Former Uber CEO sued for fraud

Uber investors call for Benchmark to forfeit board seat after Kalanick lawsuit

Kalanick, Camp and Graves together hold a significant voting stake in Uber.

Benchmark's lawsuit will cause investors to rethink the recent practice of granting founders extensive power over their firms, said Bob Ackerman, founder of venture firm Allegis Capital, which is not an investor in Uber.

Benchmark Capital Partners, an investor in Uber Technologies Inc., has sued Uber's former chief executive Travis Kalanick for breach of duty.

Will Uber be able to steer away from the bad image it has created in recent years under Travis Kalanick's leadership? But tension has been simmering at Uber after Kalanick stepped down in June amid a series of controversies and missteps that have clouded the future of a start-up thought to be valued at $68 billion.

Benchmark also argues Kalanick knew Uber might be accused of stealing trade secrets from Waymo, Google parent Alphabet's self-driving vehicle unit. According to a report by Bloomberg, Benchmark's lawsuit claims that the former CEO appointed three board members who are close to him and continue to wield a lot of power over the board.

The VC firm says it never would have agreed to let Kalanick expand the number of board seats if Kalanick had disclosed the extent of his mismanagement.

Uber said it had no comment on the lawsuit.

Uber is named as a nominal defendant in the lawsuit.

Uber's first CEO also left today.

Benchmark wants to invalidate those three board seats, which would block any chance of Kalanick returning to a key role at Uber as he has been said to want. It alleges that Kalanick promised in writing to ensure the two other board vacant seats would be unbiased, and contingent on the rest of the board's approval. NYT added that Kalanick is not interested in helming the company as CEO and sources also told the publication that he prefers being a shadow leader.

A spokesperson for Kalanick said the lawsuit is "completely without merit and riddled with lies and false allegations".

Benchmark Capital plans to deprive the former CEO of his rights as a founder and shareholder, according to the statement. He added that Benchmark was acting in "its own best interests" instead of those of Uber, and added that Kalanick "is confident that these entirely baseless claims will be rejected".

Benchmark is looking to remove the 40-year-old from the start-up's board of director and bar him from interfering with business affairs.

According to an entrepreneur expert from the University of Michigan's Ross School of Business, Benchmark might have a hard time proving to the courts in DE that their concern is borne out of true concern with regards to the company, rather than the fear that their own power base would be diluted.

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