For good reason, the business of venture capital firms is
focused largely on core business issues such as raising capital,
product/market fit, and deal flow. However, as such firms
guide and interact with their portfolio companies, litigation
issues can result and become a pressing concern for such firms,
especially with respect to applicable securities laws and attendant
fiduciary obligations.
Our experience litigating in this industry has shown that
venture capital firms are open to a wider range of potential
liability than they might anticipate. This is increasingly
true as they become important players in the day-to-day activities
of their portfolio companies. This article will address some
of these potential litigation pitfalls by considering liability for
a venture firm in two common scenarios that can go overlooked: (1)
a venture firm providing guidance and advice to portfolio companies
regarding its vendor and supplier relationships; and (2) a venture
firm
