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Venture Capital Asset Protection
Chubb Specialty Insurance
Chubb's Venture Capital Asset Protection (VCAP) policy is a combined product offering management liability, management indemnification,
outside directorship and professional services liability insurance in one policy - helping to eliminate gaps in your insurance
programme. With our combined VCAP policy, venture capital firms receive true value and one of the broadest policies in the
Chubb's VCAP policy recognises that venture capital firms and their partners have unique exposures. Chubb's comprehensive
risk transfer programme is specifically designed to help protect your firm's returns through the preservation of capital.
By mitigating potential losses, we help safeguard reputations and investment returns.
What are the exposure?
The following are some of the exposure that venture capital firms face as investors and developers of emerging companies:
Positions on Portfolio Company Boards - Active participation in managing your portfolio companies is a hallmark of your firm, but there are risks to be considered.
Indemnification - To what extent does the indemnification power of a portfolio company protect a venture capitalist serving as an outside director,
in particular, on the board of a portfolio company in the seed or early stage of development?
Down Round Financing - The perception created by down rounds may be that the best interests of other parties are intentionally not being considered.
Conflicts of Interest - Divergent interests may create scenarios in which not all interested parties feel they have benefited to the fullest extent
“Wash-outs” - Some situations create the perception that a venture capital firm is acting unfairly and in its own best interest while
breaching its fiduciary duty to a particular portfolio company, its management and its investors.
In-kind Distributions - An in-kind distribution is a highly anticipated event. What happens if it doesn’t go exactly as expected?
Bankruptcy - Declaring bankruptcy is a reality for some emerging companies, but that reality can carry significant liabilities for the
company’s board of directors and business developers.
Confidential information - How secure is confidential information when it is being communicated via e-mail, fax or letter or while it sits on a partner’s
desk or in a filing cabinet?
Employment Practices - In certain cases, new management is hired to take a portfolio company to the next level. How does old management feel about
Intellectual Property - With thousands of new companies being started the world over every year it is becoming increasingly difficult to be certain
that proprietary intellectual property has not already been ‘claimed’ by another.
Initial Public Offering - Initial public offerings invite added scrutiny by unaffiliated third-party investors of past and present financial information,
management decisions, the offering itself, etc, potentially resulting in costly and distracting litigation.