule give you more control
over when and whether to go public
private? • Revised Reg “A+” and Reg D provide additional alternative
sources for growth capital
• IPO on-ramp
Not sure? • No need to disclose confidential business info until you’re sure
• “Testing the waters” can let you assess demand
• Other provisions make staying private a more viable option
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15. The IPO On-Ramp: A Quick Tutorial
• Two years of audited financials for IPO (instead of three years for full
financials and five years for selected financial data)
Financial Disclosure • More limited financial data for post-IPO filings
• Will markets accept the reduced disclosures?
• Longer time to comply with new and revised accounting standards
Accounting & Audit • No audit firm rotation or “auditor discussion and rotation” (if adopted)
SOX Internal • Don’t need to pay auditors to audit SOX 404(b) internal controls
Controls • …But yes, you still have to have these controls
• Fewer disclosures, covering fewer execs, for fewer years
Executive Comp. • No CD&A or say-on-pay
• Confidential preliminary registration statements => greater control over sensitive
IPO Filings & information
• “Test the water” communications => better insights for pricing, book building, etc.
Communications • More flexible rules for research coverage => better investor/analyst
communications
• Spend more time and money building your business, less paying lawyers and
auditors
• Test the waters before committing to an IPO, and keep your business info
Bottom Line confidential until you’re ready to go
• Improve communications to bring in the right shareholders and the right
coverage for your long term growth
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16. Who Can Use It?
Less than $1B in
Emerging Growth Public less than 5
trailing annual
years
Companies gross revenues
A new category of issuers,
subject to less rigorous Less than $1B in
Not a “large
regulation non-convertible
accelerated filer”
debt over 3 yrs
Went public after
Dec. 8, 2011
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17. What’s Left?
 All offerings will remain subject to
“core” investor protections
 Makes things easier, but not easy
 Doesn’t address other root causes
of the IPO decline, such as
decimalization
 Still unclear: How will investors
and bulge bracket investment banks
react?
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18. Reg A+: Re-Inventing Small Cap IPOs?
• Old limit: $5 million annually
Offering Size • New limit: $50 million annually
• Limited public offerings – essentially a “mini” registration process
• An issuer can use Reg A+ and still opt to remain private
Offering Process • Can use general solicitations and general advertising
• Can “test the waters” before incurring significant expenses
• Can sell securities to investors who are not “accredited investors”
Restrictions on Sale? • Securities are not “restricted securities” – can be freely re-sold
State “Blue Sky” • Revised law makes it more feasible to avoid state-by-state filings
Laws • Exempt from state filings if listed on an exchange or sold to “qualified
purchasers”
• Must file audited financial statements annually
Required Disclosures • Additional requirements to be determined by SEC (which could impact practical
use)
• An alternative path for fundraising
• Can offer debt, equity, and convertible debt
• More flexible than private placements
Bottom Line • Less costly than a true IPO
• Leaner process could mean significantly more proceeds to company
• Doesn’t preclude company from later using the IPO on-ramp
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19. What If I Want to Stay Private?
You must register with the SEC and begin filing financial statements if you have:
• $10M in assets, and
Old Rule • 500 shareholders
• Includes employee shareholders
• $10M in assets, and
• 2000 shareholders (max. 500 who aren’t
New Rule accredited investors)
• Excludes employee shareholders and
crowdfunding shareholders
Will make it easier to provide liquidity to employees and investors through secondary transactions
and use options to compensate a growing employee base … without fear of crossing the line.
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20. When Can I Use the JOBS Act?
New financial reporting and
Immediately
auditing standards for EGCs
New compensation disclosure
Immediately, for most
and corporate governance rules SEC needs to adopt rules to cover exemption from “pay-for-performance” and “pay-
for EGCs ratio” disclosure obligations
Pre- and post-filing “test the
Immediately
waters” communications for EGCs
Publication of research reports
by participating underwriters
Immediately
for EGCs
Immediately, as a matter of law
Securities analyst conflict rules
for EGCs But as a practical matter this may not happen until FINRA/stock exchanges weigh in
and the effect of the JOBS Act on the “global settlement agreement” is clearer
Timing of publication of research
reports for EGCs and appearances Immediately
by broker-dealers But there may be risks until FINRA weighs in
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21. When Can I Use the JOBS Act? (con’t)
Confidential submission of draft
registration statements by EGCs Immediately
Elimination of prohibitions on
general solicitation and Requires implementation rules to be issued by the SEC
advertising (Reg D) Stated deadline for rules: July 4, 2012
Crowdfunding Requires implementation rules to be issued by the SEC
Stated deadline for rules: December 31, 2012
New Reg A rules Requires implementation rules to be issued by the SEC; no deadline
established
Immediately
Increased shareholder limits for
public company reporting SEC will need to adopt rules for some provisions
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22. Questions?
