The VC firm suing Travis Kalanick is trying to block other Uber investors from selling their shares

Matt cohler
Benchmark VC and Uber board member Matt Cohler LinkedIn

One of Uber’s earliest investors is reportedly trying to block other shareholders from selling their shares, reports CNBC, citing sources who seemed less than thrilled with this development.

Trying to block such a sale could be a violation of a board member’s fiduciary responsibilities, the people who talked to CNBC said.

The Uber board has been in discussions with three investors each looking to buy into the company, New York Times’ Mike Isaac and Katie Benner reported over the weekend.

Uber is not trying to raise more cash by selling off another chunk of itself. It has already raised more than $US10 billion and has about $US5 billion in the bank, the NYT reported.

These investors are looking to buy shares from other investors. Some of them are trying to buy the shares at a discount from the company’s last round, which valued Uber at nearly $US69 billion. But apparently these deals include a way to both discount the shares and keep the company’s high valuation.

One of those three deals was from Benchmark’s rival on Uber’s board, Shervin Pishevar. Pishevar is angling to buy out Benchmark’s stake and kick Benchmark off the board after Benchmark took its political board fight nuclear last week and filed a lawsuit against former CEO and cofounder Travis Kalanick.

Needless to say, it’s highly unusual that an investor sues a founder and fellow board member of a company that it is heavily invested in. Benchmark currently owns about 13% of Uber’s stock and has 20% of its voting power.

But Benchmark was one of main investors that forced Kalanick’s to resign from the board in June after a series of scandals rocked the company during his reign.

Benchmark wants Kalanick to give up his board seat as well as the two other vacant board seats that he still controls. The VC firm fears that Kalanick is trying to vote himself back as CEO.

In an open letter addressed to Uber employees on Monday, Benchmark said that when Travis resigned, he agreed to release the board seats so they could be filled by independent directors but he has refused to sign the formal agreements that would remove the seats from his control. The letter said:

“Travis’s failure to make good on this promise, as well as his continued involvement in the day-to-day running of the company, has created uncertainty for everyone, undermining the success of the CEO search. Indeed, it has appeared at times as if the search was being manipulated to deter candidates and create a power vacuum in which Travis could return.”

Part of this drama could be solved soon though. Benchmark is asking the court for preliminary injunctions against filling those seats and for an expedited ultimate ruling.

Before the suit was filed, Uber had promised to name a new CEO by September.