February 22, 2018

Uber board 'disappointed' by Benchmark's lawsuit against former CEO

13 August 2017, 01:26 | Cesar Cruz

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One of the investors behind the ousting of Travis Kalanick from Uber earlier this summer sued the former CEO on allegations of fraud Thursday.

A major Uber investor has sued founder Travis Kalanick, accusing the recently departed chief executive of covering misdeeds while rigging the board in order to return to power at the company.

Benchmark, one of Silicon Valley's top venture-capital firms, insists in its suit that Kalanick's reported transgressions weren't evident when Uber's board voted previous year to increase its membership from eight to 11 and to give Kalanick sole appointment rights.

"In 2016, Kalanick fraudulently obtained control of three newly created seats on Uber's Board by his material misstatements and fraudulent concealment from Benchmark of material information that would have led Benchmark to reject the creation of the seats", Benchmark Capital wrote it its complaint. This is expected to change the way investors deal with start-up founders in the future.

Benchmark also alleges that Kalanick sensed his behavior would force his ouster.

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The dissenting shareholder group - headed by Los Angeles billionaire Ron Burkle, Hyperloop One backer Shervin Pishevar, and music mogul Adam Leber - blasted the legal salvo from Benchmark's Bill Gurley as a "fratricidal" move against Kalanick that could jeopardize Uber's ability to raise funds and find a new CEO. These scandals have led to halting of the Uber's self-driving auto after the engineer at the center of its development left the company. Gurley had acted as Kalanick's close confidant and mentor.

Travis Kalanick, Uber's former CEO, is actively thwarting the company's search for his replacement, according to a new lawsuit. In fact, it was during such an investigation of harassment cases that Kalanick found himself stepping down as CEO.

On Friday morning, three Uber investors asked Benchmark to divest its shares and step down from Uber's board, according to an e-mail published by news Web site Axios and confirmed by Reuters. With this statement and now the lawsuit, Ben Narasin a venture capitalist in the Silicon Valley is convinced that Kalanick "is done".

Axios' Dan Primack was first to report the news on Thursday. The lawsuit cites an agreement entered with Kalanick indicating that he would give up those rights when he resigned as CEO.

Their Friday letter accused Gurley - who for years was a mentor to Kalanick before a slew of scandals at Uber soured their relationship - of holding Uber "hostage to a public relations disaster by demanding Mr. Kalanick's resignation". The investor indicated that some of the top CEOs are scared to take up the job.

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