Venture Capitalist on Leave, Apologizes for Harassing Women (2)

(Bloomberg) -- Conceding his behavior helped perpetuate a "hostile" environment for female entrepreneurs, venture capitalist Justin Caldbeck said Friday he will take an indefinite leave of absence from the firm he co-founded to seek professional counseling.

The departure comes a day after technology news website The Information reported that the Binary Capital LLC partner and former investor at Lightspeed Venture Partners and Bain Capital Ventures, harassed female entrepreneurs while discussing potential business deals.

In a frank statement, Caldbeck apologized to the women and to the tech community. "It is outrageous and unethical for any person to leverage a position of power in exchange for sexual gain, it is clear to me now that that is exactly what I’ve done," he said. "I am deeply ashamed of my lack of self-awareness."

The Information reported detailed accounts by a half dozen women of inappropriate and unwanted sexual advances by Caldbeck while they were working to raise funding and build their companies. Bloomberg News interviewed the three women identified by The Information -- Niniane Wang, Susan Ho and Leiti Hsu -- and they confirmed the account of their experiences.

Wang, founder and chief executive officer of startup Evertoon, told Bloomberg News she "lost sleep" over the decision to permit use of her real name in the article because she feared retribution from investors who could harm her company.

"I had nothing to gain and a lot to lose," said Wang, adding she decided to come forward to prevent other women from being harassed by Caldbeck. His pace and scale of investment has accelerated in recent years, with Binary Capital closing a $125 million fund in 2014 and $175 million fund last year.

"I hope that people will apply pressure to Binary Capital’s LPs and I hope his LPs will drop support of Binary Capital," Wang said, referring to the limited partners, or LPs, that invest in VC funds. Binary Capital co-founder Jonathan Teo declined to comment.

This is the latest example of harassment and gender bias in Silicon Valley. Uber Technologies Inc. co-founder Travis Kalanick was ousted as chief executive officer this week after a series of such scandals, and complaints by a former female engineer that she was mistreated by a manager at the company.

Caldbeck’s statement on Friday came after billionaire venture capitalist and LinkedIn co-founder Reid Hoffman and others in Silicon Valley reacted with outrage on social media. In a LinkedIn post, Hoffman called for the creation of an industrywide human resources function outlining the way technology investors and VCs should behave toward entrepreneurs.

"This year, Silicon Valley technology companies have been receiving some very good criticism on fairness and decency on gender. The criticism ranges from employment and compensation to cultures that harbor sexual predators," he wrote. "This criticism is important. I welcome it. We should all welcome it, and of course, remedy it."

While there are guidelines for how employees within a company should act toward each other, there is no such oversight for investors and the way they treat founders in the male-dominated VC industry, Hoffman said.

Hoffman called on venture investors to sign on to a "#DecencyPledge" on Twitter to indicate their support. The call to action was trending Friday, with at least six firms including Sequoia Capital, First Round Capital and Cowboy VC committing to the project.

Ho, co-founder of startup Journy, reported what she considered an inappropriate advance by Caldbeck as he sought to recruit her for another startup. She told Bloomberg that support from Hoffman and others in the industry was crucial to changing the power dynamic.

"We need men to be just as engaged in sending the message that this kind of behavior is not to be tolerated," she said.

(Updates to note Sequoia and First Round Capital supporting Hoffman’s proposal in 12th paragraph.)

To contact the reporters on this story: Lizette Chapman in San Francisco at lchapman19@bloomberg.net, Emily Chang in San Francisco at echang68@bloomberg.net.

To contact the editors responsible for this story: Tom Giles at tgiles5@bloomberg.net, Alistair Barr, Andrew Pollack

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