Venture capital and private equity firms face various legal threats from partners, employees, portfolio companies, vendors, and regulators. Claims of poor management or investment advisement are common.
If errors occur during investment management services, companies and individuals may be sued if a third party suffers financial loss. VCAP insurance provides coverage for defense fees, management indemnification, and professional services liability.
PE firms provide financial backing to startups and operating companies.
VC firms provide financial backing and support business development, just like PE firms.
Investors put partners and founders at risk.
Financial institutions face costly legal issues from various sources, including limited partners, employees, vendors, and regulators. To deal with these disputes, a policy pays for legal fees and settlements for lawsuits alleging management failures or investment advisory failures. Here are some claims illustrating insurance’s importance for PE and VC firms:
Limited partners claim that the general partners illegally ended the partnership and purchased the flourishing business assets at a significantly lower value through a different company without competing offers or auction. The limited partners believe this was a breach of the general partners’ fiduciary duty because they engaged in self-dealing.
Three tech entrepreneurs developed software together. One of them shut down the company without permission and started a new one, taking the intellectual property. The other two founders sued the new company, its leaders and the venture capital firms involved for breach of duty, fraud and conspiracy.
Five company founders claimed that venture capital firms took control of management and made unfair stock offerings, resulting in common shareholders receiving less than $50k from an $80 million merger.
Check your policy for exact coverage, but these scenarios are usually covered by VCAP insurance.
Protects a corporation as well as its directors and officers.
Protects managers in ways that other policies fail.
ODL expands D&P coverage for directors and managers on outside boards.
Offers liability protection for professional services.
Protects your company against specific money theft crimes.
VCAP insurance cost varies based on several factors that insurance companies consider when calculating your premium. Here are some of the main points:
Shoot us your email and we’ll kick off a conversation to help get you a quote on the best coverage for your brand.