Author : zebethcontrol

Okta CEO opens up about Auth0 acquisition, SaaS slump and Lapsus$ attack • ZebethMedia

By zebethcontrolPosted on November 10, 2022Posted in auth0, EC Cloud and Enterprise Infrastructure, Enterprise, identity access management, Okta, Security, todd mckinnonNo Comments

Okta launched a cloud identity product back in 2009 when most people were locked into Microsoft Active Directory, an on-prem incumbent so entrenched that nobody believed that anyone could touch it. It took a little audacity to go after a giant like that, but Okta took a cloud-first approach, a markedly different strategy from Active Directory at the time. The company raised over $230 million before going public in 2017. It reached unicorn status with a $75 million raise on a $1.2 billion valuation back in 2015 when the designation meant a little more than it does these days. With ownership of the workforce side of the market, Okta decided to make another bold move when it acquired Auth0 for $6.5 billion during the stock market bubble that accelerated in 2020. The idea behind the deal was not simply to own an identity tool favored by developers — although that was certainly a big part of it — it was really about owning another large piece of the market, one that could make Okta a one-stop identity shop. “There’s a very deep divide between legacy and modern in this market.” Okta CEO Todd McKinnon Okta wanted to own both the workforce market, the core of its approach to that point, as well as the customer identity market where Auth0 lived. And Okta made a substantial bet for a company of its size to make that happen. Okta isn’t alone in the identity space; competitors include companies large and small like ForgeRock, SAP, IBM, Ping Identity, Salesforce, Microsoft, and Akamai, among others. Like every other SaaS company out there, Okta has had a rough year in the public markets, down over 80% in the past year (although it was up almost 10% in midday trading Thursday). It also had to deal with an attack spearheaded by the group Lapsus$ that happened in January but was reported in March — and the fallout from its response. Despite these headwinds, the company has big long-term goals to own the cloud identity market and believes it can ride out the current temporary macroeconomic conditions and the legacy vendors to get there. We sat down with CEO and co-founder Todd McKinnon recently and asked him about how he is navigating these times — and the lessons he’s learned along the way. Growing Auth0 McKinnon emphasized that he spent 14% of his stock value at the time to acquire Auth0, a number he knows off the top of his head, because he wants his company to own the cloud identity market, and he doesn’t think he could do it without Auth0. “We bought them to change, and we bought them because we needed change to win this customer identity market,” he told ZebethMedia. “Our strategy is that we have to win both the workforce market and the customer identity market. And the only way we’re going to turn identity into one of these most important platforms for every company is we have to [own] both use cases.” He said integrating two companies like this didn’t come without challenges, and he may have moved too quickly to bring the products together.

Meet Pineapple, the platform aiming to reshape professional networking for Gen Z • ZebethMedia

By zebethcontrolPosted on November 10, 2022Posted in Apps, pineapple, professional networking, SocialNo Comments

