Apparently I'm the exception, but my business was pretty small (under $1M ARR), and one of our investors (which was also our largest client), sued us to pay his convertible note back. The company went bankrupt and after bankruptcy he sued my cofounder and I personally for the note. Still dealing with the whole thing. Every step of the way our other investors and lawyers were caught off guard, because the situation is apparently very rare, however, it still happened.
Having said that, knowing what I know now, I'd prefer to start a business, with all the issues and risks that it might entail, rather than let fear keep me from doing it. It's also been a hell of a learning experience and I'm sure it's all going to help me in the future.
"having investors" is perhaps a different sort of business than other small businesses that start up. many of the smaller businesses (esp software) don't have 'investors' as such, though some have taken out bank loans.
If you've never owned a business and have no relation to me, then probably you'll survive the suit just fine.
But as you can see, OP had a business relationship with the person involved, and though OP probably won the suit in the end, he still had to pay oodles of money to protect himself. And if he lost, well, then there's my point.
Our lawyers and other investors do think this situation is pretty rare, as the guy ended up killing the business that could have given him a better return on his money, and also screwed everyone else involved in the process.
I can't discount it entirely, but... for many situations, that's probably a somewhat overblown fear. It's why you get insurance, pay professionals to do legal/paperwork stuff, and get on with your business. Almost anyone can sue for anything, but it probably doesn't happen anywhere near the number of times you might think it does. When you start, you're going to be too small to get sued in the first place. And being sued probably means you have paying customers, so you're already doing something right.