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Thomson Reuters Enterprise Centre GmbH v. Ross Intelligence Inc., decided in the federal District Court in Delaware on September 25, 2023, asks the question whether a company can train its AI on a competitor’s copyrighted works in order to help it compete? What if the AI output does not infringe the competitor’s copyrights? The answer so far is “maybe,” but that the answer is not “no” adds to the hazards of using copyrighted works as training data. Thomson Reuters v. Ross is a trial court decision denying summary judgment on the points at issue, and is therefore not a definitive declaration of law. However, by denying summary judgment on copyright infringement to the AI builder and user, the decision opens the door to the kind of lengthy, expensive and uncertain litigation that could deter builders and users of AI from using copyrighted works as training data.

When people hear about the 25 percent annualized rate of return that active angel investors obtain, they assume that there must be some secret involved—perhaps an old-boy network of hidden links that connects angels to brilliant entrepreneurs and tech innovators or a mathematical algorithm developed by some genius at MIT that helps angels identify and invest in the businesses that are guaranteed to be the Apples, Googles, and Facebooks of tomorrow. In reality, there are few secrets about the investment world, including the world of startups. But there are some little-known truths that serious startup investors (both angels and venture capitalists) take for granted, and to which most people—including entrepreneurs themselves—are oblivious. These deal with the fundamental nature of the industry, and one needs to completely internalize them if you are going to be successful at investing in startups.

Over the past 20 years, the typical structure for seed/angel deals has shifted from common stock (in the mid-1990s) to convertible notes (late 1990s through early 2000s) to full Series A convertible preferred (mid-2000s) to convertible notes with a cap (late 2000s) to Series Seed convertible preferred or similar (present). This shows the increasing sophistication of investors and founders, the increasing experience and publicity surrounding the advantages/disadvantages of various options, and the increasing availability of model documents and online generators for different choices.

The principal roles of the lead investor was to negotiate the terms of an investment with the founder of the startup. In theory, the terms could be “here’s a million dollars to use; if the company becomes a big success, please give it back to us.” Unfortunately, that’s not the way it works. When a corporation is established, its ownership is divided into pieces called shares of common stock. That’s what you as a founder will have, which is why it’s also known as founders’ stock. There is a different kind of stock that investors can choose to purchase, called preferred stock. While the name makes it seem preferable to common stock, preferred is not inherently better, it’s just different. Here’s why.

Even in this age of videos and text messages, the quickest way to kill your startup dream with investors, business partners, or even customers, is embarrassingly poor writing. Being very visible in the startup community, I still get an amazing number of badly written emails, rambling executive summaries, and business plans with one paragraph per chapter. In the competitive realm of business, you only get one chance to make a great first impression. You have to be able to communicate effectively in all the common forms, including business writing, as well as talking, presenting, and producing videos. Lack of the requisite skills or discipline will get you branded as a poor business risk before the message is even considered.