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Any jump in venture capital investment activity is reason to celebrate in Silicon Valley, but some startup lawyers are cheering for more personal reasons. Take David Healy, a Fenwick & West partner with about a dozen unfunded — and starving — companies in his practice. Each one of those clients represents $15,000 to $200,000 in unpaid legal bills. So any time the Valley toasts an uptick in VC activity, chances are good Healy is finally getting paid. “The VCs are again finally funding companies,” Healy said, “So the spigot is turning back on, and the companies that managed to survive through the funding drought are getting term sheets.” This quarter, venture capitalists put 23 percent more money into startups and early-stage companies than in the last quarter, according to PricewaterhouseCoopers’ MoneyTree survey of venture capital activity. VCs put $328 million in 61 companies in the second quarter, up from the $267 million they put into 49 companies in the first quarter. That translates into quite a few clients who can now pay their legal bills. It’s also validation for the lawyers who learn they made the right call in carrying a client through a drought. “There’s always a tension,” Healy said. “You ask yourself ‘how long do I carry these guys?’ and the lawyer instinct is to do everything possible to help the company survive.” Oddly enough, the riskiest of companies are often cheapest for lawyers to carry. Unfunded startups don’t require a lot of work from lawyers. So their unpaid legal bills usually run to the relatively modest $15,000 to $50,000, Healy said. But larger, more established companies pose a bigger risk. They usually generate the bigger unpaid balances because they need more work to help them survive or attract a buyer, Healy said. Healy said two such clients got funding offers in the past month — which means he probably can breathe easier about getting paid. But showing his partners a jump in his collections isn’t the only reason why Healy feels buoyed. It’s making him more optimistic about the Valley. “It feels excellent,” Healy said. “It just goes to show that if entrepreneurs have enough guts and staying power and are willing to do what it takes to survive, there’s hope, and the Valley is turning around.”

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