- Dan Primack
- Jul 9
Binary co-founder blames "corrupted" media for his resignation offer
Binary Capital co-founder Jonathan Teo slammed the media, investor leaks and at least one of his portfolio companies in an email sent to all Binary portfolio CEOs on Saturday, more than two weeks after his former partner, Justin Caldbeck, resigned over allegations that he had sexually harassed female founders. Axios has obtained the email, which is reprinted in full after the jump.
- Teo remains managing partner of Binary Capital, as its limited partners have not yet accepted his offer to resign.
- Teo says that his resignation offer was not based on any personal failings, but rather was intended to stop a news cycle "by giving the blunt-tooled media activists what they wanted." He also writes: "The news we read and have access to is a problem. Media has been corrupted."
- Teo claims only one entrepreneur has asked to buy back shares from Binary, and says that those who choose that route are engaged in "opportunistic grandstanding."
- Teo lashed out at an investor who he believes has been leaking information to the media (psst Jon, it's more than one), and repeatedly complains about "whiners" who want to be "coddled."
- He says he is "angry" that women have been hurt, although he also says it is "moronic" that some believe only a woman should be chosen as Binary's next general partner.
Below is the email sent to portfolio company CEOs by Jonathan Teo, followed by a letter he previously sent to limited partners in Binary funds. Both were provided to Axios by a source:
Thank you for being so patient with me.
I just hit send on the email I've copied below this to the Binary Capital LPs. Given the leaks, the best way to ensure everyone feels up to date is for me to send out simultaneous updates.
First of all, thank you to all of you who have written such strong messages of support to our Limited Partners. I really appreciate it. It's important that the entrepreneurs we work with have a voice and that voice is heard. We are all doing what we can in the capacity we are in and again, I thank you for being so honest yet supportive in all this. I could not even attempt to continue doing what I feel is the right thing here if it were not for your support. I will never forget that.
The news we read and have access to is a problem. Media has been corrupted. The voice of many have been diluted by the agendas of a few. My offer of resignation was made to quell a news cycle that we are almost positive was exacerbated by a leak from someone in our investor base that had an agenda not in the best interest of the entrepreneurs we work with. Nor the value of the portfolio we are committed to building. I did it so attention was on what matters and not a distraction based on my personal life. Yes my offer quelled the cycle by giving the blunt-tooled media activists what they wanted. Yes it made me have to come across as someone with something to hide. No I do not have anything to hide. And no, my resignation has not been accepted. Yet. If the most that the sensationalism press has on me is my personal life, so be it. The leaks however had their intended effect. It panicked an already nervous LP base, drove rash decisions, and in effect has left us all worse off.
The story in the public that you are all trying to buy back shares should be revised. Not for my sake. If that's what any of you want, ok, but know this. I strongly urge you not to be considered part of a group of entrepreneurs that would, at the first sign of trouble or opportunity, choose to renege. It is dishonorable. And it is opportunistic grandstanding. It will hurt the perception of your integrity and it will hurt your ability to raise capital down the line. No investor seeks out that risk. It's not an action of integrity. I would urge you to separate yourself from that narrative if it isn't true of your intentions. If it is, I hope you have a very credible reason to do it besides just doing a shakedown, or to stand outside your integrity for the sake of media perception. I also recommend you speak to each reporter who has quoted that erroneous article and have it corrected.
What I think is that we are an industry full of entitled human beings. Particular to silicon valley but not exclusive to it. There are victims out there paying for oppression with their lives. As for the people here that whine that they aren't taken care of, who have not to worry about their lives being taken from them or their basic needs met, who owes them more than the voice they already have access to? To these whiners who want me to constantly address their questions preemptively, I say that we all have priorities. Even I do. I spend my time working through those priorities. And maybe there are priorities beyond your personal feelings. I would love to get to them, but maybe I just have not prioritized it high enough. If you feel that, reach out, don't whine about what you expect me to do. Ask it. The world is better off when we take control of our own voice, and fight for those who have truly none. Most in silicon valley have a voice, not everyone in the world does. I learned the power of my voice again this past week when I allowed my trust in Justin to enable him to retain control of the voice of the firm, and gave my input up. I didn't claim it back fast enough, up till the prior Saturday night. Yes Binary had a statement conflict. And yes I'm responsible for allowing that to happen, as a co-founder of the firm. But we have a division of responsibilities. That is how partnerships work. And I was late in dissolving it in my heart and mind. The minute I did, I dissolved it in action.
