Insolvent Companies Create Boardroom Risks For Venture Capital Firms

Law360, New York (December 8, 2006, 12:00 AM EST) -- Venture capital firms often require a seat on a company’s board of directors as a condition of their investment. There are good business reasons for doing so.

A board seat can help a venture firm monitor its investment in a company and can add value to the venture firm’s investment in the company through the expert advice and useful contacts of the venture firm’s designated board member.

However, board seats can also expose venture capitalists and venture firms to unique liabilities when a portfolio company becomes...
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