It has been a little over 24 hours since news broke that Benchmark Capital, an early investor in Uber, was suing the company’s founder and former CEO, Travis Kalanick for fraud. Benchmark capital claims that Kalanick deceived Uber’s board when he requested to be given more seats at the table.
It has now emerged that a group of Uber investors are not happy with Benchmark’s move and they now want Benchmark Capital to divest not less than 75-percent of its stake in Uber thus losing their seat on the board. “I light of your suit against the Company, we believe it would be best, and hereby request, that Benchmark remove its representative from the Company’s Board and move promptly to divest itself of enough shares in the Company so as to cease to have Board appointment rights,” read an email from the shareholder group.
The shareholder group stated that they have already found investors who are lining up to buy off around $6 billion worth of shares from Benchmark Capital. Through the email sent out to Uber investors and the board, the shareholder group is alleging that Benchmark’s law suit will cripple the company’s efforts in searching for a new CEO and that Benchmark has violated its fiduciary duty to the company, terming the move as “ethically dubious and critically, value-destructive rather than value enhancing.”
The shareholder group is seemingly surprised that Benchmark can sue the founder who worked so hard to grow their investment in Uber from $27 million to $8.4 billion.
Uber’s board has also expressed its disappointments in Benchmark Capital. “The Board of Directors is disappointed that a disagreement between shareholders has resulted in litigation. The Board has urged both parties to resolve the matter cooperatively and quickly, and the Board is taking steps to facilitate that process. At a time when thousands of employees around the world are working hard to serve our drivers and riders and continue to innovate, our priority remains to select Uber’s new CEO as quickly as possible. We are fortunate to have several outstanding candidates who share our belief in Uber’s great future,” read a statement from the board.
Uber’s woes seem to be firing up by the day. With these new developments, Uber is likely to be facing civil war within its board, at a time when the company needs a united board the most.