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Article: Venture capital funds, organizational law, and passive investors.
- Article from:
- Albany Law Review
- Article date:
- December 22, 2006
- Author:
CopyrightCOPYRIGHT 2006 Albany Law School. This material is published under license from the publisher through the Gale Group, Farmington Hills, Michigan. All inquiries regarding rights should be directed to the Gale Group. (Hide copyright information)
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I. INTRODUCTION
The current orthodox view is that investors in U.S. venture capital funds are passive. (1) They delegate decision-making authority and other management responsibilities to the fund manager. (2) Legal scholarship on the U.S. venture capital market, however, has offered surprisingly little analysis on why venture capital fund investors are passive. (3) Furthermore, scholars have almost completely ignored the possibility that investors could be active in their fund's business. (4)
The emphasis that scholarship has placed on passive investors in venture capital funds might cause one to assume it was a global phenomenon. In fact, it is not. ...