Benchmark has repeatedly threatened to block any potential investment deal in Uber unless the board is capped at 8 people, reversing a June 2016 move by then-CEO Travis Kalanick to increase it to 11, sources tell CNBC.

Over the weekend, the New York Times reported that Uber’s board has been approached by three potential investment proposals from Softbank, Dragoneer Investment Group and a consortium led by Shervin Pishevar of Sherpa Capital.

CNBC is told that the potential investments have been discussed at multiple board meetings, and Benchmark has explicitly said they would try to block any investment unless the three extra board seats are eliminated.

Right now, Uber has nine board members. Kalanick appointed himself to one of the vacant seats when he stepped down as CEO, vacating the seat that had been reserved for the chief executive. Two of the three added board seats remain vacant. Kalanick has been actively involved in trying to find people to fill those last two spots.

Last week, Benchmark filed suit against Kalanick seeking to eliminate those seats and remove him from the board. In the filing, Benchmark alleged that Kalanick had attempted to conceal certain facts from the board, including allegations of widespread sexual harassment within the company and a possible legal conflict with Alphabet subsidiary Waymo over self-driving car technology.

It is extremely rare for a start-up investor to sue a former executive and fellow board member.

Today, Benchmark sent a letter to Uber employees that explained, “We know that many of you are asking why Benchmark filed a lawsuit against Travis last week. Perhaps the better question is why we didn’t act sooner.” The VC firm also says that its decision was “motivated by a deep desire to do what is best for Uber, and for the thousands of employees working so hard every day.”

The sources, who spoke to CNBC on the condition of anonymity, questioned that motive, saying that blocking an investment would likely come at the expense of their fiduciary responsibilities.

Benchmark was one of Uber’s earliest investors, participating in three funding rounds starting in 2011. According to the lawsuit, its $27 million investment has translated into a 13 percent stake of the company, last valued at nearly $70 billion, as well as 20 percent of its voting rights. Kalanick has 10 percent of the shares and 16 percent of the voting rights, the suit claims.

In a statement today provided to CNBC and others, Kalanick said he was “disappointed and baffled by Benchmark’s hostile actions.”

Benchmark did not immediately respond to a request for comment.

Source: Tech CNBC
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