Vic,

My approach is less erudite, but here is how I would conceive of a class called Law and Entrepreneurship: I’d look at what an entrepreneur needs to know about the law in roughly chronological order. The narrative skeleton would come from the chronology.

So what did I need as an entrepreneur? Obviously it varied with the business we were starting, but I can take a stab at it:

Step 1 – Write a business plan. Here we immediately get into some of the securities law issues, and see just as quickly how to get around them.

Step 2 – Create a non-disclosure agreement. You’re going to need one if you believe you’ve got proprietary ideas, and most people will sign them. You can probably download a good enough version from the Internet. (I have).

Step 3 – You are going to need to hire some people. Here we need employee and independent contractor agreements. Also, this is another area that touches on capital structure. Some early employees are going to want equity; you need to figure what that means, and how to structure equity compensation at this stage.

Step 4 – Start accumulating tangible and intangible assets. This usually involves creating the appropriate entity, and securing necessary intellectual property rights (which is, again, pretty straightforward).

Step 5 – You will start promoting your business, and will need some marketing materials. Not a lot of legal issues to take seriously at this point, but almost every business also needs a web site these days, so take a quick look at what legal issues may be involved there.

Step 6 – You will be selling something at some point, and almost every sale requires some form of sales contracts these days.

Step 7 – If everything is going well, it will be time to look for outside capital. Yes, I know some businesses raise capital well before they start selling anything, but I think this is true for only a small minority of entrepreneurial ventures. Here, you can talk about valuation and deal structure. Obviously, this section alone could easily fill up a semester.

Step 8 – Why not throw in the IPO process, if you have time, since this is the prototypical ending point for the entrepreneur.

Sounds like a fun course to me, although not a particularly corporate or theoretical agenda. Let me know when you have the materials together, and maybe I’ll give it a try.

Vic,

I taught a 2 credit course called "Advanced Topics in Business Law: Technology Start-Ups and Venture Capital" at IU-Indianapolis in the spring 2005. At the time I was preparing, there was even less out there than there is now. And my reaction was precisely the same as yours: what is the LAW to be taught here that distinguishes this either from (a) a CLE course, or (b) a business school course. Moreover, at the time, the only "texts" were Jack Levin's very heavily tax and structuring focused materials, or practitioner-oriented "how to" books (the best of which was Constance Bagley's).

I like your theoretical approach very much. I don't know if these areas are separate or already in what you've outlined, but additionally I would include:

1. When everything goes wrong: dilution, anti-dilution and the down round. The Benchmark Capital and the Equity-Linked cases are fun to teach and have been written on academically (see Gordon's article on Benchmark).

2. The role of the lawyer. Suchman & Cahill on hired guns as facilitators in Silicon Valley. There is also a Harvard Law & Technology article on lawyers taking interests in their clients.

3. I didn't do a very good job of this, but I think attempts at public jump-starting of technology hubs is interesting. State funded seed funds, etc. Josh Lerner wrote a short piece about the problems involved when political concerns rather than return dictate where money is spent.

Mike -- I can definitely see the appeal of your approach ... as it happens, we have an Entrepreneurial Law Clinic here at Colorado that follows this approach. I'm aiming for a bit more of a theory course, and something that will have a conceptual framework rather than a series of red flags that will quickly be forgotten. I'm also thinking that a more theory-oriented course may also provide more benefits for students who end up practicing outside the area.

Jeff -- Thanks for the comment. If I could get away with teaching from the Levin treatise, I would. Unfortunately, not everyone likes tax as much as I do. Plus, if you've looked at it, it doesn't solve the "conceptual framework" problem.

I expressed my thoughts on the best way to teach a venture capital class at Emory's Conference on Teaching Drafting and Transactional Skill. An edited version of my reamarks is now available at http://papers.ssrn.com/sol3/papers.cfm?abstract_id=1292477