Chamath Palihapitiya fires two Social Capital partners over AI investment
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Chamath Palihapitiya in 2018. Photo: Mark Kauzlarich/Bloomberg via Getty Images.
Social Capital, a venture capital firm led by investor and podcaster Chamath Palihapitiya, has fired partners Jay Zaveri and Ravi Tanuku.
Why it matters: The dispute, ostensibly tied to a lucrative AI investment, seems headed for litigation.
Behind the scenes: Palihapitiya told investors that he terminated Zaveri and Tanuku on Sunday night, following a three-day investigation by law firm Wachtell into an undisclosed "situation."
- Multiple sources tell Axios that the issue involves Groq, a Silicon Valley AI company in which Social Capital first invested eight years ago. It was valued at over $1 billion in 2021, is said to be raising new funding at a much higher price, and recently acquired another Social Capital portfolio company, Definitive Intelligence.
- Groq also has an expiring convertible note, and Zaveri and Tanuku formed a special purpose vehicle — not branded as Social Capital — to add investors.
Zoom in: This is where the stories diverge.
- The partners were officially fired for forming the SPV behind Palihapitiya's back.
- Zaveri, who had sat on Groq's board, claims in a statement to Axios that "the firm's leadership approved and participated in the investment that is now being used as a pretext to fire him."
- It is possible that there is some rhetorical distance between Palihapitiya and Social Capital "leadership."
- Tanuku didn't return a request for comment, while Social Capital hasn't yet replied to Zaveri's statement.
Look ahead: Zaveri has retained law firm Gibson Dunn, although does not yet appear to have filed a complaint. It's unclear if Social Capital would countersue.
- Bloomberg and the FT each previously published stories on the firings.
The big picture: This isn't the first meltdown at Social Capital — in 2018, it saw a partner exodus, culminating in Palihapitiya pivoting the firm into a family office.
- Axios recently reported that Palihapitiya abandoned plans to raise outside capital for a new fund.
Update: After this story was published, a spokesperson for Ravi Tanuku sent over the following statement: "A number of employees invested in and worked on the SPV. Mr. Tanuku firmly believes that he has acted with the utmost integrity during his tenure at Social Capital and throughout his career, as will be substantiated when the full facts come to light."
