The following is an excerpt from Practice Perspectives: Vault's Guide to Legal Practice Areas.
Jonathan Goodwin, Partner, and Saarah Woodby, Associate — Fund Formation/Corporate
Jonathan Goodwin’s practice encompasses all areas involved in the formation and general representation of venture capital firms. Jonathan’s clients span early-stage to growth-stage venture capital firms with assets under management in the tens of millions to billions of dollars across a global footprint in the United States, Israel, and China. He has recently closed funds for notable venture capital firms, including Jerusalem Venture Partners, Kleiner Perkins, and Sequoia Capital. Jonathan received his J.D. from Stanford Law School and his B.S. from the University of Tulsa. He is admitted to practice in California and is a partner at Gunderson Dettmer. In January of 2020, Jonathan was named to the Venture Capital Journal’s inaugural “40 Rising Stars Under 40” list.
Saarah Woodby specializes in the representation of emerging growth companies throughout their life cycles. Saarah’s practice focuses on general corporate counseling, venture capital financings, and mergers and acquisitions. Saarah represents a wide variety of technology companies, including consumer internet, software, telecommunications, and entertainment technology industries, as well as a number of leading venture capital firms. Saarah received her J.D. from NYU School of Law and her B.S. from the University of Pennsylvania. She is admitted to practice in New York and is an associate at Gunderson Dettmer.
Describe your practice area and what it entails.
Jonathan: I represent venture capital firms in their formation and general operations. When a venture capital firm is raising money from its investors (such as endowments, foundations, and pension plans), I represent the venture capital firm throughout the formation process. We work with the fund managers to determine the terms for the new fund (e.g., carried interest and management fee) and draft the fund’s governing agreements. We then negotiate those agreements with the fund’s investors and their counsel. Once the agreements are settled, we handle the closing process. In addition, venture capital firms have a number of ongoing matters in which we assist, ranging from personnel matters to securities filings. In the last two years, we’ve seen a lot of IPO activity, and our fund clients that have large positions in these companies need to address the mechanics of having a portfolio company go public.
Saarah: My practice generally focuses on helping to build and grow startup companies through multiple avenues. On the company side, we work with startups in various stages of their life cycles (from formation to exit events), providing general corporate advice and facilitating the legal aspects of corporate transactions and fundraising events. On the investor side, we primarily focus on helping venture capital funds invest in startups in equity and debt financing rounds.
What types of clients do you represent?
Jonathan: We represent venture capital firms with assets under management, ranging from tens of millions to billions of dollars. We represent first-time fund managers and longtime venture capital firms (many of whom created the venture capital industry). Our clients invest in geographies across the world, including the U.S., Europe, Israel, and Southeast Asia, and make anywhere from $500,000 seed-stage investments to $50 million growth-stage investments.
Saarah: We represent tech startups that are either venture backed or seeking to become venture backed, as well as venture funds that vary in size and experience, looking to invest in these types of companies. Many of the businesses we work with develop interesting and innovative solutions (from apps to websites to consumer products) to improve everyday life using cutting-edge technology.
What types of cases/deals do you work on?
Jonathan: I have recently closed funds for notable venture capital firms, including Jerusalem Venture Partners, Kleiner Perkins, and Sequoia Capital.
Saarah: I work on a wide array of transactions, from financings to mergers and acquisitions. For many of our clients that don’t have in-house counsel, we play more of a hybrid role than just a standard transactional legal role, advising on both business and legal matters on a day-to-day basis.
How did you choose this practice area?
Jonathan: I appreciated the variety of the work involved with representing venture capital firms. The fund practice allows you to work on a range of issues and, in many ways, be a generalist to venture capital firms. In addition, the fund practice allows you to develop a unique skill set. Gunderson has a premier fund formation practice group, so you can chart your own path and build a practice around early-stage fund managers, late-stage fund managers, or sector-focused funds—such as cleantech- or big-data-focused funds.
Saarah: After spending a few years in the banking, capital markets, and mergers and acquisitions practice areas working with large institutional clients, I developed an interest in playing a more active role in the day-to-day growth and development of a client’s business. I enjoy being able to advise clients on not only legal, but also business-related matters, as well as the challenges and opportunities for creativity that come with working in this space.
What is a typical day like and/or what are some common tasks you perform?
