Understand the VC term sheet risks for founders before signing.

A VC term sheet may look like a golden ticket, but it often carries hidden liabilities that founders can easily overlook.

From liquidation preferences to board control and personal legal exposure, we break down what every founder should know before signing.

Real case: A controversial term sheet from a Malaysian VC firm shows how investor-friendly terms can cost founders control—and trust.

Learn how smart insurance strategies like D&O can protect your leadership when things get complicated.

Scroll through to uncover the hidden risks and how to protect yourself.

D&O lawsuits arise when leaders are accused of wrongdoing in their fiduciary duties — whether from fraud, breach of duty, negligence, or misrepresentation. These risks extend not only to executives within portfolio companies, but also to fund managers who hold board seats and shape governance. The following case studies highlight where things have gone wrong — and how D&O insurance can act as a critical safety net.

Case Study 1: When Investors Get Sued – Temasek, SoftBank and the FTX Fallout

What Happened: In 2023, Temasek, SoftBank, and other major VC firms were named in a U.S. class-action lawsuit for allegedly “aiding and abetting” fraud at crypto exchange FTX. Despite extensive due diligence claims, investors alleged the VCs failed to catch red flags and helped validate the now-defunct platform.

D&O Risk: Investor-side liability. Fund managers and investment committee members faced accusations of fiduciary failure and public misrepresentation. Even though they weren’t directly operating FTX, their reputations and legal exposure were on the line.

Consequences: Temasek wrote off its entire $275M investment and cut internal executive pay. Legal defense costs, reputational damage, and tighter scrutiny from regulators and LPs followed.

Mitigation: Tailored D&O insurance can cover legal defense and settlements (excluding proven fraud). Global coverage with U.S. jurisdiction protection is key. Stronger due diligence processes and ongoing monitoring could have further reduced risk.

This case illustrates a clear instance of D&O liability for Asian based private equity and venture capital, especially when investors play an active governance role.

Case Study 2: Board Oversight Failure – The Collapse of Zilingo

What Happened: Zilingo, a Singapore-based fashion startup once valued at $1B, collapsed in 2023 after CEO Ankiti Bose was terminated over financial misconduct. A forensic audit uncovered US$9M in dubious consulting fees, unapproved salary hikes, and mismatched revenue reporting.

D&O Risk: The CEO faced termination and potential legal action. Investor-appointed board members risked reputational damage and potential litigation from creditors and minority shareholders who lost out during liquidation.

Consequences: Over $300M in investor capital was wiped out. Zilingo entered liquidation. Investors like Temasek and Sequoia publicly distanced themselves to preserve credibility.

Mitigation: Better governance could have flagged issues earlier. A robust D&O policy would cover innocent directors for defense costs in harassment or negligence claims. Coverage for insolvency-related lawsuits is especially relevant in wind-down scenarios.

Zilingo’s collapse shows how unchecked executive actions can lead to major D&O liability for Asian based private equity and venture capital, especially in fast-scaling startups.

Actionable Risk Management for PE/VC in Asia.

To protect against D&O liability private equity and venture capital, fund managers must embed governance, monitor continuously, and secure tailored coverage.

1. Embed Governance: Ensure portfolio companies adopt basic internal controls, audits, and board-level accountability.
2. Due Diligence Beyond the Term Sheet: Continue oversight well after investing, with metric verification and periodic audits.
3. Tailor Your D&O Insurance: Make sure policies include:
   1. Outside Directorship Liability (for board seats in portfolio companies)
   2. Global and regulatory investigation coverage
   3. Severability clauses and coverage for legal costs up to final adjudication
4. Crisis Readiness: Have a response plan for internal investigations, PR management, and insurer notifications.

How Continuum Can Help

At Continuum, we specialize in providing tailored D&O and professional risk coverage for private equity and venture capital firms operating in Asia. Our advisory-driven approach ensures:

1. Policies reflect multi-fund and cross-border structures
2. Investor-side and portfolio-level risks are aligned
3. Rapid claims response and legal support when it matters most

We help you protect not just your capital, but your leadership. Contact us today to structure the right protection for your investment team and portfolio.

