Should a Startup Buy D&O Insurance Before Fundraising?

Usually yes. Venture capital and private equity firms often require D&O coverage before they invest, and underwriting takes time, so start before the term sheet turns into a closing date.

Get the investor's exact insurance requirement in writing and compare it with the policy declarations, not just the broker's proposal. Ask whether the required limit means total D&O or a specific Side A, B or C grant, and whether entity securities coverage or named board members must be included.

Check that the effective date and retroactive date fit the deal timeline. If you already know about a dispute, a prior-notice clause can exclude it. Confirm the policy is bound and keep the issued forms; a financing covenant can't make the policy broader than its wording.