Jonathan: We have a lot of client interaction and spend a lot of time talking to clients about what we’re seeing in the market. While an individual attorney may be working on multiple fundraisings at a time, for clients, it may be the first or second time that they’re raising a fund. There is a lot of counseling involved and talking people through transactions. For example, this morning, I had a call with a client to walk through a summary of terms for the client’s new fund, and then I had a call with another client to discuss annual SEC filings that the client must make at the beginning of the year.
Saarah: First off, there’s a typical day? It really depends on what your clients have going on at the time. I might have a couple of investor- or company-side financings going on any given day. On the venture-fund side, we are negotiating certain legal points in transaction documents and looking out for particular things that fund clients are typically concerned about in the documents. A point that’s typically focused on quite heavily, for example, is making sure that each party that participates in a deal is on the same page with respect to the equity ownership of a company. Other day-to-day tasks will include attending to general questions that arise, such as how to administer equity plans, deal with general business concerns, etc. Again, there really isn’t a typical day.
What training, classes, experience, or skills development would you recommend to someone who wishes to enter your practice area?
Jonathan: I would recommend law students focus on corporate and tax classes. It’s also helpful to be familiar with financial statements, accounting concepts, and Microsoft Excel.
Saarah: Interpersonal skills are very important because you’re going to have a lot of client-facing interactions on a daily basis, even if you’re a fairly junior associate. In addition, organization, paying close attention to detail, and time management are also really good skills to have because this is a high-volume practice where you’re managing many clients at one time. It’s important to come up with your own personal system with respect to how you’re going to prioritize things and manage the multiple tasks that come in every day.
What is unique about your practice area at your firm?
Jonathan: One of the things that’s unique about us is that we generally represent the venture capital firms only (or the “general partner/GP” side, as you might hear in the industry) and not the investors who invest into the venture capital firms (the “limited partners/LPs”). Clients appreciate our focus on the GP side, as we are able to be better advocates for our clients’ interests—they recognize that we’re wholly interested in them. We aren’t spending our mornings negotiating one perspective for one client and then turning around and negotiating the opposite perspective for another client. In addition, our training materials, form documents, and entire practice group are able to be focused for the same purposes. As an attorney in our group, this makes your practice more efficient, and you are able to learn and scale more quickly.
Saarah: I think being in this space in New York is unique because Gunderson does the vast majority of this type of work in the city. We are uniquely positioned relative to other New York firms because we are a firm focused on the venture capital and startup industry. More likely than not, for any question that comes up, regardless of how obscure it may be, I can usually find somebody in the firm who’s dealt with it before, which is extremely helpful.
How do you see this practice area evolving in the future?
Jonathan: Our venture fund clients are investing in technology companies, and they expect their attorneys to utilize cutting-edge legal technology as well. As an attorney in this practice, you must understand substantive law, but you must also understand how to use new software to deliver a better legal product to clients. We are not only purchasing new software, such as document automation software, but our firm is also building new software to support our clients. We have worked with our IT team and an outside developer to build a custom online portal where investors can complete and sign onboarding documentation to invest into the funds that we represent. We’ve received great feedback from clients, and I expect that we will continue to need to innovate and develop new offerings such as this to support our clients.
Saarah: There’s been a push to start integrating more and more technology into this practice area, so we’re figuring out ways where new technological innovation can help us be more efficient and do a better, quicker job on whatever the task may be. Since we’re working in the tech space, I think there will probably continue to be newer developments that will help lawyers do things more quickly and more efficiently.
What kinds of experience can summer associates gain in this practice area at your firm?
Jonathan: I summered at Gunderson in 2010, so the summer program is special to me. We want to make sure that each summer associate gets as much exposure to the ins and outs of our day-to-day practice as possible. In our practice area, that means that a summer associate can be part of the entire formation process for a new venture fund. Summer associates often take a first cut at drafting a term sheet and formation documents for a new fund. Summer associates will join calls with clients and opposing counsel, will be included on all correspondence, and will be part of the fund-closing process.
How is it different working with entrepreneurs in contrast to large corporate clients?
Saarah: One of the clearest differences when you’re working with a large corporate client is that the in-house legal team probably has a very advanced understanding of the space and whatever transaction you’re doing, so there isn’t as much advising needed. Working with emerging companies is different because, more likely than not, corporate transactions and certain business issues can all be quite new for a company, depending on its stage, so there are varying levels of involvement that you’ll have in working through matters. In addition, you’re usually working directly with founders in this practice area who may have more decision-making flexibility than may otherwise be the case in a larger corporate structure.