030726 KU Venture Capital Law (2023W)

Venture Capital Law - The Law & Economics of VC Contracting

The course aims to introduce students to the law and economics of VC contracting, and it will unfold as follows. It will explore the agency problems plaguing, on the one hand, the VC fund investor - VC fund managers at the VC fund level; and, on the other hand, the VC fund – entrepreneur at the portfolio company level. After mapping those agency problems comprehensively, the course will move on to explore the contractual responses aimed at addressing them under U.S. law. The course will then bring the discussion into a comparative law perspective with a view to discussing how corporate law in Europe can affect the adoption of the contractual technology governing VC deals in the U.S.

By providing a holistic overview of the ways in which these financial intermediaries operate and how existing laws and regulation affecting their operations, this course can be a valuable add-on to any university’s educational offering.
More specifically, this course will equip students with basic knowledge as to (i) the economic problems affecting VC-funds and their portfolio firms; (ii) the contracting solutions generally adopted to ameliorate or overcome those problems and which are responsible for the peculiar organizational structure of VC-funds as well as their portfolio firms; and (iii) the legal regime in force at the EU level relating to VC-funds and their managers; and (iv) the problems associated with shaping PE- and VC-investments under US and importing the resulting contractual framework into Europe – particularly when negotiating under German and Italian corporate law.
Methodologically, the course combines a theoretical approach that sheds light upon the economic problems affecting VC-funds and their portfolio firms, a granular discussion concerning the contractual solutions that are commonplace in this context at the VC-fund and portfolio company levels. It will also discuss the conceptual significance of corporate law for the purposes of building a vivid VC market and engage with a critical analysis of (European) corporate law regimes governing the operations of these investors (with an ancillary focus on the policy-making initiatives that are being, or could be, discussed, to address existing problems).