Six women complained investor Justin Caldbeck sexually harassed them. Less than a week later, his entire firm was on the brink of collapse. Here\u2019s a look at how it happened, and what\u2019s\u2026<\/b>
\nBinary Capital is struggling to survive after co-founder Justin Caldbeck resigned in the midst of a sexual harassment scandal and the firm\u2019s other two partners followed closely behind.
An advisory committee of Binary investors \u2014 called an LPAC \u2014 is now in charge, according to a person with knowledge of the situation who isn\u2019 t authorized to comment. The LPAC is working with lawyers to find a replacement general partner to manage the fund, and is taking into consideration recent pressure to choose a woman, the person said.
Binary raised $125 million in 2014 and used that money to back startups including San Francisco-based automated messaging company Assist. The firm\u2019s investors include WeatherGage, Legacy Venture and the University of North Carolina.
\u201cWe\u2019 re kind of in a holding pattern for the next 30 days until they figure out what to do with the fund, \u201d said Assist co-founder and CEO Shane Mac.
Binary reportedly canceled plans for a $75 million fund it was raising when the scandal broke, and suspended last year\u2019s $175 million fund, of which little capital had been invested.
It has yet to be determined whether Caldbeck will continue to reap profits from the investments he made while at Binary, the person familiar with the matter said.
Here\u2019s a look at how events unfolded:
June 22 \u2014 Tech news source The Information publishes an article in which six women accuse Caldbeck of sexual harassment. Caldbeck denies the \u201cattacks on my character.\u201d His firm issues a statement saying that Caldbeck has \u201coccasionally dated or flirted with women he met in a professional capacity, \u201d but there\u2019s no evidence he did anything illegal. Later Caldbeck adds that while \u201csignificant context\u201d is missing from the allegations, he regrets making anyone feel uncomfortable.
June 23 \u2014 Caldbeck takes an indefinite leave of absence from Binary Capital. He tweets \u201cI\u2019 m incredibly sorry\u201d and links to a statement apologizing for his behavior.
June 25 \u2014 Caldbeck resigns. His co-founder, Jonathan Teo, announces the departure in a Sunday evening email to investors, calling the behavior Caldbeck is accused of \u201cpredatory\u201d and \u201cdeplorable.\u201d A second Binary partner, Matt Mazzeo, also resigns. A person close to him says Mazzeo left because he felt he could no longer be associated with the firm.
June 27 \u2014 Bloomberg reports Teo, the last remaining partner at Binary Capital, has offered to resign. A week later, it was still unclear whether Binary\u2019s investors had formally accepted his resignation, a person with knowledge of the matter told this news organization.
Meanwhile, San Francisco-based automated messaging company Assist, a Binary portfolio company, moves to sever its ties with the VC firm. The company put up $3.6 million to buy back Binary\u2019s 2015 investment, CEO and co-founder Mac said. Assist gives Binary one alternative \u2014 it says the company will stay if Binary hires a female investor to take over.
Other portfolio companies, including Dia&Co and Havenly, also condemn Caldbeck\u2019s actions and kick Binary off their boards.
Meanwhile, tech blog Recode reports that years ago Stitch Fix CEO Katrina Lake complained about Caldbeck\u2019s behavior to Lightspeed Venture Partners, his prior employer. Lightspeed tweets that it removed Caldbeck from a portfolio company\u2019s board after a complaint, but it should have done more.
June 28 \u2014 Ann Lai, a former principal at Binary Capital, sues the firm for defamation. Lai claims that she quit over the firm\u2019s sexist atmosphere. After she left, she says, Caldbeck threatened her, using the non-disparagement agreement she signed in an attempt to prevent her from talking about sexism she experienced.<\/p>\n

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