Pineapple, an app that’s aiming to reshape professional networking for Gen Z, is officially launching to the public today. The idea behind Pineapple is to give young professionals a way to network with others through a visual story profile that’s kind of like a digital portfolio. For now, the platform is only available on iOS. The professional network is the brainchild of Pineapple’s 22-year-old co-founder and CEO David Diamond, who got an early start in tech as a product design intern at Intercom at age 15. Diamond was initially rejected from Intercom after applying with a standard paper resume and was also told he was too young to work there. After strengthening his resume and building a portfolio, Diamond says he landed the role. “I started to think about how I landed the job and how lucky I was,” Diamond told ZebethMedia in an interview. “I wondered, if I had to put together a portfolio, what was the rest of my generation doing? From there, we had a clear vision of building a professional network for Gen Z. We saw that other networks weren’t accurately representing Gen Z. We wanted to make a network that helps Gen Z network with each other and gain opportunities, rather than focusing on creating another jobs board. The goal was to give users profiles that really represent them.” In 2020, Diamond founded Pineapple alongside Oliver Cruise with the goal of changing professional networking for Gen Z. After beta testing the platform with 10,000 users, Pineapple is now ready to grow. Image Credits: Pineapple Diamond says the main focus of Pineapple is user profiles, which are designed to help create deep and meaningful professional connections by allowing users to express themselves in a visual way. The app’s profiles are a cross between LinkedIn and Instagram, as they showcase a user’s introduction, experience, projects and more in a visual Story-like way. Another big part of Pineapple is Communities, which aim to help users find other people who are passionate about the the same thing as them. From VCs to marketers to designers, there are specific communities for all sorts of topics. You can see the member directory for each community and connect with specific people. Within Communities, there are Jams, which are threaded conversations for discussions that last for 24 hours. Jams can be used to go in-depth about a specific topic. For instance, a founder can start a Jam to answer questions that people may have about their journey. Pineapple also includes an Explore page where you can discover more Jams, people and communities. The app also has a TikTok-inspired For You page that is designed to help you keep up with your connections. Some may see Pineapple as the “LinkedIn for Gen Z,” but Diamond says the platform still has a ways to go before looking to take on LinkedIn. Right now, Pineapple is focused on helping people network in different ways than LinkedIn is. For instance, Diamond says that some young users may use LinkedIn to find a mentor, but Pineapple is where they can come to network with their peers, learn new things and find people for their side projects. Pineapple also isn’t focused on status/job updates or the hustle culture that is often associated with LinkedIn, Diamond says. Image Credits: Pineapple For the time being, Pineapple is going to focus on growth before venturing into monetization. When Pineapple is ready to add monetization features to its platform, Diamond says the company will focus on helping creators earn money. One of the ways the company plans to due this is through creator subscriptions where popular creators will be able to offer educational content to users for a price. In addition, Pineapple hopes to partner with companies who will be able to recruit employees directly from the platform. “We want to be the go-to professional network for Gen Z and folks who are early on in their career,” Diamond says. “From a roadmap standpoint, we want Pineapple to be the obvious solution for people who are starting their career. I think in order to do that, we need to up our game when it comes to profile-building. I think you should be able to build a mini-website within Pineapple, and I don’t think there should be a need to ever have a portfolio website if you have Pineapple.” In terms of funding, Pineapple raised a $1.1 million pre-seed round in April that was co-led by F7 Ventures and 500 Global. The round included participation from angel investors Bradley Horowitz, the VP of product at Google, and Julie Zhou, the former VP of design at Facebook. Diamond says the funding mainly went toward research and development, along with making key early hires. Pineapple is kicking off its seed round soon and plans to close it sometime next year.

Police arrest suspected LockBit operator as the ransomware gang spills new data • ZebethMedia

By zebethcontrolPosted on November 10, 2022Posted in ransomware, Security, ThalesNo Comments

A Russian national linked to the LockBit ransomware operation has been arrested over his alleged involvement in attacks targeting critical infrastructure and large industrial groups worldwide. The 33-year-old suspect was arrested in Ontario, Canada on October 26 following an investigation led by the French National Gendarmerie with the help of Europol’s European Cybercrime Centre, the FBI, and the Canadian Royal Canadian Mounted Police. During the arrest, police seized eight computers, 32 external hard drives, and €400,000 in cryptocurrencies, Europol said. The arrest follows a similar action in Ukraine in October last year when a joint international law enforcement operation led to the arrest of two of his accomplices. Europol says the suspect, described as “one of the world’s most prolific ransomware operators,” was one of its high-value targets due to his involvement in numerous high-profile ransomware cases. The EU police agency added that he is known for trying to extort victims with ransom demands between €5 to €70 million. The suspect will now face charges in the United States. An announcement from the U.S. Department of Justice is expected later today. Specific victims targeted by the suspected LockBit operator were not named by Europol. However, France’s involvement in the operation suggests he could be linked to a recent attack on French aerospace and defense group Thales. LockBit, a prominent ransomware operation that’s previously claimed attacks on tech manufacturer Foxconn, U.K. health service vendor Advanced, and IT giant Accenture, added Thales to its leak site on October 31. The group claimed to have published data stolen from the company today, which it describes as “very sensitive” and “high risk” in nature. Contents of the data leak include commercial documents, accounting files and customer files, according to LockBit, though the files had not been published at the time of publication. “As far as customers are concerned, you can approach the relevant organizations to consider taking legal action against this company that has greatly neglected the rules of confidentiality,” a message on the LockBit leak site reads. Thales spokesperson Cedric Leurquin did not immediately respond to our request for comment. LockBit also claims to have today leaked 40 terabytes of data stolen from German automotive giant Continental, and samples of the data suggest that the gang has accessed technical documents and source code. Though a ransom demand was not explicitly stated, the ransomware gang’s leak page claims to offer access to the full tranche of stolen data for $50 million. Continental spokesperson Marc Siedler told ZebethMedia that the company’s investigation into the incident has revealed that “attackers were also able to steal some data from the affected IT systems,” but refused to say what types of data were stolen or how many customers and employees have been affected.

