[VC Unlocked] Due Diligence with DLA Piper

TL;DR

Ensuring thorough due diligence in investments is crucial for success, covering legal, financial, and business aspects.

Transcript

and now getting in to the reason why we're all here I'd like to introduce Louie Leo he is a partner at DLA Piper in addition to the co-chair of US emerging growth and venture capital he's also a co-managing partner of DLA Piper Silicon Valley office and with that I'm gonna go ahead and pass it off to Louie who's going to explain more about his expe... Read More

Key Insights

• 👨‍💼 Due diligence in investments requires thorough legal, financial, and business analysis to mitigate risks and ensure success.
• 🎮 Addressing export control violations and regulatory compliance is crucial in due diligence to protect investments.
• ✳️ Re-incorporating in mature legal jurisdictions like Delaware may be necessary for US investors to mitigate legal risks and enhance investor confidence.
• 🥺 Investors must conduct adequate due diligence, including background checks, even if not leading a funding round to ensure alignment with their investment goals and risk tolerance.

Questions & Answers

Q: How should an investor address export control violations in startups?

Export control violations must be remedied immediately with declarations to the government or putting new controls in place to ensure compliance and avoid legal consequences.

Q: Is it necessary to re-incorporate in a more mature jurisdiction like Delaware for startups from less mature legal systems?

It's advisable to re-incorporate in a mature jurisdiction like Delaware for access to US markets and investor comfort, but timing and investor interest should guide this decision.

Q: What level of due diligence is recommended for non-lead investors in a funding round?

Non-lead investors should conduct sufficient due diligence, including background checks on lead investors, to ensure the investment aligns with their risk tolerance and expectations.

Q: How can investors address delayed back pay promises made by startup CEOs?

Non-payment issues must be addressed promptly to avoid legal liabilities and ensure compliance with minimum wage laws, balancing financial constraints and legal obligations.

Summary & Key Takeaways

• Key legal considerations in due diligence, addressing potential risks like export control violations.

• Importance of incorporating in mature legal jurisdictions like Delaware for US investors.

• Due diligence must cover all aspects from financials to regulatory compliance to ensure a sound investment.