From venture capital firms to private equity funds and asset managers, the risks are not just reputational. They’re legal, financial, and systemic. Yet, many firms still operate with outdated governance frameworks and insurance programs that fall dangerously short of real-world exposure. To mitigate governance failures at financial institutions, a tailored risk and insurance strategy is essential.

The High Stakes of Governance Missteps

Financial institutions manage billions in assets, investor trust, and systemic responsibility. A single lapse in governance—be it undisclosed conflicts of interest, failed fiduciary oversight, or executive misconduct—can trigger investor lawsuits, regulatory action, and irreversible damage to market credibility.

Recent cases across APAC and beyond have revealed a troubling pattern: governance gaps are often not due to a lack of rules but a failure to anticipate how emerging risks—digital infrastructure, cross-border operations, decentralized investment models—interact with old playbooks.

Common Policy Gaps

1. Directors & Officers (D&O) Insurance Misalignment

   Many financial institutions carry D&O policies that were designed years ago, with little adjustment for today’s realities. Cross-jurisdictional risks, ESG-related litigation, and investor activism demand bespoke protection that reflects the institution’s risk profile—not boilerplate coverage.

2. Professional Indemnity (PI) Exclusions

   Errors in financial advice, misrepresentation, or operational failure can all trigger client lawsuits. Yet many PI policies include narrow definitions or outdated exclusions that fail to reflect the institution’s current service offerings, especially in digital asset or algorithm-based models.

3. Cyber & Operational Risk Blind Spots

   Increasing reliance on cloud infrastructure, third-party vendors, and digital platforms means institutions are only as secure as their weakest link. But few align cyber insurance with their actual tech exposure—leaving critical systems uninsured or underinsured.

4. Lack of Crime & Fidelity Coverage

   Internal fraud, rogue employees, and vendor collusion continue to represent substantial threats—particularly in firms with decentralized teams or rapid deal flow. Crime insurance is often treated as an afterthought despite its relevance in both front-office and back-office operations.

Real-World Example: Internal Governance Failures at Saigon Joint Stock Commercial Bank 

Between 2012 and 2022, Saigon Joint Stock Commercial Bank (SCB) in Vietnam became the epicenter of one of Southeast Asia’s most significant financial scandals, primarily due to internal governance failures. Truong My Lan, a prominent real estate tycoon, clandestinely gained control over SCB through a network of proxies and shell companies. Over this period, she orchestrated the embezzlement of approximately $12.5 billion from the bank by approving over 2,500 fraudulent loans to entities under her control. 

This massive internal fraud was facilitated by a lack of effective oversight within SCB. Key executives and board members failed to implement robust risk management practices, allowing Lan to manipulate the bank’s operations extensively. The bank’s internal audit and compliance mechanisms were either ineffective or complicit, failing to detect or report the irregularities over a decade.

The consequences were severe: SCB faced a liquidity crisis, leading to a loss of customer confidence and significant financial instability. The scandal not only tarnished the bank’s reputation but also raised concerns about the robustness of internal governance frameworks within financial institutions in the region.

This case underscores the critical importance of strong internal governance structures, including independent oversight, effective risk management, and a culture of accountability, to prevent such catastrophic failures.

The Continuum Approach

At Continuum, we work with financial institutions to close these policy gaps—before they become liabilities.

Our approach includes:

• Crime Insurance that aligns with operational infrastructure and addresses insider threats.

• D&O Coverage that reflects current regulatory realities, shareholder activism trends, and global exposures.

• Modernized PI Policies tailored for firms offering complex or cross-border financial services.

• Cyber Insurance that aligns with the use of third-party vendors and decentralised IT operations to address unknown external and threats.

We believe risk management should evolve with innovation. Because in a fast-moving financial landscape, governance isn’t just about compliance—it’s about resilience.

The Growing Threat of Data Breaches in Education

The education sector is an attractive target for cybercriminals. Institutions collect and store highly valuable personal information, often with weaker cybersecurity protections compared to financial or healthcare organizations. Common causes of student data breaches include:

Recent breaches in educational institutions highlight the scale of the problem. In 2022, the Los Angeles Unified School District suffered a massive ransomware attack, exposing sensitive student and employee data. Similar incidents have occurred across Southeast Asia, with hackers targeting universities and EdTech companies for financial gain.

