Foley & Lardner, a US-based law firm, has launched a $4m corporate venturing fund using its partners’ money to invest in or with its clients.
More than 70 of Foley’s 350 legal partners have committed to the fund, which will be drawn down over two years.
To deal with potential conflicts and managing deal flow, Foley will use a set formula.
Foley Ventures will invest in a portfolio company if it is projected to have adequate cash flow after the investment for at least one year. For start-up or emerging companies, the fund will also only invest if the group receives a simultaneous investment from a professionally-managed venture fund. Start-ups with angel investors alongside would receive $50,000 while those with VC syndicate members would get $100,000. Both sets of deals could receive another follow-on round of money, Foley said.
Gabor Garai (pictured), chair of Foley’s private equity and venture capital practice of more than 200 attorneys, said this "piggy-backing" approach meant the venture capital firms set the terms and did due diligence and Foley would exit with them as well and would be passive investors with no board or observer seats. The only exception to the formula would come if Foley Ventures’ investment committee decided the deal was antithetical to its law firm ethics.
The law firm said the corporate venturing fund’s deal flow would come from its near-1,000 attorneys from all practice groups, from intellectual property to government regulations, and from any of its 21 US and international offices, whether or not they invested in Foley Ventures. This would bring the attorneys closer together across practices and make the firm closer to the technology hubs it served.
Garai said: "Establishing a venture fund was the next logical step in support of our clients dealing with sophisticated financing issues.
"By having a vested interest in our clients’ businesses, we are further demonstrating our commitment to their success by literally putting our money where our mouths are."