What legal questions most concern venture capital firms considering an investment?
Law & Taxation mentor Richard S. Morse Jr. responds: Venture capital firms will look at the scope and duration of any existing noncompetition agreements, as well as any stock vesting schedules that are already in place -- which they may or may not choose to modify. If the agreements are done well, they will stay in place, but if the venture capitalists don't like them, their counsel will not hesitate to request changes to tighten the agreements up.
Beyond that, venture capital firms frequently care a lot about intellectual property. Sometimes they will conduct independent assessments, bringing in an outside firm to evaluate, for example, how strong the patents are. If the company has been spun off from a larger firm, the venture capital firm will want to be sure that the new company has received all of the intellectual property it needs to pursue its proposed business plan.