Who is Liable for a Student Data Breach?

1. Educational Institutions as Data Controllers

Schools and universities are the primary data controllers responsible for safeguarding student information. Under various data protection laws, institutions are expected to implement cybersecurity measures to prevent unauthorized access. If a breach results from negligence, such as failing to update security protocols, the institution could be held liable for damages.

Example:  In 2023, a hacker attacked a well-known Vietnamese school’s website, claiming to have obtained 30 million records containing full names, emails, phone numbers, birthdays, grades, schools, and locations. This breach exposed significant vulnerabilities in the institution’s data security practices.

2. EdTech Providers and Third-Party Vendors

Many educational institutions rely on third-party providers for learning management systems, online assessments, and cloud storage. If a breach occurs due to a vendor’s security lapse, liability may shift to the third party. However, institutions must still conduct due diligence when selecting service providers.

Example:  In 2020, GeniusU, an EdTech firm based in Singapore, suffered a data breach affecting 1.26 million users. The breach exposed personal information, leading to scrutiny over the company’s data security practices. 

3. Regulatory Authorities

Government agencies establish data protection frameworks that dictate liability. Countries with stringent data protection laws, such as Singapore’s Personal Data Protection Act (PDPA), require institutions to notify affected individuals and regulators after a breach. Non-compliance can result in hefty fines and legal action.

Example: In 2021, Singapore’s Ministry of Education experienced a data breach where personal information of approximately 300,000 individuals, including teachers and students, was leaked due to a phishing attack. The breach highlighted the importance of compliance with data protection regulations and timely notification.

4. Cyber Insurance and Legal Recourse

Educational institutions and EdTech providers can mitigate financial losses through cyber insurance, which covers legal fees, forensic investigations, and financial penalties resulting from a breach. Without proper coverage, organizations risk significant financial and reputational damage.

Example: In 2024, a cyberattack targeted a Singaporean network overseeing school-provided iPads, affecting 13,000 students and users. The breach led to the loss of important data and significant disruptions to learning. Institutions with cyber insurance were better equipped to handle the financial repercussions, including costs associated with data recovery and legal liabilities.

How Continuum’s Educator’s Liability Insurance Protects Institutions

Given the rising legal and financial risks associated with student data breaches, institutions must adopt a proactive risk management approach. A single data breach can lead to regulatory fines, lawsuits, and reputational damage—threatening the long-term stability of an educational institution.

Continuum offers Educator’s Liability Insurance, a comprehensive protection package covering Directors & Officers (D&O) Insurance, Professional Indemnity (PI) Insurance, and Cyber Insurance to help institutions mitigate liability risks.

What Continuum’s Educator’s Liability Insurance Covers

Why Educational Institutions Need Educator’s Liability Insurance

As educational institutions increasingly rely on digital platforms for student management, learning tools, and administrative functions, the risk of cyber breaches, legal disputes, and regulatory scrutiny continues to grow. A single data breach or lawsuit can have devastating financial and reputational consequences. This is why Educator’s Liability Insurance is essential in today’s education sector.

How Institutions Can Reduce Liability and Strengthen Data Security

While no system is 100% secure, institutions can take proactive steps to minimize breach risks and mitigate legal exposure:

Conclusion

When student data gets breached, liability is not always straightforward. Educational institutions, EdTech providers, and regulatory bodies all play a role in ensuring data security. With cyber threats on the rise, schools and universities must adopt robust security practices and risk management strategies—including digital asset and cyber insurance—to protect students, maintain compliance, and minimize financial fallout.

For institutions looking to strengthen their cybersecurity posture, investing in cyber insurance is no longer optional—it’s essential. Protecting student data today ensures a more secure and resilient education sector for the future.

Want to ensure your institution is fully protected? Contact us today to learn how Continuum’s tailored insurance solutions can safeguard your organization against student data breaches and liability risks.

From reentrancy attacks to front-running exploits, vulnerabilities in smart contracts can lead to financial losses, legal challenges, and operational disruptions. While best practices like audits and reentrancy guards help mitigate risks, no system is 100% immune.

