- It’s been a good day for former Uber CEO Travis Kalanick
- A deal with perhaps the most powerful investor in tech, a deal in the works for months, closed today.
- That deal dropped a cool $US1.4 billion in cash into Kalanick’s pocket and will soon end a contentious lawsuit with his biggest investor Benchmark.
- Kalanick’s first order of business is setting up a charitable foundation and donating a big chunk of his money to it, Business Insider has learned.
Uber confirmed on Thursday that its investment deal with Japanese tech giant Softbank has closed. Softbank dropped $US1.25 billion into Uber’s coffers, and bought about 15% of the company from existing shareholders, including one of its biggest stakeholders, cofounder and former CEO Travis Kalanick.
Kalanick had never sold a share of Uber prior to this deal and was the only early employee shareholder who had never cashed out during secondary offerings that allowed employees to sell shares.
But he sold about one-third of his stake to Softbank for this deal and has now received a $US1.4 billion payout. He still has the remaining 70% of his stake, or roughly 6% of the company, Business Insider has learned.
Kalanick was forced to resign from the CEO role in June after a series of scandals rocked the company. Uber’s largest venture investor, Benchmark, led an investor revolt demanding his resignation. Although he was a multi-millionaire from the sale of his previous startup, Red Swoosh, he was relatively cash poor after his Uber resignation, people close to him told us. Cash-poor for a billionaire, that is.
Most of his wealth was paper money, billions of dollars worth of stock in Uber, as well as financial interests in a number of other startups where he is an angel investor.
Now that his cup runneth over with cash, Kalanick will be setting up a charitable foundation and plans to donate a significant amount of this $US1.5 billion to his foundation. There’s no word yet on what philanthropic area his foundation will focus on.
With the Softbank deal closed, a host of governance changes will go into effect at Uber. Among them, investor Benchmark has agreed to drop a lawsuit it filed against Kalanick over Kalanick’s control of two board seats.
When that suit is dropped, Kalanick, who is still a board member, will technically still control those two board seats, meaning he’ll be able to recruit people for them. However, the new governance rules mean they cannot be filled without a majority vote from the board.
Softbank is also gaining board seats and Uber’s board will now include a whopping 17 seats.
Another major change: no board members will keep super voting rights for preferred shares (which granted 10 votes for each share, sources tell us.) Kalanick owned super-voting-right shares. So did Benchmark and other early investors.
As we previously reported, Kalanick was on board to give up some control in exchange for the Softbank deal to close. This deal was important particularly to him because Softbank had threatened to invest in Uber’s top competitor, Lyft, instead.
Uber’s board also promised Softbank that it will start the IPO process in 2019.