Venture Capital Insurance in Singapore

Let’s start with a summary of the major types of covers that VC firms should have. We’ll then dive into the details for the most critical types of VC Insurance. We’ve organised a summary in an easy-to-read table below:

Now that you have an overview of the various covers that you should have running a VC firm, let’s talk a little more about the most important of these covers. The most critical policies that VC firms should have are: i) Professional Indemnity Insurance, and ii) Directors & Officers (D&O) Liability Insurance.

Professional Indemnity Insurance protects you from a wide range of business-related lawsuits. This includes lawsuits related to negligence. VC firms can be sued by a wide variety of sources. For instance, Limited Partners (LPs) could sue the VC firm, alleging a mismanagement of funds. LPs could accuse the fund manager of negligence in allocating assets, which resulted in diminished returns for the investors. Given the high risk of investing in startups, lawsuits like these are not uncommon.

Directors & Officers Liability Insurance is also just as important. If you get sued as a VC, it’s not just your corporate entity that can be sued. The other party can come after you as a company director personally. This means your personal assets like your house, bank savings, car, etc. can be exposed to legal claims. The risk of VC partners is heightened because they sit not only on their own VC firm’s board, but also on the boards of the startups they invest in. This increases the risk of Director/Officer lawsuits significantly. It’s therefore absolutely critical that VCs carry D&O Insurance to shield their personal assets from litigation.