This is where Continuum comes in. Our Digital Asset Insurance solutions help businesses recover from breaches, cover legal costs, and build resilience against evolving cyber threats. In an industry where trust is everything, proactive risk management is key.

What Does D&O Insurance Cover?

D&O Insurance shields company leaders against the financial fallout of claims arising from their decisions. For Web3 startups, these protections are more than hypothetical—they’re a necessity. Legal actions tied to regulatory breaches, allegations of mismanagement, or disputes with stakeholders can result in significant financial and reputational damage. D&O coverage ensures that leadership can focus on strategic goals without the constant fear of personal liability, covering everything from defense costs in regulatory investigations to settlements or judgments stemming from governance-related claims.

D&O insurance typically covers a wide range of claims, including:

• Breach of fiduciary duty: Claims that directors or officers have not acted in the best interests of the company or its shareholders.
• Mismanagement: Allegations of poor decision-making, negligence, or errors in judgment that resulted in financial losses for the company.
• Employment practices: Claims of discrimination, harassment, wrongful termination, or other employment-related issues.
• Shareholder lawsuits: Claims brought by shareholders alleging harm due to corporate decisions or actions.
• Securities law violations: Claims related to misrepresentations in financial statements, insider trading, or other violations of securities laws.

For more details visit our dedicated coverage page > D&O Insurance – Continuum

Why D&O Insurance Is Vital for Web3 Startups

The decentralized and rapidly evolving nature of the Web3 ecosystem intensifies the risks faced by startup leadership. Regulatory uncertainty looms large as governments across the globe race to define legal frameworks for blockchain and cryptocurrency. In this environment, even well-intentioned decisions can lead to accusations of non-compliance. Stakeholders and investors, who expect transparency and accountability, are quick to act when financial losses occur, often directing claims at the decision-makers. Our article last year on FTX and their D&O dispute shows how things can go wrong quite quickly even with coverage in place

Moreover, the inherent cybersecurity challenges of Web3—ranging from platform vulnerabilities to data breaches—compound these risks. Any misstep in managing operational threats can lead to allegations of negligence, targeting directors and officers personally. For startups navigating these uncertainties, D&O Insurance is more than a financial safeguard—it is a strategic advantage that bolsters leadership confidence and attracts investor trust.

How Continuum Supports Web3 Startups

At Continuum, we recognize the unique challenges faced by Web3 leaders and tailor our solutions to address their specific needs. Our D&O Insurance offerings are designed to go beyond the basics, incorporating insights into the nuanced risks of blockchain-driven businesses and making sure that endorsements and exclusions are relevant and not prohibitive. By providing comprehensive protection, we help leadership teams mitigate potential legal pitfalls and reinforce stakeholder confidence.

We also understand that considering this coverage has to aligned with the stage of growth as at the end of the day there is a cost in the form of a premium to get the protection in place. Therefore, we work on different payment options to allow this premium to minimise the effect on cash flow.

Securing the Future of Web3 Leadership

The dynamic nature of the Web3 ecosystem demands resilient and protected leadership. D&O Insurance is not merely a safety net—it is an essential foundation for ensuring that leadership teams can drive innovation without undue exposure to personal or financial risk. By partnering with Continuum, Web3 startups can safeguard their leadership, reassure stakeholders, and focus on delivering transformative solutions in a rapidly evolving industry.

Reach out to Continuum today to explore how we can help protect your leadership and fortify your startup’s success in the Web3 era or for more detailed information on D&O visit our dedicated coverage page:  D&O Insurance – Continuum and see our handy guide for startups here Essential Insurance for your Tech Startup – D&O Insurance – Continuum

Professional Indemnity Insurance  Professional indemnity insurance (PI) protects against claims of negligence or errors in your services. Whether it’s a faulty algorithm in a health app or incorrect medical data analytics, PI ensures your business is covered against potential lawsuits arising from service-related issues. It demonstrates accountability, which is critical for building trust with stakeholders in the healthcare industry.

Cyber Insurance In today’s digital-first environment, MedTech companies handle vast amounts of sensitive patient data, making them prime targets for cyberattacks. Cyber insurance provides coverage for data breaches, ransomware attacks, and other cyber incidents. This policy helps cover costs such as breach notification, legal fees, system recovery, and reputation management, ensuring your company’s ability to recover swiftly from a cyber crisis.

