성공하지 못한 벤처투자에 관한 법적 분석 －실리콘밸리 벤처캐피탈과 창업자 사이의 긴장관계를 중심으로－

As venture investment market is going through recession, post-money valuations of many startups may not meet the expectations. When they don’t, inherent conflict within VC-backed startups can break surface and become a legal quagmire. This article introduces and analyzes the conflicts of interests between a founder and venture capitals (VCs) in a typical Silicon Valley startup and how they are governed by Delaware law. First, this article contemplates power dynamics within VC-backed startups. To mitigate information asymmetry and agency problems prevalent within startups, VCs in Silicon Valley use various contract mechanisms such as staged financing, convertible preferred shares with liquidation preferences, and a number of governance rights. As a startup goes through multiple stages of financings, however, the one who grips the rudder of a startup gradually becomes the VCs, not founders. Some original founders resign from CEO as the startup matures, and VCs retain near-majority of board seats. Outside directors may also be “friends” of VC partners. Second, the article analyzes how this power dynamics become a fiduciary duty case. Founders and VCs, though different as common and preferred shareholders, have similar interests overall: Both want the company to grow. However, unlike founders, VCs have limited timetable and multiple portfolio companies. If a startup shows unclear potential for growth, the VCs will rather concentrate on another company in their portfolios that seems to have brighter potential. Option-like payout structure of a convertible preferred stock with liquidation preference intensifies this problem: If the startup has not grown far enough and its sale price can just meet the liquidation preferences, vague prospect of growth does not excite the preferred stockholders at all. There, VCs will proceed with a fire sale of the startup (using its board control) even if the founders may want a stand-alone growth—even when it is feasible. Third, the article shows how those cases are dealt with in Delaware courts. Due to the conflicted nature of VC-directors and some outside directors, most cases regarding VC-backed startups have been reviewed under the Delaware’s most stringent standard, the Entire Fairness standard. However, the actual outcome has not been bad for defendants. Many of them tend to fall short of the first throng of that standard, namely the “fair dealing” element. Still, several cases were held entirely fair because the prices of those deals were fair. This trend is in line with Delaware case law that has constantly confirmed that fair price in fiduciary litigation can only be recognized by some range of prices (unlike appraisal cases), and fair procedure is a tool for securing fair price.