Off the Cuff –

LP Weighs in on VC Litigation

Benchmark Capital recently filed breach of fiduciary duty claims in a suit against directors and controlling stockholders of its portfolio company, Juniper Financial. With the spate of down rounds over the past two years, many observers expect such litigation to blossom, particularly from washed-out founders.

VCJ wondered what limited partners would think of litigation among VCs. A tenured LP says, “Whenever a fiduciary acts to protect the interests of their investors, I think that’s commendable. If they were advised that they have a legitimate claim that a valuation was deliberately contrived to deprive them of their economic interest-one that is likely to be sustained by the courts-I think they have an obligation to pursue that course of action.”

For more on this topic, see attorney Chris Aidun’s Viewpoint on on page 42.