Directors & Officers (D&O) Insurance Leadership in MedTech companies faces unique challenges, including heightened scrutiny from investors, regulators, and other stakeholders. D&O insurance protects executives from personal liability in cases of alleged mismanagement, breach of fiduciary duties, or regulatory violations. It’s a critical policy for startups seeking to scale while ensuring that their leadership team is protected.

Commercial General Liability (CGL) Insurance CGL insurance is a foundational policy for any business, including MedTech companies. It provides coverage for claims of bodily injury, property damage, or personal injury caused by your business operations, products, or services. For instance, if a visitor is injured on your premises or your product causes accidental damage, this policy helps manage the associated legal and financial liabilities.

How Continuum Can Help

At Continuum, we specialize in crafting tailored insurance solutions for the unique needs of MedTech companies. Our expertise in risk management allows us to identify vulnerabilities and ensure your company is fully protected.

We help secure Professional Indemnity Insurance to address service-related risks and offer Medical Malpractice Insurance for companies providing direct patient care. Our Cyber Insurance solutions are designed to mitigate the impact of cyberattacks, while D&O Insurance protects your leadership team. With CGL Insurance, we provide a robust foundation to guard against general operational risks.

By partnering with Continuum, you gain more than just insurance policies—you gain a strategic ally in navigating the complex MedTech landscape. Contact us today to explore how we can help secure your innovations and ensure your company’s resilience in a rapidly evolving industry.

Continuum recognizes the unique challenges EduTech companies face as they balance growth with the need for security and operational stability. We provide tailored insurance solutions specifically for the EduTech sector, empowering startups to establish a robust risk management strategy that extends beyond standard coverage. With our expertise in both technology and education, we can help you navigate complex insurance requirements and secure the right mix of policies to protect your data, intellectual property, and business continuity.

For EduTech companies focused on service quality, Continuum’s Professional Indemnity Insurance manages liability associated with educational services and content quality, covering legal expenses and damages in cases of alleged negligence or inadequate service. This coverage enables your team to innovate with confidence, knowing they are protected against potential claims.

To address cybersecurity concerns, our Cyber Insurance offers comprehensive protection against cyber threats, including data breaches and ransomware, covering costs for data recovery, regulatory fines, and crisis response. This helps EduTech companies safeguard sensitive information and stay resilient in the face of evolving digital threats.

We also support EduTech innovators with Intellectual Property (IP) Insurance, which protects proprietary technologies, educational content, and digital assets. This coverage provides legal protection and compensation in cases of IP theft or infringement, allowing companies to grow without fear of IP disputes.

Continuum’s Directors & Officers (D&O) Insurance is designed to protect company leaders from personal liability linked to management decisions. This policy covers legal defense costs, settlements, and damages, demonstrating a commitment to sound governance and bolstering stakeholder confidence.

For traditional risks such as physical injuries or property damage on company premises, our Commercial General Liability Insurance provides coverage for medical expenses, legal costs, and settlements. This ensures that EduTech companies can operate securely, knowing they are protected from unforeseen physical liabilities.

In times of operational disruptions, our Business Interruption Insurance offers financial stability by compensating for lost income and covering ongoing expenses during unplanned shutdowns. This policy acts as a financial buffer, enabling EduTech startups to recover and maintain resilience.

Partnering with Continuum gives EduTech startups access to specialized insurance solutions designed to meet the unique demands of the digital education landscape. Contact us today to learn how we can help your EduTech company achieve stability, security, and continued growth in education.

FTX: Crypto king to convicted fraudster

At the start of 2022, FTX was one of the world’s largest cryptocurrency exchanges valued at $32 billion. The company’s co-founder and CEO, Sam Bankman-Fried, was fêted as the King of Crypto.

Just 11 months later, in November 2022, the company filed for bankruptcy, sending shockwaves through the nascent crypto industry. FTX’s collapse was triggered by a surge in customer withdrawals, which exposed the exchange’s lack of liquidity. Investors scrambled to withdraw funds totalling an estimated $6million in just three days.

