Lawsuits, Mudslinging, and a Broken Friendship: Venture Capital’s Most Contentious Breakup Just Added a Messy New Chapter

Hugo Van Vuuren was within the midst of a messy, high-profile falling out along with his enterprise accomplice when he landed at New York’s JFK Airport in September 2016. Van Vuuren, a South African citizen, stated he didn’t suppose twice about crossing the border; he had held some type of visa since he first entered the U.S. greater than a decade prior as a Harvard undergraduate. He all the time stored his paperwork so as. When the border patrol agent instructed him to step into one other room for one thing referred to as a secondary inspection, he was perplexed. The agent instructed him his visa was not legitimate and stated he needed to return to South Africa on the subsequent obtainable flight. Two armed guards escorted him to the gate. He chatted with them in regards to the upcoming election. He purchased a smoothie. It wasn’t till he was again in South Africa that it hit him: He had been forged overseas. 

It wasn’t clear to Van Vuuren how he ought to proceed. His visa had been depending on his job standing as a accomplice on the $100-million enterprise capital agency Xfund, alongside along with his cofounder Patrick Chung. However, in keeping with authorized papers filed by Van Vuuren, a authorized group employed by Chung claimed to immigration authorities that Van Vuuren not had a place there. Van Vuuren stated he ultimately discovered one other path to a visa, however shortly after he went to the U.S. Consulate as a part of the appliance course of, he was instructed that he was completely barred from reentering the U.S. It started to appear to Van Vuuren that a part of Chung’s technique to bar him from the corporate concerned blocking his means to enter the nation to make his case. Final week, Van Vuuren filed a criticism alleging that Chung had weaponized his immigration standing to push him out of the corporate. 

The blowup between Van Vuuren and Chung is at this level the stuff of legend, with either side so adamant that the opposite is performing despicably that it’s nearly unimaginable to get them to agree on a set of details. The 2 helped begin the fund collectively to bankroll entrepreneurs at Harvard and MIT; it grew out of a earlier, smaller enterprise referred to as Experiment Fund that launched in 2012 with $6 million. Chung got here to the Xfund with expertise as a accomplice at New Enterprise Associates, and the youthful Van Vuuren had connections on campus due to his time there as an undergraduate and grasp’s scholar.

Quickly after Xfund was established, nevertheless, the 2 disagreed about who wielded management over the corporate; Van Vuuren signed over a level of management in 2014 with out, he beforehand told Wired, sufficiently vetting the paperwork. As the 2 founders clashed, the fund suffered, and solely about 10% of its preliminary $100 million in capital had been invested by mid-2016, the Wall Avenue Journal reported on the time. Ultimately, Van Vuuren filed a lawsuit in opposition to Chung alleging that the veteran investor had deceptively modified contracts and bullied workers. The case, which was settled privately, included examples of messages despatched by Chung allegedly calling Van Vuuren a “moron.” The fund’s capital was cut to $50 million, although Chung raised further funds. Final 12 months, Xfund launched a 3rd providing and raised $120 million.

Van Vuuren’s new criticism, this time in opposition to a legislation agency concerned within the allegations, is the most recent chapter of the saga.  The go well with alleges that the agency, referred to as Lowenstein Sandler, helped Chung conspire to dam Van Vuuren from returning to the U.S. with the intention to quash the case in opposition to him. Chung, who continues to move up Xfund, isn’t named as a defendant within the case, however the criticism cites his intervention in Van Vuuren’s visa purposes. As a part of the criticism, Van Vuuren factors to a letter written by Chung to the consular chief in South Africa, dated simply 10 days after Van Vuuren was rebuffed at JFK, saying that he needed to alert the chief to Van Vuuren’s “malfeasance.” Based on Van Vuuren’s criticism, Chung and his legal professionals reported to U.S. immigration providers that Van Vuuren had falsified paperwork by signing them on Chung’s behalf. (Van Vuuren’s criticism features a log of messages through which Chung requested him to signal for him, “with my full blessing.”)

On the time of publication, Lowenstein Sandler had not responded to a request for remark. A P.R. individual named Paul Kranhold responded on Chung’s behalf, saying that Van Vuuren’s claims “are and proceed to be baseless.” He pointed to authorized paperwork filed from 2016 through which Chung stated he reported the forgery of his signature on Van Vuuren’s immigration paperwork and that he “by no means gave Plaintiff or anybody performing on his behalf permission to signal my identify.”

It’s a messy story that has engendered deep resentment on either side. “Patrick is vicious and can cease at nothing to attempt to get what he needs,” a mutual acquaintance of Chung and Van Vuuren within the enterprise capital house instructed me. “Hugo was in the best way of him, and he’s a bulldog. That’s what made him a fantastic enterprise capitalist—he bulldogs his method into each deal and was very profitable at it.” Robyn Scott, a good friend of Van Vuuren’s who hung out with him in London whereas he challenged the ban, stated he by no means wavered in attempting to attraction the choice. “It’s fairly uncommon to be accused of one thing that you’re fairly sure you’re not responsible of and to have that false accusation flip your life on its head,” she stated.

Van Vuuren now lives in New York; he efficiently overturned the ban in 2019 and bought a inexperienced card. However he stated the imbroglio left a mark on his repute. He had been getting ready to funding two firms when, he stated, he discovered himself frozen out of Xfund along with his private financial institution accounts briefly locked. He additionally suspects that being deported has a chilling impact, whether or not the grounds have been truthful or not. “Your foreign money as a V.C. is to be within the stream of data, to be trusted as a superb fiduciary, and to be a safe, calm sounding board to your founders,” he instructed me. “Your founders undergo this loopy life, and also you’re purported to steadiness them. Whenever you undergo the loopy life—from dropping cash, to being defamed, to having your character referred to as into query—it’s very exhausting to be an investor once more.”

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