Binary Capital co-founder Justin Caldbeck quits as Matt Mazzeo steps away from the firm

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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:

I trusted my partner and it is clear that I shouldn’t have. The predatory behavior Justin has been accused of is deplorable, and there will be zero tolerance at our firm of any conduct that is demeaning to women. 
 
Effective immediately, Justin has resigned from Binary Capital. He will have no further role at the firm and I will be the sole managing partner. Matt Mazzeo has also announced his resignation. We have retained Orin Snyder and Michele Maryott of Gibson Dunn to conduct an independent internal investigation of this matter. It is important we understand how these circumstances could have been avoided and how we will prevent this kind of behavior from occurring in the future. We look forward to reviewing and implementing the appropriate recommendations based on their findings.
 
We recognize that power dynamics in the business world can, and often do, place women in difficult or hostile situations. As I write this today, I regret that I did not insist on Justin’s immediate exit after his behavior was revealed. I would also like to apologize for our initial response to these allegations. It is clear to me now that I was misled by a partner and friend.
 
In venture capital, we pride ourselves on being astute stewards of talent and resources. We all aim to support the ambitions of the entrepreneurs we support and invest alongside. 
 
Many of our most important investors and entrepreneurs are women. I helped found Binary Capital with the mission of creating a more authentic connection and access for all. Moving forward, we will redouble our efforts to promote and ensure gender equality in all of our endeavors as we remain focused on our fund and investors.  
 
While we are disappointed with this outcome, we are committed to handling this transition smoothly and properly. We couldn’t have achieved our success without you and we are deeply grateful for your support. We have an outstanding team at Binary and we look forward to working together in the future as we continue to pursue our vision to enable people to more authentically connect with one another and the world around them.
 
Jonathan 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 that 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.

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