Venture capital consists of funds obtained from investors (e.g., endowment funds, high-wealth individuals, pension plans, and family trusts) that are invested in young, innovative companies in exchange for an equity stake that can be translated into a profit when the company goes public or is sold to or merged with another company. Some of America’s best-known companies— including Facebook, Whole Foods Market, Google, and Intel—were founded with the help of venture capital.
According to an article about venture capital on BetaKit, a news site about start-ups and tech innovation, lawyers (along with venture capitalists, entrepreneurs, and limited partners) are the key players in the VC industry. Venture capital lawyers can be generalists or they can specialize in areas such as transactional expertise, due diligence, intellectual property, and tax law. They also may work for VC firms that focus on funding start-ups in specific industries (technology, medical science, renewable energy, energy, real estate, etc.). Although job responsibilities vary by employer, typical job duties for VC lawyers include:
- drafting venture capital financing documents such as term sheets, certificates of incorporation, indemnification agreements, investor rights agreements, management rights letters, voting agreements, and stock purchase agreements
- providing counsel at all investment stages, from initial funding through IPOs and mergers (including fundraising strategy, due diligence, and business model issues)
- serving as the liaison between the investment staff and outside counsel during transactions
- advising clients on intellectual property (including patent and trademark) issues
- assisting compliance professionals about reporting and documentation obligations pertaining to compliance with Securities & Exchange Commission (SEC) regulations, and interpreting SEC rules, regulations, and laws that are applicable to VC firms
- reviewing vendor and employee contracts, nondisclosure agreements, and firm marketing materials, among other documents
- designing and negotiating compensation and benefits plans for executives and employees at both VC firms and their portfolio companies