Coefficient wants to bring live data into your existing spreadsheets • ZebethMedia

By zebethcontrolPosted on November 10, 2022Posted in analytics, Apps, battery ventures, business intelligence, Coefficient, Enterprise, startup, StartupsNo Comments

With the explosive adoption of software-as-a-service (SaaS) apps, the average company now has more than 100 SaaS apps to manage — leading to data being siloed across countless different systems. That makes analysis challenging. To wit, according to Forrester, between 60% and 73% of all data within an enterprise goes unused for analytics. Ideally, analysts need something that connects disparate enterprise systems, like business intelligence and analytics tools. But these tools are often complex and unintuitive, leading employees to spend hours each day searching and gathering information. In search of an answer, Navneet Loiwal teamed up with Tommy Tsai, with whom he’d previously founded an e-commerce app, to build Coefficient, an app that brings live data into Google Sheets and other existing spreadsheet platforms. “Tsai and I had worked on consumer technologies for many years, and we saw a big opportunity to bring consumer-grade experiences to companies,” Loiwal told ZebethMedia in an email interview. Loiwal was previously a software developer at Google working on AdWords, while Tsai was an early engineer at location-sharing smartphone app Loopt. “Most data products are designed for the technical user, which results in a poor user experience and low adoption for business users. We wanted to bring the power of technical products to the business user with the simplicity that they expect in their consumer lives.” To this end, Coefficient — which today closed an $18 million Series A funding round — is designed to cut down on the number of manual and repetitive tasks business users have to complete daily to cross-reference data across systems. The platform lays on top of Google Sheets (with support for Excel forthcoming), bringing in data from customer relationship management (CRMs) systems, SQL databases and other SaaS tools. Using Coefficient, users can create, share and automate live reports, set up alerts and write data back to connected SaaS tools. A template gallery provides pre-made spreadsheet dashboards for common reports used by business operations teams (think team KPIs, leadership dashboards and decks and revenue analyses), which users can integrate with existing data systems to enable live data to power all charts within their spreadsheets. Coefficient’s spreadsheet add-on. Image Credits: Coefficient “Business users are more technical in the spreadsheet than anywhere else, yet business teams are often forced to resort to archaic methods of managing data — requesting frequent updates from technical teams with data expertise or exporting raw data from dashboards or CRMs to report repeat, manual analysis, reducing team efficiency and productivity,” Loiwal said. “Coefficient’s products extend the reach of advanced, connected data and analytics to business users, enabling the business to become more self-sufficient through real-time connectivity to the data in their source systems from where they’re working: in spreadsheets.” That’s a lot to promise. And to be sure, Coefficient isn’t the first to attempt this sort of thing. Startups like Airtable and Smartsheet already offer spreadsheet-like UIs to organize business data. Others have tried to put their own spins on the formula, like spreadsheets with apps and spreadsheets with granular access controls. Indeed, at first glance, Coefficient sounds a lot like Actiondesk, which similarly connects with databases, CRMs and SaaS tools to feed live data into Excel and Google Sheets spreadsheets. Like Coefficient, Actiondesk supports common formulas and offers templates for getting started. But to its credit, Coefficient got off to an auspicious start — Loiwal claims that Zendesk, Spotify, Foursquare, Contentful and Miro are among its customers. Combined, tens of thousands of people are currently using the platform. “We are seeing our customers grow their contracts with us despite undergoing layoffs — a testament to the value proposition of making business teams more efficient,” Loiwal said. “Additionally, with increased remote work and complex economic headwinds, companies need their employees to become more self-sufficient.” Loiwal says that the proceeds from the Series A will be put toward expanding Coefficient’s product offerings and “scaling global operations.” In the coming months, the startup plans to add new SaaS system integrations and expand the scope of its reporting automation tools. Battery Ventures led Coefficient’s Series A with participation from Foundation Capital and S28 Capital. To date, the company has raised $24.7 million in capital. Neeraj Agrawal, a general partner at Battery Ventures, added: “It is a testament to the Coefficient team’s product craftsmanship that users become evangelists, promoting use of the product throughout the organization … Coefficient products equip business users with the tools and automation needed to reach peak performance, a critical advantage amid an unpredictable macroeconomic environment.”

