Keeping with the Grokster Theme

Posted by: Heather Green on June 29, 2005

I am with Om Malik when he writes that, post Grokster, “expect all those VC firms that made a lot of noise about consumer and digital media going back into hiding and rediscovering the joys of enterprise software.” Or just anything other than digital media.

The perception about VCs is wrong. They aren’t all gung ho about risk and they just got handed a bucketful of uncertainty in the form of the new inducement standard.

In doing some reporting, I spoke with lawyers who work with VCs and startups yesterday about Grokster. Here are a couple succinct comments:

Talking about investing in new technologies, Mark F. Radcliffe, a partner at DLA Piper Rudnick Gray Cary said: “P2P will continue to be a pariah in the investment community… and investors will be careful about touching anything that has digital content.”

Others explained how companies would need lawyers involved more during the entire process of creating a company, from conceptual discussions, to financial negotiations, to R&D, to customer outreach.

Here’s the kicker. According to some of the lawyers I spoke with, one issue that might hold VCs back is uncertainty about whether, under the inducement standard, they personally could be held liable….


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