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EisnerAmper Blog

Technology and Life Sciences Blog

EisnerAmper Hosts Forbes’ “30 Under 30” Life Sciences Entrepreneur

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February 2, 2016

Over 50 life science CEOs, CFOs, investors and industry experts came to our ‘Rising from the Ashes: The Axovant Sciences Story’ fire-side chat at the Cornell Club in mid-town Manhattan. The guest speaker was Vivek Ramaswamy, a 31-year-old former hedge fund manager who led the largest-ever IPO of a biotech company, Axovant Sciences, in 2015—and was recently featured in Forbes’ ‘Boy in the Bubble’ cover story.

It’s no secret that biotechnology and innovation have been booming in New York City and across the state. New York is ever-increasingly becoming a hub for biotech growth as startups see more funding, partnership opportunities and accelerator programs. 

When partner John Pennett asked Mr. Ramaswamy about success, the young entrepreneur mentioned that “professional skepticism” learned earlier in his career as a hedge fund manager helped him ask the tough questions required to eventually position his startup, Axovant Sciences, for success.

Forbes 30 under 30

NYC Making a Splash in #RETech

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New York City is the epicenter of real estate – from mergers to owners to residential and commercial – an asset class in the trillions. It is also the second largest market for technology, lagging solely behind Silicon Valley.  But with NYC-based companies like OnDeck Capital and Etsy, both of which are public and have over $1 billion valuations, it possess the perfect ingredients to become a major hub for #RETech.

With this in mind, it’s no surprise MetaProp NYC has chosen New York as home. “Real Estate technology is the last frontier for disruption – lagging behind finance, fashion, media, education and health care” says Aaron Block, Co-Founder and Managing Director of MetaProp NYC. 

MetaProp NYC is an accelerator program whose goal is to combine the real estate and technology industries in NYC and provide start-ups with resources and mentorship to catalyze growth through a 22-week intensive program. They will graduate their first class this upcoming Tuesday (January 26, 2016) at their Demo Day (hosted at Silverstein’s 7 World Trade Center) in true New York fashion. Aaron further explains, “MetaProp NYC’s inaugural Demo Day will showcase the 5 start-ups and provide our partners like EisnerAmper, investors, media and government officials the opportunity to learn more about the latest in real estate technology, and to explore new partnerships, mentorships and funding opportunities.” 

The five companies graduating are: 

Following the NYC Demo Day, where Richard Mack, CEO of Mack Real Estate Group will be the keynote, MetaProp NYC will host a second demo day in San Francisco.

 

PATH Act Provides Significant Benefits to Life Sciences and Technology Industries

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December 28, 2015

MacDonald_EmmaleeBy Emmalee MacDonald, CPA 

The Protecting America from Tax Hikes (“PATH”) Act was signed into law December 18, 2015. Many of its more than 100 provisions are favorable to technology and life sciences companies. It makes permanent some of the benefits that have previously only been extended temporarily. Specifically, the research credit and 100% gain exclusion on qualified small business stock are now permanent tax provisions. In addition, the controversial medical device excise tax has been suspended for 2 years. Here are some of the specifics of the bill:

Research and Development Credit

Not only does PATH finally make permanent the credit that has been extended many times since its original enactment in the 1980s, it also provides for additional benefits to eligible small businesses by permitting these companies to use the credit to offset alternative minimum tax and, in some cases, the employer portion of the FICA liability. It also raises the Alternative Simplified Credit from 14% to 20% of qualified research expenditures.

Moratorium on Medical Device Excise Tax 

Currently, manufacturers and importers of medical device taxes must pay a 2.3% tax on the sales price of medical devices which fall under certain provisions of the law. PATH imposes a morato¬rium on the excise tax on medi¬cal devices for 2 years. The tax will not apply to sales during calendar years 2016 and 2017, providing much sought-after relief for medical device companies.   

100% Gain Exclusion on Qualified Small Business Stock

The 100% exclusion allowed for gain on the sale or exchange of qualified small business stock held for more than 5 years by non-corporate taxpayers is made permanent. Read more about the specifics of qualified small business stock here

 

These are just a few of the provisions included within the new law. Watch for more thought leadership on the PATH Act.  

 

Private Equity in the Technology Space

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August 21, 2015

By Brendan Freidrich

EisnerAmper’s San Francisco office recently hosted a meeting of the minds among seventeen prominent Bay Area technology leaders. “Private Equity in the Technology Space” addressed some of the increasingly visible issues concerning the funding and valuation of what seems to be an endless wave of new technology companies. Moderated by EisnerAmper’s Mike Morris (SF), along with John Pennett (NJ), Dan Heller (SF) and special guest, Nick Ellis, founder of data-driven talent management company Hirabl, the group identified and analyzed current major shifts in venture capital and private equity investment in the technology sector.

The supply of venture capital and private equity in the technology space has increased tremendously in recent years as investors seek higher returns in a low interest rate environment. Additionally, the advent of new funding platforms such as Funding Circle has increased access to alternative sources of capital and made it easier for new companies to obtain vital infusions of working capital. As a result of this influx, valuations and acquisition prices for new ventures are at an all-time high, and investment funds have begun selling off some of their portfolio companies. However, inherent problems in the market such as arbitrary valuation multiples are troubling both potential buyers and sellers as fund managers try to answer the most important question: Is this a good deal for my investors?

