Totally--and this is a really good point to clarify, especially if one would like to understand more broadly how VC works. I intentionally abstracted the "where does the money come from" in my original reply to focus on the classification itself, but that admittedly left the comment lacking this useful context. LP and venture dynamics are both interesting and important to understand the full picture.
> Most of the money VCs invest isn't their own.
To underscore tomhoward's point--VCs are largely (already) stewards of other people's money (their LPs). So while they are set up to be "the person with the money" from the market's perspective (e.g., if you are looking to get your company funded), they are acting as investment advisors (e.g., where and how to spend the fund's money--and by extension the LP's money--for a fee). Albeit with a specific legal exemption set forth in the Investment Advisers Act that governs certain activity depending on how they are registered* (this is what is changing for a16z). No matter how they are registered, they do have compliance requirements as custodians of other people's money.
*Under the Investment Advisory Act, they can be registered as:
(1) ERA - exempt reporting advisor (what we are referring here as a VC in the traditional sense), or
(2) RIA - registered investment advisor.
As it relates to a16z, they are giving up their IAA exemption as a fund (registering as an RIA vs ERA). No need to get into why that matters again (see other posts that have already addressed it well). The point being, VCs are already in many ways "investment advisors" as custodians of other people's capital (and sometimes their own) through their funds and they have compliance requirements, just different depending on how they are registered.
From 30k ft--in the financial industry, the VC title afforded a carve out from SEC oversight if its business was focused around certain qualifications (e.g., invested primarily in new-early stage private companies).
This classification, in turn, also limits what an entity with a VC status can ultimately do and invest in.
In this case, a16z has ambitions that outstrip the limited definition of VC in the eyes of the SEC. Under their new classification, they still have the monies as an 'investment advisor' but aren't hamstrung on what they can invest in. It will, however, change the way they will be required to operate due to new regulations that come with the investment advisor classification.
Related, an article from the NVCA on the subject from December. [0]
It's interesting to see Google's AI principles [0,1] published on the same day as these patent applications. Of course, this could be unrelated and complete coincidence. However, this _could_ have been strategic depending on the possible breadth* of what they are trying to claim. (And to be clear, I am not saying this is why they released these principles -- plenty of other reasons for that.)
*Note on the applications - I have not reviewed the claim sets so cannot comment specifically on what they are attempting to claim. In any event (and as others have noted, as well) the devil is in the details (e.g, the claims in each application -- more specifically, what is eventually allowed/granted).
> It's interesting to see Google's AI principles [0,1] published on the same day as these patent applications. Of course, this could be unrelated and complete coincidence. However, this _could_ have been strategic depending on the possible breadth of what they are trying to claim. (And to be clear, I am not saying this is why they released these principles -- plenty of other reasons for that.)*
It's almost certainly not a coincidence. Patent applications with possible international impact are typically filed before any publication, so as to avoid forfeiting any potential foreign patent rights. [0] Patent attorneys get extremely busy before, e.g., trade shows, new-product announcements, etc. — they want to get applications on file to preserve foreign rights.
Totally, you are 100% correct w.r.t. public disclosures and patent filings -- that you want to get the latter done before the former so as to preserve foreign rights outside of the US. Also, more broadly, so as to preserve any rights at all -- following the America Invents Act (AIA) the US is now in a first to file system (like the majority of the rest of the world), not a first to invent system [0,1].
In this case of Google that we are discussing, however, the patents have already been filed but not yet published -- thus, the public did not/could not know what the patents were. Patents publish some time after filing, often times 18mo after the filing date for the USPTO [1] but this timeline can vary for a number a reasons, e.g. an earlier priority date, etc [2].
That all said, much of the work here by Google has likely been disclosed already, but the existence of the patents and what was in them is generally new info for the public and industry.
The referenced AI principles post by Google discussed more about "values" and less about any given tech. That said, my original comment was aimed toward the possible notion of strategic PR (e.g., saying we are going to do 'good' with not just this tech, but also these patents which you are just learning about), not strategic IP (e.g., preserving defensibility for any specific tech).
> following the America Invents Act (AIA) the US is now in a first to file system
This is partly true. If Alice invents a widget and publishes details without filing a patent application, she still has a one-year grace period in which to file a U.S. patent application [1], and if she's successful she'll get only U.S. patent rights (plus a few other countries, I forget which). But whether or not Alice publishes before filing, the longer she waits, the greater the risk that Bob will independently invent the widget, without deriving it from Alice, and will file first. Even after the AIA, we still aren't a "first to file" system — we're a "first inventor to file" system.