For now, trust that I want to do what's right. My job is not to make you all feel good, or keep you updated on things that I have no clarity on (many decisions are now outside my control). My job is to preserve the integrity of the portfolio we built up and the value in it, and to ensure the resources you count on do not dematerialize. It is at risk of that. So forgive me if I have not prioritized pandering to the people that feel entitled to be coddled. From the entrepreneurs to the LPs to the public to the reporters.
Some ask what else has not come out. I will say that nothing will come out that truthfully points to me abusing my professional capacity to further any social agenda. I do not need to do that. And I will fight any attempt to paint me as such. Even if it takes time to do so. To my core I believe in respecting each our right to live the way we want to on this planet Earth, and do it without hindering another's.
I'm hopeful we all come out of this stronger than before. I am angry about this situation. I am angry that women have felt hurt. I am angry that many have been hurt. That we have allowed this hurting to go on for so long is inexcusable, and it is now changing. Fast. This situation has ripped apart something I have built with an intention to bring good into the world. I let it get ruined because of poor choices in people. I regret that and won't forget that lesson.
Now we move ahead, now I am committed to finding someone to carry on the work (when the LPAC decides to remove me). And to chart a plan that is not about some reactive pledge. Or some silly framework. I want to institute a set of metrics that measure impact on equality, in the companies we back, in the firm I will build or rebuild, and in the world we touch with our work. And when we find the right metrics, and understand how we can influence them positively, hopefully we show the rest of the industry and the world what can be done.
Dear Binary LPs,
Thank you so much for your patience as we work through the events of this past week. I wanted to send you a formal update as well as give you an idea of what are the plans moving forward.
As you know, we have had a number of leaks to the press and are keeping written updates to a minimum till we feel we have a bit more control of the situation. I understand it is frustrating so please do feel free to reach out to me directly for a verbal update if questions arise.
As of now, we are in Limited Operations Mode for both Fund I and Fund II. This has two primary consequences. First, the Management Fee rate is reduced. Second, the Funds will not make any investments into new portfolio companies without LPAC approval. We expect that future capital calls will be made solely to cover: (i) follow-on investments into existing portfolio companies; and (ii) Fund expenses.
My offer to resign still stands, but contrary to news reports, has not yet been accepted. I am committed to carrying out my responsibilities to you, to the entrepreneurs we work with and to the Binary Capital staff, and generate increasing value of the portfolio we have worked so hard to build up. In the event that the LPAC chooses to replace me, I will work cooperatively with my replacement to transition these responsibilities in a way that maintains the integrity of the mission the entrepreneurs have and the resources we have committed to them. I have advised the LPAC to choose a replacement solely on merit and not based on convenience or for appeasing any public perception. Doing anything less will be irresponsible.
A capital call was sent out yesterday. The call was accompanied by an explanatory memorandum which highlighted the limited uses to which proceeds will be applied. A copy of that memorandum is attached to this e-mail for your convenience.
The portfolio remains strong. We have a number of companies that no longer require support from Binary as they did in their earlier days. We also have a significant number of companies that are already profitable. We also have a portfolio company that has recently filed for an IPO on the HKSE. I am committed to ensuring the portfolio will be a driver of returns for you.
The news media reporting that all our entrepreneurs are looking to buy back their equity is utterly misleading. That is simply not true. I would be disappointed if you as a group believe that we have invested in entrepreneurs that would take advantage of such an unfortunate situation without knowing full facts to renegotiate and do a shakedown. I am aware of one single entrepreneur who has done this, and only 2 others who have asked to have a discussion regarding it.
I also want to remind everyone that we have always invested in great entrepreneurs, regardless of gender or race. We have 7 female led companies in a portfolio of 18. Far greater a number than the industry average. And there have been zero incidents of inappropriateness reported by any of them to me, and in contrast I have been constantly reminded of how positive the working relationship has been, barring some natural disagreements on business decisions.
We will continue in limited operations mode until the LPAC has confidence on next steps.
My plans for next steps are firstly to ensure a smooth transition away from the recent events, and to find a good partner or replacement to support making good decisions on behalf of you our investors, and the entrpreneurs who are working hard to build value that will ultimately benefit all of us.
I am also putting together a set of metrics we will use internally to measure the impact that our work has in encouraging equality of access both within the portfolio and at Binary itself. We will monitor these metrics and interate on them, and expect that when we do have a set of practices that can positively impact them, to publish them as findings on practical work that can be done. I do not plan to grandstand with public statements of a pledge or platitudinal suggestions driven out of reactionary dynamics to take advantage of the current press cycle. Sustainable change comes from understanding the real levers, which comes only from knowing what does actually work. And this needs to be measured to be discovered credible.