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Index Ventures

Areas of Potential Disputes: the Venture Capital Perspective Francesco De Rubertis, PhD General Partner, Index Ventures WIPO Conference on Dispute Resolution in International Science and Technology Collaboration, Geneva April 25-26, 2005. Index Ventures.

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Index Ventures

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  1. Areas of Potential Disputes: the Venture Capital Perspective Francesco De Rubertis, PhDGeneral Partner, Index VenturesWIPO Conference on Dispute Resolution in International Science and Technology Collaboration, Geneva April 25-26, 2005

  2. Index Ventures • Among European largest Venture Capital firms (ca. 1bUSD under-management) • Geneva and London location • Only Institutional Money

  3. Framing the Start Up scene • Actors within start up companies • Founding scientists (publications) • Concerned Universities (IP-income) • Entrepreneur (glory and money) • Venture backers (money and glory)

  4. Unique situation of start up companies At very early stage, for the first years of life of the Company, the Venture Capitalists exerts a control position in the Company, both because of contractual agreements and because of the dependence of the Company’s survival on their investments

  5. Assets of start up companies • IP-related transactions and agreements • Licenses • Employment contracts • IP positions • Patent applications • Trademarks

  6. Due Diligence ahead of investment • Total cost ca. 75-100k EUR • 60-70% of total cost is legal bill (ca. 40-70k EUR) • IP deals, transfers • Assignment of IP rights and co-ownership issues • Enforceability of IP, novelty • Freedom to Operate • Applicable law (R&D or HQ location, IP depot…)

  7. Risk-mitigating approaches • Move Top-COs to other countries • Ownership vs licensing IPR, when possible • Integrated IP and product analysis • Relevance of third party claims • IP interference on likely future product • Business-driven focus on key claims • Due diligence with lawyers from multiple jurisdictions

  8. Standard Terms (general) • Veto power on major decisions • Joint decision power with the other major stakeholders • Representation and Warranties • Indemnification clauses

  9. The role of arbitration and mediation • Start up environment killed by uncertainty • More than direct financial cost is “opportunity cost” on the upside that can impair Start up growth • Speed of decision correlates with survival

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