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23. Biographies
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24. Gregory T. Davidson is a partner in Gibson, Dunn & Crutcher's Palo Alto office
and Co-Chair of the firm's Emerging Technologies Practice Group. Mr. Davidson's
corporate practice includes extensive experience in mergers and acquisitions,
private equity, joint ventures, corporate finance and general business law matters.
He regularly advises public company clients in connection with SEC filings, public
disclosure, corporate governance and other securities laws matters.
Mr. Davidson also represents venture capitalists and corporate strategic investors,
as well as companies, in connection with private placements of equity and debt,
and he counsels start-up and emerging growth companies in all aspects of their
corporate legal requirements.
Gregory T. Davidson
In addition to co-chairing the Emerging Technologies Practice Group, Mr.
Partner
Davidson is a member of each of Gibson, Dunn’s Corporate Transactions, M&A,
Gibson, Dunn & Crutcher LLP Capital Markets, and Private Equity Practice Groups. His work also has included
gdavidson@gibsondunn.com significant executive compensation and equity plan matters.
650.849.5350
Mr. Davidson is named in Chambers USA – American Leading Lawyers for
Business as a Leader for his mergers and acquisitions practice and his venture
capital practice.
Mr. Davidson joined Gibson, Dunn & Crutcher in 1988 after earning his law
degree from the University of California at Berkeley (Boalt Hall). He received his
Bachelor's degree with distinction in political science and economics from
Stanford University in 1985. Mr. Davidson worked for four years in Gibson, Dunn
& Crutcher's Orange County office before moving to the San Francisco Bay Area.
He is Vice Chairman of the Board of Directors of United Way Silicon Valley.
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25. In 1968, Bill co-founded Hambrecht & Quist, an investment banking firm
specializing in emerging high-growth technology companies. He
founded WR Hambrecht + Co in 1998, introducing OpenIPO® as a
means to level the playing field for both investors and issuers. Bill has
served as a director for numerous private and public companies. In
October, 2006, Bill was inducted to the American Academy of Arts and
Sciences. He was appointed to the board of the Presidio Trust in 2010.
Bill graduated from Princeton University.
William R. Hambrecht
Founder, Chairman and CEO
WR Hambrecht + Co
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26. Marshall is a deal team leader in growth ($5-$75M in revenues) focused
on Hardware and Infrastructure Software companies in the San
Francisco Bay Area. Areas of focus include Networking, Security, Cloud
Platforms/Infrastructure, EDA, Consumer Devices and Big Data.
Marshall Hawks
Deal Team Leader
Silicon Valley Bank
mhawks@svb.com
415.504.2957
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27. Brian Lane, a partner with Gibson, Dunn & Crutcher, is a corporate securities lawyer
with extensive expertise in a wide range of SEC issues. He counsels companies on
the most sophisticated corporate governance and regulatory issues under the federal
securities laws. He is a nationally recognized expert in his field as an author, media
commentator, and conference speaker. BTI Consulting Group named Mr. Lane as a
2011 BTI Client Service All-Star for delivering “outstanding legal skills enveloped in a
rare combination of practical business knowledge, extraordinary attention to client
needs and noteworthy responsiveness.”
He was also:
Listed in the 2012 edition of The Best Lawyers in America® for securities law,
Brian Lane corporate governance and compliance law.
Partner Selected by Chambers and Partners as a Leading Lawyer in Securities Regulation in
Gibson, Dunn & Crutcher LLP its Chambers USA: America’s Leading Lawyers for Business Guide for 2011.
blane@gibsondunn.com Named by Washingtonian Magazine as one of Washington’s Top Lawyers for
202.887.3646 securities law in 2009.
Named the Leading Lawyer for Corporate Governance: Internal Investigations in the
Washington D.C. area by Legal Times in 2008.
Mr. Lane ended a 16 year career with the Securities and Exchange Commission
(“SEC”) as the Director of the Division of Corporate Finance where he supervised
over 300 attorneys and accountants in all matters related to disclosure and
accounting by public companies (e.g. M&A, capital raising, disclosure in periodic
reports and proxy statements). In his practice, Mr. Lane advises a number of
companies undergoing investigations relating to accounting and disclosure issues.
.
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28. Disclosures
This material, including without limitation the statistical information herein, is provided for informational purposes only. The material is
based in part upon information from third-party sources that we believe to be reliable, but which has not been independently verified by us and,
as such, we do not represent that the information is accurate or complete. The information should not be viewed as tax, investment, legal or
other advice nor is it to be relied on in making an investment or other decision. You should obtain relevant and specific professional advice
before making any investment decision. Nothing relating to the material should be construed as a solicitation or offer, or recommendation, to
acquire or dispose of any investment or to engage in any other transaction.
©2012 SVB Financial Group. All rights reserved. Member Federal Reserve System. SVB>, SVB>Find a way, SVB Financial Group, and
Silicon Valley Bank are registered trademarks.
Silicon Valley Bank Financial Group is not affiliated with WR Hambrecht & Company and Gibson, Dunn and Crutcher LLP 0612-0077
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