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Lazaro Gamio / Axios

When Stitch Fix founder Katrina Lake told Lightspeed Venture Partners, an early investor in her company, that (then) Lightspeed partner Justin Caldbeck had sexually harassed her, the firm asked her to sign a non-disparagement agreement. Not signing, a source suggests, could have endangered her entire company's future. So she signed, and remained silent about her experience.

Why it matters: Lightspeed today tweeted that it regrets not taking "stronger action" when it learned of Caldbeck's alleged behavior. Lake signed the non-disparagement clause while Stitch Fix was trying to raise money — which it eventually did in a round led by top-tier VC firm Benchmark. Lightspeed could have blocked that investment.

Caldbeck has been accused of sexual harassment by several other female founders, leading him to resign from Binary Capital, the firm he co-founded after leaving Lightspeed in early 2014. Lightspeed never said anything publicly about the charges against its partner until today, and arguably enabled his future behavior by legally requiring that Lake stay silent.

Background: Lake founded Stitch Fix, an online personal styling and shopping service for women, in 2011, but by mid-2013 was having trouble finding new capital. Existing seed investor Lightspeed didn't want to lead the new round, in part due to shell-shock from consumer-focused commerce disappointments like ShoeDazzle and LivingSocial. Many others also passed, until Benchmark Capital expressed interest in leading what would become a $12 million round.

At around the same time, however, Lake had told Lightspeed about the alleged harassment by Caldbeck – and asked that he be removed as a board observer. Lightspeed agreed to do so, but Lake also knew that it could effectively block the Benchmark investment. Lake was asked to sign a non-disparagement agreement against Lightspeed and its partners, which she did on August 13, 2013.

Lightspeed also would sell a portion of its shares in the company — which now may be valued at $4 billion in an IPO — into the Benchmark transaction, although it's unclear if that was related to Lake's allegations or a byproduct of Benchmark's minimum ownership requirements.

Caldbeck would formally leave Lightspeed the following spring, in order to form Binary Capital.

Below is the non-disparagement agreement (apologies for the low resolution), which is contained in a larger file related to the Benchmark funding. It was provided to Axios by someone with access to that file:

Axios and The Information had previously reported that a Lightspeed founder had told the firm of Caldbeck's alleged misbehavior, but had not identified Lake nor her company. Recode today was first to publicly name her, and received this statement from Lake:

"It's important to expose the type of behavior that's been reported in the last few weeks, so the community can recognize and address these problems."

A Lightspeed spokeswoman declined comment, beyond the firm's tweets on the matter.

Go deeper

Democrats propose raising debt ceiling through midterms

Speaker of the House Nancy Pelosi and Senate Majority Leader Chuck Schumer. Photo: Stefani Reynolds/Bloomberg via Getty Images

House and Senate leadership announced on Monday that they plan to attach a proposal to raise the debt ceiling through Dec. 2022 to a short-term, government funding bill. The bill must pass before the end of the month or Congress risks a shutdown.

Why it matters: Democrats are taking a huge risk by trying to force through an increase of the debt limit in its must-pass funding bill. The move is wishful thinking on behalf of Democrats who are hoping they can get at least 10 centrist Republicans to balk, as well as an effort to put Republicans on record opposing it.

Biden to stress U.S. does not seek new Cold War in UN speech

Photo: Al Drago/Getty Images

President Biden will use his first address before the UN General Assembly to lay out his vision for an era of "intensive diplomacy" with allies and "vigorous competition" with great powers — without a Cold War with China.

Why it matters: Biden will take the podium in New York on Tuesday with his own international credibility in question after the chaotic withdrawal from Afghanistan. His administration also is struggling to build international momentum to fight climate change, the pandemic and rising global authoritarianism.

6 hours ago - Health

Biden administration to lift travel ban for fully vaccinated international travelers

Photo: Win McNamee/Getty Images

White House COVID-19 response coordinator Jeff Zients announced on Monday that the Biden administration will allow fully vaccinated travelers from around the world to enter the U.S. beginning in November.

Why it matters: The announcement comes as President Biden seeks commitments from countries to donate vaccines to the global COVAX initiative. He is expected to host a COVID summit on the sidelines of the UN General Assembly this week, and many of the countries attending have expressed frustration with the travel ban.

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