Insurance for Venture Capital Firms
We invest in values so you can invest with confidence.
We invest in values so you can invest with confidence.
Practice leader Brian Schneider breaks down the basics of business insurance for hedge funds and private equity firms. Learn about the importance of proper due diligence during acquisitions and how teaming up with Higginbotham’s venture capital and commercial industry specialists can make the process smoother.
Regardless of whether you’re focused on M&A or other strategic investments, capital deployment involves significant risk.
Considering this risk is amplified when third-party interests are involved, private equity and venture capital firms need a healthy risk appetite to succeed.
That’s why the private equity and M&A specialists at Higginbotham work tirelessly to deliver innovative risk management solutions that add value well beyond the standard liability coverage you need.
Employee-owned and customer inspired, our authentic and transparent approach to insurance and risk management helps give you peace of mind.
Because when you lead with values, value leads.
To learn more about how our values-based approach creates value for you and your business, click here.
Or visit our Insights page to learn more about risk management.
Planning coverage that addresses the complicated risks present in the private equity sector can be daunting.
Not with Higginbotham as your partner.
We start with listening and end with custom insurance solutions. By making policies personal, we help you accomplish more.
Our deep industry experience and strong insurance carrier relationships help us get things done that others can’t.
From buy and sell-side risks to complex operational considerations well beyond the scope of the average M&A transaction, you can rest easy knowing you have a team of seasoned professionals in your corner with your best interests in mind.
Higginbotham has experience working with a broad spectrum of private equity firms, including:
I recently purchased yet another policy through my long-time friend at Higginbotham. They are simply the best!
Though private equity firms and venture capital firms both make money through capital investments, variance in their core investment strategies can create a considerable variance in the risks they face.
Let’s say your private equity firm invests capital from high net-worth individuals, pension plans, university endowments or another business into a private company, securing a controlling interest in that company.
In this case, you could face the following exposures:
This list isn’t exhaustive, and there are a myriad of other ways a deal can unexpectedly go sideways.
With this considered, we recommend working with a seasoned insurance professional to assess your risk.
Few startups enjoy the access to traditional funding that more established middle-market companies and enterprises might.
These firms tend to be more likely to offer attractive terms and a generous equity stake if you’re willing to take a leap of faith.
While your VC investment strategy likely carries a higher risk than a traditional private equity approach, the returns can be tremendous.
Because you can often enjoy a seat at the decision-making table as an angel investor, you may be able to hedge your bets by way of expertise and consultative guidance.
However, if you take a hands-on approach to your investments, it’s important to consider the additional risk it may create.
While insurance can help mitigate some of these exposures, there are several supplementary strategies to consider for your risk management plan. That’s why it’s critical to work with an insurance partner who intimately understands the nuances of professional liability and other key exposures.
With Higginbotham in your corner, you can rest easy knowing your management liability, cyber liability and other critical considerations are kept top of mind.
As a member of the board of directors of a PE or VC firm, you likely face a robust set of risks in your day-to-day work.
This list of coverages is a great starting point for limiting your personal and professional liability.
When your investment firm purchases interests in other private or portfolio companies, you can be held liable by investors alleging wrongful conduct or professional errors. Also commonly carried by board members of portfolio companies, E&O can help with legal costs and damages should you be named in a lawsuit.
Considering that the core value your firm provides requires rendering investment advice and offering professional guidance, the importance of errors and omissions (E&O) coverage cannot be overstated.
Compounded by the inherent liability involved with asset allocation and capital management, investment advice can be a risky business.
As a private equity firm member, you will likely act as a director or officer of a portfolio company at some point in your career.
If something goes wrong, you could be held personally liable for claims alleging wrongful acts that resulted in financial damage. Designed with these risks in mind, directors and officers (D&O) coverage can help with legal costs, settlements and judgments you could incur defending against these allegations.
EPLI is another essential liability coverage for private equity and venture capital firms to consider.
Some examples of allegations that could qualify for an EPLI claim include:
This coverage can help with the cost of defending allegations of unlawful hiring practices against the insured firm or its employees.
Widely-regarded as another key coverage for fiduciaries, trustees and professional administrators, this coverage is designed to help with the cost of an allegation of a breach of fiduciary duty. If a member of your firm is named in a lawsuit alleging a breach, your fiduciary liability coverage could help with legal defense costs, settlements and judgments.
Often carried in tandem with the aforementioned coverages, a fidelity bond can help cover the cost of a financial loss caused by employee dishonesty, theft, forgery, computer fraud and more.
As the global economy becomes increasingly digital with each passing day, the liability created by a potential cyberattack grows in lockstep.
Cyber liability coverage is designed with this risk in mind. Also commonly known as “cyber and data privacy,” this coverage can help with the costs of third-party lawsuits and regulatory fines in the aftermath of a covered data breach.
Trade credit insurance provides protection against nonpayment by your customer due to insolvency, default and country risk. In addition, there are many other coverages depending on your business.
Types of trade credit insurance include:
Both unintentional and inaccurate representations by a seller in a merger or acquisition can be grounds for a lawsuit. This coverage can help with the cost of financial damage incurred as a result of a misrepresentation, potentially reducing the likelihood of litigation in the process.
At Higginbotham, we take a consultative approach to customer service and risk management.
Whether you have a single policy, a commercial package or many insurance policies covering multiple locations and risks, we take the time to understand your unique needs so we deliver the best coverage at the best price available.
But we don’t stop there.
Our work continues 365 days a year. We have a Day Two Services® team that works in tandem with our risk management specialists to deliver year-round value.
From help with compliance to safety audits and claims advocacy, our Day Two Services® team helps you mitigate risks, avoid costly claims and better position your operations so you can focus on what matters most: growing your business.
Brian Schneider, managing director in our Fort Worth office, began his career on the insurance carrier side. He transitioned to Higginbotham more than a decade ago when he recognized the need to provide comprehensive market solutions as well as a consultative approach to his clients.
Brian and the private equity team focus on both domestic and global M&A transactions. They serve their clients in all aspects of the investment lifecycle from pre-acquisition, transaction, integration and post-acquisition. Their consultative approach starts when a letter of intent is signed aiding in due diligence, placing Reps & Warranty insurance and all other needed coverages for the PE firm and portfolio company. Experience in all levels of client servicing has given Brian and team the insight to varied risk management and coverage needs.
Brian holds a Certified Insurance Counselor (CIC) designation.
A great plan starts with a conversation. Let’s talk about what you need.