Shortly afterwards, in December 2022, the U.S. government brought civil and criminal charges against Bankman-Fried and other top executives. They were accused of misappropriating over $8 billion in customer deposits, laying the groundwork for an insolvency, and generating false financial statements inflated with niche token holdings to mask a shortfall in funds.

In November 2023, SBF was found guilty of all seven criminal counts against him. He is awaiting sentence in March 2024.

The vast majority of the funds that were misappropriated have not been recovered. The US Securities and Exchange Commission (SEC) is continuing to investigate the FTX scandal and may recover additional funds in the future. However, it is likely that many investors will never see their money again.

D&O insurance to SBF’s rescue

After he was charged, Bankman-Fried filed a claim under the company’s Directors and Officers (D&O) Insurance four insurance policies seeking coverage for his legal defence costs. Each policy had a $5million policy limit. So far, so normal.

However, with a $5 million limit on each policy, and several FTX executives competing for the funds, there simply wasn’t enough money to go round. This led to a messy, and ongoing, dispute regarding how the $20 million in D&O coverage should be allocated among the numerous lawsuits filed against FTX’s directors and officers.

Things got even messier. FTX’s second level excess insurer, Continental, tried to deny SBF’s claim, arguing that the fraud exclusion should apply. He responded by suing them arguing that the primary and first layer excess insurers had paid out in full.

This may seem incredulous, given that Bankman-Fried was subsequently found guilty of fraud and money laundering, a conviction which implies an element of intent to the criminal activity. However, fraud exclusions can only be applied once the accused party is convicted of fraud.

Another FTX executive, Daniel Friedberg, former general counsel of FTX trading, entered the fray, arguing that he had received nothing from the first two $5 million layers in insurance and that he should also benefit under the second level of insurance.

This lawsuit was subsequently withdrawn but has raised major questions about levels of D&O insurance cover and how the proceeds are distributed when there are multiple directors and officers making competing demands.

The implications of FTX’s D&O insurance claim

The FTX D&O insurance claim has significant implications for the cryptocurrency industry and for D&O insurance coverage more broadly. It is a rare case in which a D&O insurer has been found liable for covering the legal defence costs of executives who have been accused of fraud and criminal activity. This could affect the willingness of insurers to provide D&O coverage to cryptocurrency companies.

It also raises questions over the traditional first-come, first-served strategy of paying D&O legal fees until the limits are reached and highlights the complexities involved in drafting policy terms.

The future of D&O insurance in the cryptocurrency industry

There are some important takeaways of this cautionary tale for the cryptocurrency industry.

The FTX scandal underscores the crucial role of D&O insurance for cryptocurrency companies in protecting directors and officers from personal liability for claims arising from their business decisions.

Of course, most directors and officers are not fraudsters and will advocate good corporate governance with strong internal controls and regular risk assessments. Nevertheless, the cryptocurrency industry is highly volatile and largely unregulated, factors which heighten the risks of personal liability for millions of dollars in damages in the event of a lawsuit. Balance this against the cost of D&O insurance, which is relatively low, especially when compared to the potential liability that directors and officers face, and it is clear that D&O insurance is an indispensable investment that shouldn’t be underestimated or undervalued.

The FTX saga also shows the importance of tailoring D&O insurance to the specific needs of a company. There are a wide variety of D&O insurance policies available, and policy terms need to closely match a cryptocurrency company’s risk profile. The devil is in the detail, which is why it is essential to work with a specialist broker who can help navigate the complexities of this type of policy.

And finally, the FTX case is likely to prompt insurers to develop more sophisticated underwriting criteria and risk assessment tools for cryptocurrency companies. This is likely include stricter and more detailed due diligence on a company’s business model, risk management practices, and cybersecurity measures. As it becomes more difficult to procure D&O insurance, working with a specialist advisor such as Continuum could make all the difference.

Continuum has a solid track record of helping companies in the digital asset ecosystem to assess their D&O insurance needs and procure a comprehensive policy to adequately protect senior decision makers. If you work in the crypto, digital assets and Defi space, why not benefit from our in-depth knowledge of the industry and the appetite of insurers to find the right solution for your business?

Talk to us today.