Roku’s home screen gains a new ‘Sports’ tab for users to access live and on-demand sports content • ZebethMedia

By zebethcontrolPosted on November 10, 2022Posted in Media & Entertainment, rokuNo Comments

Roku announced today that the home screen menu will now include a new “Sports” tab that gives sports fans instant access to sports events, upcoming events and on-demand sports-related content. The feature on the Roku Home Screen has already begun to roll out to some users and will be gradually added to all Roku devices in the coming weeks, a Roku spokesperson told ZebethMedia. Within the Sports tab, users will see an array of dedicated rows, including a row with games that are currently live, upcoming sports events, as well as leagues, conferences, and the option to browse by sport, whether that be pro basketball, college basketball, soccer, hockey, and so forth. There will also be rows for free sports content, sports-related shows, as well as sports documentaries and movies. Once the user makes a selection, they’ll see several viewing options, such as Apple TV, DIRECTV, FOX Sports, FuboTV, Paramount+, Peacock, Prime Video, Sling, The Roku Channel, TNT, TBS, and truTV. The company noted that more streaming apps would be added in the coming months. Image Credits: Roku The purpose of Roku’s sports hub is to simplify sports discovery by giving users a better way to find sports content across various platforms. Previously, if Roku users wanted to watch a specific live event, they had to click through multiple streaming apps or channels to find it. Rival Amazon made a similar announcement last month when it launched a new dedicated “Sports News & Highlights” row on the home screen of Fire TVs. Roku wrote in its official blog that a “centralized location” for sports was requested by 61% of users, according to a poll. There were 1,400 active Roku users who responded to the poll, which was conducted via the online survey tool Qualtrics in September 2021, said the Roku spokesperson. “We know that keeping track of where sports are being streamed has only become more fragmented over the past few years,” said Alex Hill, Director of Live & Sports, Roku, in a statement. “Watching your favorite teams should be simple, so we’ve made it a priority to build out a more seamless and streamlined way to discover and watch sports on our platform.” While sports content on The Roku Channel is slim, the company can’t help but promote its streaming service as well. The Roku Channel’s newest exclusive series “The Rich Eisen Show,” will get its own dedicated row within the Sports tab for users to stream all the latest episodes of the sports and entertainment talk show. The company also highlights the new Roku Original series “Emeril Tailgates” in its announcement, which features celebrity chef Emeril Lagasse creating new recipes for game day.

As inflation slows, did we just see the bottom for tech stocks? • ZebethMedia

By zebethcontrolPosted on November 10, 2022Posted in EC Newsletter, EC venture capital, Startups, tech valuations, The Exchange, VentureNo Comments

While the world digests the fact that FTX could be heading to zero, Elon Musk continues to make headlines with changes to Twitter policy — at times seemingly on the fly — and results from the U.S. midterm elections still trickling in, there could be some fair winds blowing for tech companies. This morning, the United States released new inflation numbers, with CNBC reporting that the consumer price index, or CPI, was up 0.4% in October and up 7.7% from the same month one year ago. Given expectations of 0.6% and 7.9% expansion, respectively, the report counted as an unexpected bit of positive news. The Exchange explores startups, markets and money. Read it every morning on ZebethMedia+ or get The Exchange newsletter every Saturday. Why? Because if inflation is cooling, then the pace at which the U.S. Federal Reserve will raise interest rates may slow. Slower rate increases would shift the calculus for investors, making assets like stocks — and tech stocks in particular — more attractive, and more conservative investments less so on a relative basis.

Amazon debuts Sparrow, a new bin picking robot arm • ZebethMedia

By zebethcontrolPosted on November 10, 2022Posted in Hardware, Robotics & AINo Comments

