Social Capital, the venture capital firm led by podcaster and former Facebook executive Chamath Palihapitiya, fired two of its partners related to an undisclosed matter involving its investment in AI startup Groq Inc.

The firm “became aware of a situation” last week, and after conducting an internal probe it hired Wachtell, Lipton, Rosen & Katz to investigate the matter on Thursday, according to a letter Palihapitiya sent to investors that was reviewed by Bloomberg. “On Sunday night we terminated Jay Zaveri and Ravi Tanuku,” Palihapitiya said in the letter.  

While the firm has declined to elaborate on the reasons for the firings, one person familiar with the matter said that it stemmed from perceived breaches of company policy. 

The incident is related to Groq, a startup that Social Capital backed in 2017 and 2018 through a $60 million convertible note. Groq has since surged in value, reaching a $1.1 billion valuation in 2021, according to PitchBook data. Zaveri, who is on Groq’s board, and Tanuku had marketed a special purpose vehicle that offered an allocation in Groq’s convertible note, a person with knowledge of the matter said.Play Video

A representative for Groq didn’t immediately respond to a request for comment. The Financial Times earlier reported Groq’s involvement.

“Mr. Zaveri’s firing was unfair and undeserved,” a spokesman for Zaveri said. “The firm’s leadership approved and participated in the investment that is now being used as a pretext to fire him. Mr. Zaveri stands by his 28-year track record of integrity and looks forward to the truth coming out.” 

While Social Capital hasn’t disclosed its reasoning, Palihapitiya hosted a call Wednesday for investors in his fund to discuss the firings and allow them to ask questions. Although it was scheduled to last an hour, it was over in seven minutes and did not reveal significant new information, according to one investor who was on the call but was not authorized to speak publicly.

In a post on X on Tuesday, Social Capital wrote, “We have terminated the employment of two of our employees due to employee-specific circumstances. We have no further comments at this time.”

“Mr. Tanuku was terminated without cause,” his lawyer said. “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.”

In his letter, Palihapitiya added that Social Capital is “working with the CEOs of all the portfolio companies on whose boards Jay sat to effect an orderly transition and we do not foresee any major issues.” 

In a related move, the firm said that Steve Trieu will serve as its global chief financial officer on an interim basis, “overseeing all finance aspects of the organization.” 

Trieu, who was involved with Social Capital’s special-purpose acquisition companies, stepped back from the firm in May 2021, according to his LinkedIn profile.

Social Capital spent recent years at the forefront of the SPAC boom. The strategy provided startups with an alternate route to initial public offerings or direct listings, often allowing companies to go public earlier than they might otherwise be able to. His early and prolific involvement earned Palihapitiya the nickname the “SPAC King.” However, some of the companies his SPACs merged with — including Opendoor Technologies Inc. and Virgin Galactic Holdings Inc. — took a dive after going public.

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