Insurers win partial victory in SPAC D&O case

A Delaware Court has issued a partial victory to insurers in one of the first directors and officers liability insurance coverage cases related to special purpose acquisition companies to reach a ruling.

Social Capital Hedosophia Holdings Corp. III was a publicly traded SPAC that merged with privately held Clover Health Investments Co. in January 2021, according to the Feb. 6 ruling by the Delaware Superior Court in Wilmington in Clover Health Investments Corp. et al. v. Berkley Insurance Co. et. al. READ MORE

A Discussion of the Current SPAC Litigation Environment

What’s the latest in SPAC litigation and enforcement? To find out, I recently spoke with two experts from the Dallas office of Holland & Knight, a prestigious multinational law firm. 

Chauncey Lane is a corporate mergers and acquisitions (M&A) partner, and Scott Mascianica is a litigation partner who previously worked in the Security Exchange Commission’s (SEC) enforcement division. READ MORE

A stake in success: Boosting profits via employee ownership

Life took a big turn last May for the employees of C.H.I. Overhead Doors, in the small town of Arthur, Illinois. Every employee was a co-owner of the company. They'd been told if the business sold at a profit, they'd all get a payday. Now, it was actually happening. "I'm just upfront, being all excited," said production manager Jim Hill. "Oh my gosh, like, we're talking life-changing money now!"

Hill, who joined the company in 2019, got two-and-a-half times his annual salary. "That was, 'Hey, Jim, like, it's easier to put your kids to college now!" he said. READ MORE

Corporate investors remain key pillars of life sciences and healthcare

Entering 2023, the private venture-backed life sciences and healthcare landscape undoubtedly looks and feels different than it did during the fast-paced, valuation-rich days of 2021. Silicon Valley Bank’s most recent Healthcare Investment and Exits report revealed that 2022 was still the second-largest year on record for venture capital investment into healthcare companies in the US, UK and EU. However, investment dollars dropped 34% from 2021’s peak, and public markets were eerily quiet, with only 31 private venture-backed healthcare IPOs versus 174. READ MORE

The $100M venture round is going extinct

Startups hoping to raise a nine-figure round in the future had best temper their ambition; venture funding events worth $100 million or more are going extinct — quickly.

A few years back, nine-figure venture funding events were common. So much so that during my Crunchbase News days, we started to call them “supergiant” rounds to avoid having to spell out their size. Hell, we actually ran regular reports of rounds worth a few hundred million or more until sheer volume made it impractical. Good times. READ MORE

US Startups Raise $5.9 Billion VC Funding During January

Aurojyoti Bose, Lead Analyst at GlobalData, comments: “There was a month-on-month (MoM) as well as Year-on-Year (YoY) decline in VC deal activity in January 2023 while the impact was more prominent in terms of value.”

An analysis of GlobalData’s Financial Deals Database reveals that VC deals volume in the US declined by 24.2% and 57.8% in January 2023 compared to the previous month and January 2022, respectively. Meanwhile, the MoM and YoY decline in value terms stood at 55.3% and 76.8%, respectively. READ MORE

VCs should want to hold early-stage companies more accountable

If the last year has taught us anything, it’s that VCs let their portfolio companies get away with a lot.

No balance sheet? No problem; here’s a $32 billion valuation. No proven product-market fit and your last venture cost investors billions? Here’s a check worth more than all Black founders raised in 2021’s otherwise record-breaking year. Cut a check for Elon Musk’s Twitter acquisition when he’s never built in that space before and has a reputation for treating employees poorly, why not? READ MORE

Angel Investing in Women-Led Companies

Start-up businesses had a banner year in 2022. In contrast to the drop in venture capital funding (down 35% in 2022 to US$445 billion compared to US$681 billion in 2021), angel and seed investors made a record-breaking combined investment of US$36.2 billion in 2022, according to CB Insights.

While the Small Business Administration estimates that more than 250,000 individual angel investors provide capital for about 30,000 businesses in the U.S every year, there are also more than 250 organized angel investor groups, according to Jo Ann Corkran, co-CEO of Golden Seeds, a New York City-based angel investor group with nearly 350 members. READ MORE

Why Do Most Venture Funds Chase After the Same Types of Startups?

Apologies to my many VC friends. I don’t mean to insult or disparage you in any way. You’re all not only brilliant, creative, and successful individuals, but caring and generous people (well, most of you.)

The reason venture funds chase after startups in the same few trendy sectors is not a problem with the individuals. It’s a function of the way the VC system works. Despite all the talk about innovation and disruption, the venture capital system encourages industry-wide groupthink. READ MORE

If Startups Want To Be The Hip Kids Again, They Need To Start Losing More Money

A couple years ago, when startups were raising record sums and using it to lose money, there were those in the nonstartup founder community who tut-tutted about why it seemed like a bad idea.

“Slow down” was the common mental refrain. If you sell your products at a loss, how will you ever turn a profit? What if investors no longer want to fund growth at any cost? Is it really wise for a company this deeply in the red to spend on perks like in-house manicures and dog walking? READ MORE

The appeal for executives of having private equity owners

Would it be better to be a chief executive who is accountable to Steve Schwarzman instead of Nelson Peltz? Schwarzman is the founder of the private equity juggernaut Blackstone which has made its name taking companies private in leveraged buyouts. Peltz’s Trian Partners, on the other hand, is known for activist campaigns at public companies. Most recently, Peltz pushed for change at Disney where CEO Bob Iger is now slashing 7,000 jobs among $5.5bn in annual cost cuts. READ MORE

6 VCs share advice for laid-off tech workers planning to launch startups

Many tech workers have never experienced a job market like this one.

Last year, 1,044 tech companies let go of 159,786 employees, according to Layoffs.fyi. As of this writing, 103,767 workers have been laid off from 345 startups so far in 2023. Many, many more are coming, obviously.

Losing a job unexpectedly is more than a financial shock. Many of us invest much of our identity in what we do for a living, which means layoffs can transform social and emotional lives overnight. READ MORE