The bin moving robots designed by Kiva Systems still form the foundation of Amazon’s warehouse robotics play a decade after it acquired the startup. There’s a reason — for example — that the recently announced fully autonomous Proteus robot effectively looks like a green (“Seahawks green,” per robotics VP, Joseph Quinlivan) version of one of those systems. Over the years, the retail giant has broadened the scope of its warehouse ‘bots – hundreds of thousands of them now occupy fulfillment centers across the U.S. Image Credits: Brian Heater As one might imagine, robot arms are a big piece of that puzzle. Robin (which debuted 18 months ago) and Cardinal (which rolls out this year) are the two most prominent examples, both designed to move packages and send them on their way inside the warehouse. Cardinal is effectively an update to Robin that’s able to pack boxes full of packages. There are currently around 1,000 Robin units deployed in Amazon warehouses. At an event held in its Westborough, Massachusetts robotics center (about 40 minutes from downtown Boston), the company added a third bird into the mix: Sparrow. Image Credits: Amazon The new arm is a more sophisticated take on the company’s existing robotic arms, adding the ability to pick and place specific objects in bins. The arm’s computer vision and AI are capable of identifying and move “millions” of items, according to the company. Amazon writes, Working with our employees, Sparrow will take on repetitive tasks, enabling our employees to focus their time and energy on other things, while also advancing safety. At the same time, Sparrow will help us drive efficiency by automating a critical part of our fulfillment process so we can continue to deliver for customers. The company is, of course, quick to point out that Sparrow (along with its other robots) is designed to replace repetitive tasks – and, perhaps, save a few human backs in the process. It’s understandably become common practice to get out ahead of the standard criticism of companies automating away jobs, but pointing out that these systems, 1. Have the ability to actually create more jobs in the long run and2. Those are “better” jobs than the standard warehouse fare. Image Credits: Amazon Per the second, Amazon attached a note about its employee education programs in the Sparrow blog post, noting, An example of our commitment to advancing employee careers is our Amazon Mechatronic and Robotics Apprenticeship. A 12-week classroom apprentice program covered by Amazon that is followed by 2,000 hours of on-the-job training and industry-recognized certifications, helping our employees learn new skills and pursue in-demand, technical maintenance roles. Following completion of the apprenticeship, employee pay increases by approximately 40% for program participants.

Contraline erects $7.2M for contraceptive implants for men • ZebethMedia

By zebethcontrolPosted on November 10, 2022Posted in Biotech & Health, contraceptives, GVNo Comments

The cervix industry has had implants to prevent pregnancy since the late 1960s, but there hasn’t exactly been stiff competition to slow down the fallopian swim team at its source. In fact, Contraline claims it is the first major innovation in this space since the vasectomy was performed on a human some 125 years ago. The company calls its product ADAM, and it just raised a wad of cash to continue its trials. “The first-in-human male contraceptive implant is a major clinical milestone that opens up new possibilities for men who wish to take contraception into their own hands,” said Kevin Eisenfrats, Co-founder and CEO of Contraline. “The patient demand for the ADAM Study has been tremendous, with the entire trial oversubscribing within three weeks of opening enrollment. We are looking forward to advancing ADAM through clinical development and bringing this product to market to transform how people think about contraception.” ADAM works by injecting a hydro gel into the vas deferens (the little tubes that carry the sperm). Image Credits: Contraline. The company just raised $7.2 million in funding led by GV. The goal is to advance its in-human clinical trials of its injectable hydrogel designed to provide long-lasting, non-permanent contraception for men. The product uses a “hydrogel” designed to occlude sperm flow through the vas deferens for a predefined period of time, eventually degrading and thus offering a non-permanent contraceptive option. The company suggests that the contraceptive is long-lasting but non-permanent, and claims it has no hormonal impact on the patients. The company told ZebethMedia that four men were implanted with ADAM at a hospital in Australia, using a minimally invasive, no-scalpel approach, with ADAM being injected using a patent-pending delivery device. The procedure marks the first patient implanted in “The ADAM Study,” which is being conducted under Human Research Ethics Committee approval. The ADAM Study is assessing the safety of the ADAM Hydrogel, while monitoring the semen parameters of the study subjects over three years. “Contraline has the potential to fundamentally change the market for contraception,” said Cathy Friedman, executive venture partner at GV. “We look forward to working with the team as they continue developing a long-acting, reversible male contraceptive that empowers more people with more choices over family planning.” Contraline’s study in Australia continues, and its next, longer-term goal is to run a second study with a larger group of patients in the United States.

“Self-therapy” startups are blooming in the ‘moderate mental health’ space • ZebethMedia

By zebethcontrolPosted on November 10, 2022Posted in Apps, Biotech & Health, StartupsNo Comments

