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TCT Exclusive: Josh Ephraim, VC & Startup Attorney at Gunderson

We’re excited to announce this week’s exclusive with Josh Ephraim, Startup and Venture Capital attorney at Gunderson Dettmer!

Josh is a former managing partner at Dorm Room Fund, a student-run venture fund backed by First Round Capital, during his time at Berkeley. Josh invested in over 25 companies during his time at DRF, including Greo, Distributed Systems fka Pavlov (acq. by Coinbase), Athelas, Capella Space, MoveButter, and Nimble Hiring.

With a wealth of knowledge about all things legal in startups and VC, we discussed:

Josh Ephraim

Thanks for sitting down with us, Josh. Let’s jump in.

How did you get started in your career? In startups?

When I was at Berkeley for undergrad, the startup ecosystem was nowhere near as developed as it is now. I was aware and interested in startups while I was there, but my major was in the liberal arts school and I wasn’t totally sure where I would fit in. My first job out of college was as a consultant for biotech companies, and as I learned how complicated the healthcare system is in the U.S., and how misaligned incentives are. I started to wonder how startups were trying to solve these problems, so I started going to NYC Health Tech meetups and eventually got connected with a digital health-focused startup program called StartUp Health. I learned a ton about the problems early-stage startups face — including legal.

Any fun stories from your time at Dorm Room Fund?

They somehow let me throw dodgeballs at Phin Barnes:

What led you to the legal side of the house at Gunderson?

I think a lot of startups I worked with didn’t have the best legal counsel and weren’t getting the best advice, and I realized how much I didn’t know, but also that a lot of the lawyers didn’t care too much about what their clients were building, so I wanted to fill that gap on the legal side.

What trends are you seeing in company and fund formation since COVID-19?

Massive uncertainty — I certainly don’t know when there will be a vaccine, who is going to win the election, or what else 2020 will bring us, and I think founders and VC’s alike are feeling the same.

In the venture ecosystem, I think this has led to a premium on certainty. If founders can add to their war chests know to ensure they make it through the next 18 months, they are more likely to do so. Venture funds are the same way - if they can close the next fund earlier rather than later, they will do so. 

Additionally, I think the private markets mirror the public markets in that the companies building products that thrive in a pandemic or post-pandemic environment have virtually unlimited access to capital, and investors will double and triple down on those businesses.

When should startup founders loop in legal counsel? What does a typical Gunderson client look like for you?

Anyone that is building a business that will have an outsized impact is interesting to me. I like working with founders that are motivated to build and grow a big business. I don’t care as much about what the innovation is, I’m just excited to work with innovators.

In terms of when they should loop us in, I really like tagging along for the whole ride, from formation through exit. If founders are fairly sure they will need the venture-capital jet fuel to grow, I think it makes sense to loop in legal counsel on the early side. It can save some money and more importantly major headaches later on if the corporate and IP matters are managed properly the first time, rather than going back and correcting any errors that may have been made in the past.

What’s your advice to founders looking to enter into an accelerator program?

This is a tough one, especially since I used to work at one. I think it depends on the founder’s skill set, the quality of the accelerator (this varies significantly), and also the cost the accelerator is asking. I think even for the most prestigious accelerators, there are some people that get a ton out of the experience, and some founders who feel like they didn’t need the seal of approval, the content, or the network and so the time and equity investment isn’t worth it. For others, it’s invaluable and turns founders that would never get the company off the ground or funded into great company builders.

What’s the difference between working with startups and VCs as an attorney in this space?

As a founder, there are other skills that are much more important than how to run and close a financing or a merger. As a VC, it’s probably more important to have knowledge in those areas. With founders, even if it’s not your first company, you’ve maybe done 3-5 financings ever, and maybe one merger if you’re lucky. The VC, if they are good, is doing at least that many every year. So we can do more to help fill that knowledge / experience gap for founders.

The year is 2030. What’s the state of corporate law for startups?

There is a lot of exciting innovation happening in legal tech right now, and my hope is that it allows lawyers like me to spend more time on advising and strategic work, and less time on the mundane and less exciting stuff. I hope that part of my job gets automated!

Thank you for your time and thoughts, Josh! We look forward to the continued success of you and the various companies you’re involved with!

Interested in working with Josh? Find him on the internet:

Deal News 9/19-9/25

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