Justin Caldbeck, the co-founder of Binary Capital, and Matt Mazzeo, the firm’s newest partner, have both resigned from the venture firm, according to a statement from the firm’s remaining co-founder Jonathan Teo.
The statement confirms reporting earlier in the evening on Sunday from Axios and comes as the investment firm struggles to remove the stain of allegations of sexual misconduct by Caldbeck during the years he was managing money there.
Here’s the text of the full statement from Teo:
Caldbeck was the subject of an article in The Information that exposed several years worth of allegations of sexual misconduct, and after a formal apology and a decision to take a leave of absence he has now officially resigned from the firm.
Matt Mazzeo, the former partner at Chris Sacca’s wildly successful Lowercase Capital fund, is stepping away from embattled venture firm Binary Capital only weeks after quietly joining up with the young venture capital shop.
According to reporting from Dan Primack at Axios, Mazzeo (whose position at Binary had never been formally announced) quit the firm earlier today.
Citing a source close to Mazzeo, Primack wrote that Mazzeo had “terminated all ties with Binary today with immediate effect.”
The source tells Primack that Mazzeo had only been at the firm for weeks, but that the allegations and the facts that were revealed meant that he had to step away from an association there.
This news comes on the heels of the Binary delaying a planned $75 million additional close to its $175 million second fund.
The news is grim for Binary, and, at this stage, there are serious concerns that the fund may be unwound by its limited partners.
For that to happen, limited partners could argue that Caldbeck’s departure triggers a “key man” clause in the partnership agreements which would allow them to take back their capital. Investors I’ve spoken with said that even with the “key man” provision triggered investors could unwind the new fund and set up a new shop with co-founder Jonathan Teo managing the money under a new vehicle.
Alternatively the limited partners who backed the fund could find a third party to manage the money, as Primack speculated in his piece.
Mazzeo did not respond to a request for comment for this article.