A comprehensive look at D&O insurance. We break down the complex legal jargon into actionable steps for early-stage founders.
The Framework That Actually Works
Here is a simple framework for evaluating D&O insurance. It's not complicated, but it requires discipline.
Step 1: you should focus on one thing and do it exceptionally well
This is where most people go wrong. They skip this step entirely and jump straight to execution. Don't do that.
Step 2: the data tells a different story than your gut
Once you have the foundation right, this becomes much easier. I've watched founders struggle with this for months when the answer was staring them in the face.
Step 3: Iterate relentlessly
Nothing works perfectly the first time. The companies that get D&O insurance right treat it as an ongoing process, not a one-time project.
Why Most Approaches Fail
Many common approaches to D&O insurance are flawed at the root.
The root cause is usually one of three things:
Copying what big companies do without understanding why they do it. What works for Google doesn't work for a 10-person startup.
Over-engineering the solution when a simple approach would work better. I've seen teams spend six months building something that could have been done in two weeks.
Ignoring the human element. Technology is the easy part. Getting people to actually use it is where the real challenge lives.
What I've Learned From 59 Companies
Across 234 angel investments, including Anthropic, a few patterns in D&O insurance come up again and again.
The founders who handle D&O insurance well understand that you should focus on one thing and do it exceptionally well.
What I Tell Founders
Before deciding anything about D&O insurance, start with three questions:
What's your timeline? Because the right approach for a company with 6 months of runway is very different from one with 3 years.
What have you already tried? Most founders have tried something. Understanding what didn't work is often more valuable than knowing what might.
Who on your team owns this? If the answer is "everyone" or "no one," that's your first problem to solve.
These questions seem simple but they reveal a lot about where a company actually stands.
This connects to broader themes around startup insurance, D&O insurance, risk management that I've been thinking about a lot lately.
What's Next
Best practice in D&O insurance is changing fast. What worked last year might not work next year. That's both the challenge and the opportunity.
My advice: stay curious, stay humble, and stay close to the people who are actually doing the work. Read less thought leadership and do more experiments. Talk to fewer consultants and more practitioners.
If you're building in this space, the best time to get D&O insurance right is before you need to. Don't wait for a crisis to force your hand.
I'll keep sharing what I learn. This stuff matters too much to keep to myself.
Frequently Asked Questions
Q:What if I disagree with some of the advice?
Good. That means you're thinking critically, which is exactly what a good founder should do. Take what resonates, test it, and discard what doesn't work for your specific situation. No advice is universal.
Q:Who is this guide designed for?
This guide is written for founders and operators who want practical, actionable advice rather than theoretical frameworks. Whether you're just starting out or scaling an existing business, the principles here apply across stages.
Q:How often is this guide updated?
I revisit and update my guides regularly as I learn new things and as the market evolves. The core principles tend to stay stable, but specific tactics and tools get refreshed based on what's working right now.
Q:Is this guide based on real experience?
Every recommendation in this guide comes from direct experience, either from building and selling my own companies, or from patterns I've observed across 234 angel investments. I don't write about things I haven't personally tested.