Mental health problems – and the tech products which aim at them – come in all shapes and sizes. There are ‘mental wellness’ products like Calm and Headspace. On the more severe side of things there is Cerebral, Betterhelp, and, of course, marketplaces for actual, card-carrying therapists. If you have more moderate mental health problems there are players such as Noom (raised $657.3M) with NoomMood, NASDAQ-listed Talkspace with Lasting, and Youper (raised $3.5M) which offers self-guided CBT therapy. Also in the CBT field there are chatbots like Woebot (raised $123.3M) and Journals like Alan Mind that leverage CBT. In this ‘moderate mental health’ problems space is also Bloom, a New York-based digital mental health “self-therapy” startup that claims it can help with mild to moderate mental health problems. The startup says its users become “their own therapist” by using cognitive behavioral therapy (CBT) via video self-therapy sessions, to address stress, anxiety, and sleep issues. All the sessions are devised by Dr. Seth Gillihan, author on CBT and Bloom’s Head of Therapy and CBT. It’s now secured a $8m seed round, led by Berlin-based VC Target Global. Also participating was Elysian Park Ventures, Angelpad and Sequoia Scout, plus founders as Scott Chacon (Github), Dominik Richter (HelloFresh), Niklas Jansen (Blinkist), Roland Grenke (Dubsmash), Joshua Cornelius & Mehmet Yilmaz (Freeletics), Ryan Bubinski (Codecademy), Mariya Nurislamova (Scentbird). So a pretty European-band line-up of Angels. Leon Mueller, Bloom’s CEO and co-founder says “Bloom is doing for therapy what Calm and Headspace have done for meditation – making it affordable, accessible, mainstream and everyday” (he said in a statement). He and cofounder Daniel Lohse say they got the idea for Bloom after moving to New York last year and each trying to find therapists.

Use IRS Code Section 1202 to sell your multi-million dollar startup tax-free • ZebethMedia

By zebethcontrolPosted on November 10, 2022Posted in Column, EC Column, EC How To, income tax, Startups, tax breaks, Tax law, VentureNo Comments

Vincent Aiello Contributor Spencer Fane attorney and business owner Vincent Aiello helps businesses solve legal problems to secure revenue flow and reduce business risks. Whoever said you can’t have your cake and eat it too should have called their accountants and lawyers first. These professionals often receive inquiries from founders, equity investment firms and venture capitalists looking for ways to save on or avoid capital gains taxes on future business sales. Both lawyers and accountants encourage clients to examine the tax savings offered by setting up a Qualified Small Business (QSB) C-Corporation at the initial business formation stage. Using a QSB can eliminate capital gains tax due on the future business sale if the company is established and stock issued pursuant to Internal Revenue Code Section 1202. Many startups often simply default to a robotic use of S-Corporations, partnerships, and LLCs, but savvy tech founders should consider the excellent long-term tax savings afforded by IRS Code Section 1202. This article provides a general overview concerning the major requirements and tax savings provided by forming a startup entity structured to maximize the capital gains tax exclusion in IRC 1202. IRC 1202 excludes capital gains tax realized on the sale of qualified small business stock (QSBS) of non-corporate taxpayers if the stock has been held for more than five years. QSBS is stock in a C-Corporation originally issued after August 10, 1993, and acquired by the taxpayer in exchange for money, property or as compensation for services. The corporation may not have gross assets in excess of $50 million in fair market value at the time the stock is issued. The IRC 1202 gain exclusion allows stockholders, founders, private equity and venture capitalists to claim a minimum $10 million federal income tax exclusion on capital gains for the sale of QSBS. Prior to 2010, only part of the capital gain on QSBS was excluded from taxable gain under section 1202 and the portion excluded from gain was an item of tax preference subject to alternative minimum tax. This rule was changed for stock acquired after September 27, 2010, and before January 1, 2015, such that the gain on such stock was fully excluded and no portion of the gain was an item of tax preference. This change was made permanent by the Protecting Americans from Tax Hikes Act of 2015, signed into law on December 18, 2015. Given the changes to IRC 1202, it constitutes a significant tax savings benefit for entrepreneurs and small business investors. However, the effect of the exclusion ultimately depends on when the stock was acquired, the trade or business being operated, and various other factors. Qualifying for Section 1202’s capital gains tax exclusion takes careful planning The critical plan to be determined at the outset is the future stock sale, which must be structured as a sale of QSBS for federal income tax purposes to achieve capital gains tax exclusion. This can be a challenge, as buyers typically prefer asset acquisitions permitting a step-up in basis and future goodwill amortization. In many business sales today, buyers expect stockholders to roll over a portion of their equity, or receive stock or membership interests in a new entity as part of the transaction. Imprecise planning will cause the QSB stockholders to forfeit the QSBS gain exclusion and owe tax on the sale. This can happen if there is an impermissible equity rollover to an LP, or receipt of LLC equity.