VC Partners Suing Each Other

from the ah,-litigation dept

When the dot com bubble was in full swing venture capitalists were printing money for themselves. Now that things are getting tougher, there’s a lot more infighting going on. The latest is a number of lawsuits from partners who have been pushed out of funds. If you’re unfamiliar with how VC funds work, the argument might be a little tricky. Each VC firm has a number of funds that they run. Each fund is actually its own partnership – its own separate legal entity. The firm itself generally is not a legal entity. In fact, it doesn’t really exist. There are just a bunch of “funds”. So, now that some partners have been pushed out of funds, they’re suing saying that the firm itself is actually a larger entity, and they’re entitled to some portion of what the overall firm is worth – rather than just the funds they were associated with. Of course, this just furthers the strereotype of the typical sneaky VC, always looking for the legal loophole. The simple response is that if the partner really thought that, they should have gotten it in writing when they joined any of the fund partnerships.

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