Ah — I didn't look at the dates and assumed that the publication was the same date as the patent applications' filing, as opposed to the same date as their publications. In the latter case, it would indeed be a coincidence.
It's also important to note that much of the value of any company created in the future as it grows, matures, etc. It sometimes happens that people default to ascribing value based on history or past contributions -- which certainly does matter with respect to the idea, tech, product, early customers, etc -- but is an incomplete ascription of anyone's particular value with respect to the life of a company. Depending on what stage the company is in -- but because we are talking about formation we can assume it is early -- much of the work is likely yet to come. If the past is too heavily weighted, it can cripple the company in the future. Among other things, vesting can help protect founders against over-indexing on the past while ensuring the team is aligned on the future of the company and that are all in it "for the long-haul". Plenty of other reasons to do so as noted in the other comments throughout the thread.
As phonon mentioned, Clerky is a service that can help with incorporation.
Another service that is more comprehensive would be Stripe Atlas, which helps with everything from incorporation to setting up a SVB bank account to helping with tax issues and AWS credits. You also get access to the Atlas Forum and network of founders and advisors. https://stripe.com/atlas
EDIT/UPDATE: Worth mentioning that Clerky offers certain legal services beyond incorporation (e.g., hiring/on-boarding and fundraising). Didn't mean to imply that incorporation is their sole product, but rather was speaking w.r.t. the topic of basic startup mechanics mentioned by the parent. https://www.clerky.com/
I highly recommend services like this. We were pressured to work with a high powered SF law firm at the accelerator I was in.
It was a total waste of a huge amount of money. ($800 an hour)
They added very little value. On more than one occasion I had to request corrections after the "final" documents were out for signature.
Usually having to remove data that was obviously left over from the last company they used the word doc template on.
You can probably fill out templates with a service for a lot less than $800 an hour.
And I don't believe for a minute that it took 5 hours of $800 an hour labor to fill out those templates not do I even believe the actual $800 an hour guy did more than quickly glance at the first page of the doc.
And while I'm ranting, what a stupid and completely broken system legal documents are. They would email us 500 pages of documents and then we would print the last page that was nothing but signatures. Scan it, and send it back where it is then appended to the document they emailed us. OR any freaking document they want.
Given the work is being completed at SRI, I would assume the tech would be positioned in a patent or portfolio of some sort. However, this is purely speculation. Nevertheless, this suspicion is further supported by the fact the inventor has a history of patenting for commercialization. That's largely the SOP at SRI and central to their business model.
However, worth noting that just because a patent is filed doesn't mean it (or all of it) will be allowed. So, wrt your second inquiry -- assuming the tech was filed on -- whether or not it can be designed around will largely depend on 1) what was claimed in the patent (e.g., how broad and thorough the claims are) and 2) what is eventually allowed by the examiner. The latter is largely a product of the prior art in the space.
Perhaps, although Harmonic Drive has previously licensed SRI's Abacus tech from the same inventor (Alexander Kernbaum)[0]. Given the two groups are already partners in commercialization, it wouldn't be a surprise if they extend their collaboration to include this design. In any event, it will be interesting to see what happens -- especially if it remains independent of Harmonic Drive, to your point.
> Most of the money VCs invest isn't their own.
To underscore tomhoward's point--VCs are largely (already) stewards of other people's money (their LPs). So while they are set up to be "the person with the money" from the market's perspective (e.g., if you are looking to get your company funded), they are acting as investment advisors (e.g., where and how to spend the fund's money--and by extension the LP's money--for a fee). Albeit with a specific legal exemption set forth in the Investment Advisers Act that governs certain activity depending on how they are registered* (this is what is changing for a16z). No matter how they are registered, they do have compliance requirements as custodians of other people's money.
*Under the Investment Advisory Act, they can be registered as: (1) ERA - exempt reporting advisor (what we are referring here as a VC in the traditional sense), or (2) RIA - registered investment advisor.
As it relates to a16z, they are giving up their IAA exemption as a fund (registering as an RIA vs ERA). No need to get into why that matters again (see other posts that have already addressed it well). The point being, VCs are already in many ways "investment advisors" as custodians of other people's capital (and sometimes their own) through their funds and they have compliance requirements, just different depending on how they are registered.