The panel weighed in on the subject and talked about debunking the “unicorn theory,” a model in which one amazingly lucrative success in the portfolio more than makes up for a series of smaller failures. Both private equity and venture capital groups are trending away from trying to hit these figurative grand slams and instead are starting to concentrate on hitting a more frequent string of singles and doubles.

When asked how he identified these kinds of opportunities as an entrepreneur, Ellis cited the concept of “negative space” in art and explained that instead of simply jumping on board a trend, he looked for new openings forming in the market spaces surrounding the trend. (As an aside, my thoughts at this juncture were on the potential kinds of products and services which might arise if driverless cars ever become the norm.)

Despite all the excitement in the technology space, there remains much uncertainty in the world of start-ups. What will prevent valuations and the supply of capital from shrinking when higher interest rates make other forms of investment more attractive, and how can that risk be managed? The financial structure of emerging companies is becoming increasingly important as PE & VC groups turn their focus towards shared-risk models which are becoming popular for aligning investor and entrepreneur interests.

A growing trend in the issuance of convertibles over traditional equity stakes, for example, encourages entrepreneurs to be responsible in managing their funding and ultimately softens the blow to investors if and when a venture does go belly-up.  In addressing the question of profitability for their investors, fund managers are taking a more holistic approach by looking to other metrics and factors besides valuation multiples and projected cash flows when trying to make informed decisions.

To that extent there was unanimous agreement by the panel: Sound investment decisions often stem from backing the right person, as well as the right company.

Virtual Wallets

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August 11, 2015

Katz_DavidBy David Katz, CPA

As virtual wallets became more common, it was only a matter of time before the big players wanted their piece of the market. And with that, Google Wallet and Apple Pay have gained traction, relying on their brand and pushing to make paying with your phone more widely accepted at retailers. 

Both companies have made strong plays in 2015, foreseeing a market opportunity where a retailer would accept either Google Wallet or Apple Pay, but not necessarily both. For Google, the company announced the acquisition of the intellectual property of the carrier-backed competitor Softcard, intending to integrate it into Google Wallet and bundle it with wireless service providers. For Apple, they were able to snag Best Buy and Target, who announced they would accept Apple Pay for mobile application purchases and then make it available in all stores towards the end of 2015. 

While other competitors remain, consumer adoption still appears to be hesitant. Widespread use may be dependent on the use of incentives (such as discounts or reward points for use) and is certainly tied to availability at retailers, a big consideration for a consumer to fully leave their wallet at home. And with hacking scandals seemingly each month, will consumers get over the hump of being comfortable that their credit card data is stored on their phone? Leaving your phone in a cab is daunting enough, but doing so with your entire banking information stored in one app, no matter the security, takes it to a whole new level. Still, if paying with your phone is going mainstream, you’d have to figure that these are the companies to work that out.

MetaProp Launches Real Estate Accelerator

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June 30, 2015

Kreit_SteveBy:  Steven Kreit

EisnerAmper is a strong supporter of technology infrastructure across the U.S. An example is MetaProp NYC.

MetaProp NYC recently announced the launch of its application process for an inaugural 16-week program geared to technology-driven startups in the real estate sector.

The program, which will accept eight companies per cohort, will provide growth services, mentoring, intensive courses and funding for a select group of companies. MetaProp NYC will invest an estimated $4-5 million in approximately 40-50 startups over the next five years, with the goal of launching and growing the next generation of leading edge real estate technology companies. Applications for participation in the program open on June 16, 2015, and selections will be determined and orientation will kick off in August 2015. The program will culminate in a Demo Day to partners, investors, VCs and media.

MetaProp NYC has five founding corporate partners including EisnerAmper LLP as well as Zillow Group, Warburg Realty, DLA Piper, and News Funnel.

Tesla’s Powerwall Raises Questions

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June 18, 2015

Katz_DavidBy David Katz, CPA


For most, the monthly electric bill is just as certain as those other items in the familiar adage: death and taxes. So will Tesla Motors’ announcement of its intention to enter the energy-storage market change that? With an anticipated price of $7,000 to $9,000 to the consumer, the Powerwall system is a rechargeable lithium-ion battery that would store solar energy to use at night. 

But will there be demand or will it take years to generate the interest that the Company’s cars have only now begun to see? It will vary and depend on the incentives states offer for the installation of renewable energy power. Additionally, it remains to be seen whether this is a solution to be a full replacement for home energy needs, or a different way to provide emergency backup power (replacing gasoline or natural gas generators). 
What does seem clear is Tesla CEO Elon Musk’s vision and motive: As founder of another company that builds home energy-storage systems to be linked to rooftop solar arrays, he has a vested interest in the success of home energy options. 

So while Musk touts the Powerwall’s ability to keep the demand for energy down, helping the energy grid during times susceptible to black out, Tesla will need the average consumer to buy into the up-front cost and deal with the potential penalties from utility companies, some of whom have moved to impose extra fees on those who install renewable energy resources. Yet, for a Company with a stock price that has grown in excess of $250 (from its IPO price of $17), these challenges are far from new.

EisnerAmper is an independent member of Allinial Global.
EisnerAmper is an independent member of EisnerAmper Global.