Spark Capital: Startups Shouldn’t Have to Pay Our Legal Bills

4/24/13Follow @curtwoodward

Don’t let it be said that venture capitalists are a greedy bunch. Well, not all of them, anyway.

Bijan Sabet, a general partner at Boston-based Spark Capital, says the firm will now start paying its own legal costs when it invests “at the earliest days of the company.”

Why’s that notable? As Sabet explains on his blog, VC protocol often dictates that the company lucky enough to land a big venture check is the one paying the lawyer’s fees of everyone involved.

“We would rather see this money go towards better uses and continue our efforts to align ourselves with the founders that risk it all every single day,” Sabet writes.

Sabet

There are some conditions—Spark plans to cap its fees at $25,000 total, which could last across multiple rounds. Any other investors will have to pay their own way (or at least get someone besides Spark to do it).

A bit of creative marketing? It probably can’t hurt in a venture industry that has been contracting, driving money into the hands of a smaller number of big-name firms.

But it also sounds like a decent thing to do for some poor entrepreneur who is trying to scratch out a “ramen profitable” life while the VCs collect their fund management fees.

Sabet, who led Spark’s investments in companies like Twitter, Tumblr, and Foursquare, along with homegrown success stories like RunKeeper, has taken on the role of policy advocate before.

He’s argued several times that Massachusetts should dump its reliance on non-compete agreements, and Spark has rejected the common Boston-area practice of insisting that its portfolio companies lock down workers with those agreements—often cited as a hurdle to developing a faster-growing technology industry.

If you’re in New York tomorrow, you can hear more from Sabet at our latest big event, New York’s Venture Challenge.

Curt Woodward is a senior editor for Xconomy based in Boston. Email: cwoodward@xconomy.com Follow @curtwoodward

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