By William & Mary Law School
A Q&A with Professor Darian M. Ibrahim on his interest in entrepreneurial law.
Professor Darian M. Ibrahim joined William & Mary from the University of Wisconsin Law School, where he was a tenured member of the faculty. His teaching and research interests encompass corporate and securities law and their application to entrepreneurial activity. He received his J.D., magna cum laude, from Cornell, where he was articles editor of the Cornell Law Review and inducted into Order of the Coif. He holds a B.S. in chemical engineering from Clemson University. Following law school, he practiced law at Troutman Sanders in Atlanta and clerked for Chief Justice Norman S. Fletcher of the Georgia Supreme Court. He taught previously at the University of Arizona College of Law, where he was voted Teacher of the Year for 2006-07 by the student body. His work has appeared in the Cornell Law Review, Vanderbilt Law Review, the University of Illinois Law Review, and other leading journals.
How did you become interested in entrepreneurial law?
My father was a small business owner. Startups (which are at the heart of entrepreneurial law) are businesses that begin small, but their trajectories quickly lead them to outside financing, rapid scale-up, and eventually initial public offering (IPO) or trade sale. Think Mark Zuckerberg in his Harvard dorm room to Facebook as a large public company in a relatively short span. That trajectory is exciting both as a practical and legal matter. Startups present unique legal issues every step of the way: from choice of entity, to how/why angel investors and venture capitalists (VC) contract as they do, to securities regulation that impacts both private angel/VC financing and an eventual IPO.
Your latest article investigated “intrapreneurship.” Can you speak about what the term intrapreneurship means, and the focus of that research?
This article was a bit of a pivot for me. Instead of focusing on innovation in startups (or “entrepreneurship”), this article looks at innovation that takes place inside large corporations (“intrapreneurship”). Intrapreneurship is substantial, important, and understudied. Yet practical problems inside large corporations lead to less intrapreneurship than might be expected. My article suggests that Delaware corporate law can mitigate these problems and affect the intrapreneurial/entrepreneurial balance we observe. The article also explores a hybrid approach—corporate venture capital (CVC)—that combines entrepreneurial and intrapreneurial advantages. In CVC, a corporation’s venture arm can invest in promising startups, and thus share in innovative gains, without having to overcome obstacles to developing those projects internally.
Talk about another recent paper you wrote on equity crowdfunding. Do you think crowdfunding is a positive development for startups? For investors?
As you mention, another of my recent articles examined the latest craze in entrepreneurial finance: crowdfunding. Equity crowdfunding is selling stock over the Internet to a large number of investors. Some of these investors are the “accredited” (read wealthy/sophisticated) angels and VCs who already invest in startups offline. This trend is not at all worrisome from an investor protection standpoint to me, and in fact has several advantages. However, the new crowdfunding law goes further by allowing even unaccredited, unsophisticated investors to invest in brand-new, unproven startups over the Internet. The idea is to help more startups raise money while at the same time democratizing startup investing. However, real investor protection concerns emerge when the pool of potential investors broadens this way. I argue that the law addresses these concerns in the wrong way. The law currently limits the amount unaccredited investors can invest; but this in no way ensures these individuals will make better investment choices. In my article, I suggest the websites that list the startups act as “reputational intermediaries” for those startups – i.e., vet them and vouch for the ones they list. The current law expressly prohibits the websites from doing this.
Given your research, what does the future look like for entrepreneurs?
The future is extremely bright for entrepreneurs. While the outsourcing of manufacturing etc. erodes traditional American strengths, technology and innovation remain things American businesses excel in. My research will continue to focus on how and where this innovation takes place, and importantly, who funds it before an IPO. My niche has been to explore the angels, VCs, CVCs, venture lenders, and other financiers that allow startups to go from small business to public companies. Entrepreneurial finance is a key ingredient to the innovation economy.
What interested you in teaching at William & Mary?
William & Mary has a tremendous faculty; one of the best in the nation. To call these amazing scholars and teachers my colleagues has been a dream come true. It’s also a “traditional” law school in the best sense of that word. Our law school keeps pace with changes in legal education, but we do not overreact to the latest craze or perceived crisis. We continue to do what we do very well, and our students are the beneficiaries.
Is there anything about your experience at William & Mary different from Wisconsin or Arizona?
Many things. The students really stand out. I think that is reflective of how well William & Mary is doing in a down law school market. We offer an outstanding legal education, a collegial and fun environment, and excellent job opportunities for our graduates at a relatively low price point.
As an undergraduate, you studied chemical engineering. What attracted you to the law? Has having a strong scientific background informed how you approached law?
To be honest, I was running away from chemical engineering by going to law school. I am not a person who cares how his car runs – I just want it to get me where I’m going. Chemical engineering was wonderful in terms of its analytical rigor, and it definitely prepared me to excel in law school and beyond. But calculating the viscosity of a liquid was not what I wanted to do on a daily basis. The law has such a practical effect on people’s lives. I had to be a part of that.