Columbia Law School
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Finite Ventures
A corporation is perpetual by default – but its lifespan can easily be limited through either a charter provision or contract. Does anyone actually do that? Indeed they do – and for good reason – as I explain in a …
VCs
The New EU Inc. Would Help Startups but Raise VC Doubts
The new optional legal form for startup companies, EU Inc., which launched last week as a so-called 28th regime, is a strategic instrument aimed at promoting incorporation, innovation, and growth across the European Union. In a period of increasing geopolitical …
Litigation Against Venture Capital in the Unicorn Era
In 2023, a former employee and shareholder of a struggling startup called Teespring sued not just the company and its managers, but also one of its investors: Hydrazine Capital, a venture fund affiliated with OpenAI CEO Sam Altman. The plaintiff …
When Venture Capital’s Speed Runs Ahead of Its Due Diligence
In recent years, the failure of high-profile startups has drawn renewed attention to a persistent question in the venture capital (VC) world: How much diligence is enough when speed of investment is at a premium? Collapses at the likes of …
Pay-to-Play in Venture Capital Financing
The startup ecosystem fuels America’s economy in ways few other sectors can match. It has also ridden waves of boom and bust, with periods of explosive growth followed by cool-downs. During these market downturns, capital becomes scarce and investors must …
The Perils of Founder Worship
In the world of startups, founders are often elevated to near mythical status – the force poised to disrupt entire industries. This adulation can grant founders extraordinary latitude in corporate control, especially in innovative and unregulated sectors like tech or …
Mandatory Corporate Law as an Obstacle to Venture Capital Contracting in Europe
Venture capital (VC) is a key driver of economic growth. A substantial body of legal and financial scholarship has examined the institutional factors that shape VC activity. In the first of two papers, we build on the idea that the …
Dynamic Views of Startup Governance and Failure
The venture capital (VC) industry has expanded greatly over the past several decades as innovative startups have become a key driver of economic growth and innovation in the United States. Foundational scholarly accounts of startup governance focused on the VC-entrepreneur …
The Challenges Facing Venture Capital in Digital Asset Markets
In a forthcoming book chapter, we analyze the regulatory challenges facing venture capital (VC) firms as they navigate engagement with decentralized cryptocurrency markets, particularly through decentralized autonomous organizations (DAOs).[1] These challenges have grown urgent, as the crypto industry emerges …
Compulsion No, Opportunity Yes in the Delaware Law of Externalities
One distinctive feature of the U.S. economy over recent decades has been the rise of the entrepreneur-dominated public company. This development has derived largely from the growth of private funding available through venture capital, so that initial public offerings have …
How Common Venture Capital Investors Are Reshaping the Startup Landscape
The venture capital (VC) industry has undergone a profound transformation over the past two decades with the emergence of common VC investors — that is, VC firms that hold ownership stakes in multiple startups within the same industry or product …
Do Board Observers Improve Corporate Governance?
In the complex world of corporate governance, a novel mechanism has reemerged: board observers. Operating without the conventional voting rights of board members, these individuals have become pivotal in bridging the gap between ambitious startups and their venture capital (VC) …
How Big Tech Coopts Disruption – and What to Do About It
Our economy is dominated by five aging tech giants – Alphabet, Amazon, Apple, Meta, and Microsoft. Each of these firms was founded more than 20 years ago: Apple and Microsoft in the 1970s, Google and Amazon in the 1990s, and …
Founding While Female: Are There Gender Disparities in Startup Governance?
Venture capital is widely perceived to have a gender problem. Founders seeking capital and investors themselves are overwhelmingly male, fomenting concerns about how – and how fairly – the VC sector distributes its economic gains. Indeed, the entire industry has …
Fintech and the False Promise of Techno-Solutionism
Dual-Class IPOs Offer Solution to Unicorn Governance Failure
Dual-class stock structures have proliferated in recent years. In 2017-2019, almost 30 percent of IPOs in the U.S. had a dual-class structure, and most of them were founder-controlled technology firms (Aggarwal, Eldar, Hochberg and Litov, 2020). Their increasing popularity has …
How Board Diversity Compares in Private and Public Firms
In today’s rapidly evolving corporate landscape, the composition of boards is not just a matter of compliance or social responsibility; it’s a strategic imperative that shapes the future of firms. Amidst growing public scrutiny and socio-economic shifts, particularly following the …
Designing Corporate Law for Startups
The world of startups often appears to embody the exceptionalism of modern finance, with funds swiftly flowing to the best teams and ideas wherever they may emerge. The reality, however, is much more complicated. Financing startups remains a daunting challenge …
How Brand Ambassadors Illustrate the Power of Private Ordering in Investment Crowdfunding
In a new book, I discuss “investment crowdfunding” (also known as “equity crowdfunding” or “securities crowdfunding”), an inclusive new type of online venture capital market – it’s like Kickstarter, except you get a share of stock. More formally, …
The Great Startup Sellout and the Rise of Oligopoly
Startup acquisitions by incumbent firms have been on the rise for the last few years. These acquisitions often allow larger companies to acquire new technologies or talent, while startups gain access to resources and a wider customer base. One notable …