Investors and Divorce

Boulder has many investors and investor groups that risk venture capital in promising startup companies.  These startups are usually non-public business entities with a small group of equity owners.  The startup will have significant risks as well as potential upsides that justify the investment.  When an investor in such a company finds himself or herself in a dissolution of marriage proceeding, the problem with valuing the interest, structuring a buy-out or settlement based upon an in-kind division of the investment rights can be challenging.  In addition, most startups require investors to sign a non-disclosure agreement that prohibits the investor from conveying company information to third parties.  The term “third party” would include the investors’ spouse.  But spouses in dissolution of marriage action have a duty to reasonably disclose material financial information to each other.  To discharge these seemingly competing duties is but one of the challenges that must be addressed when an investor in a startup becomes a party in a dissolution of marriage action.