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Venture capital firm Lerer Hippeau has reached an agreement to take over another fund from Binary Capital, the firm that last year was hit by a sexual harassment scandal and is now trying to move on.
Binary’s investors on its Limited Partner Advisory Committee have struck a deal to let Lerer Hippeau manage the companies in its second fund, according to sources familiar with the matter. Last month, Lerer Hippeau assumed the companies that were part of Binary’s first, larger fund.
But there was some wrangling and negotiating over what would happen to the $175 million second fund — which has slightly different limited partners than the first does.
All told, this is good news for Binary’s second crop of portfolio companies — which will now have a venture capital firm to advise them. Because less of the money had been spent, Lerer Hippeau investors had more options — it was possible, for instance, that Binary LPs could have voted to dissolve the second fund and give investors back some of their unspent money.
The next step will be for all of Binary’s LPs to ratify the agreement reached by their LPAC. No cash is expected to change hands as part of the deal. Lerer Hippeau will gain some equity in Binary’s fund, assume its board seats and be able to develop relationships with its LPs in exchange for the increased workload.
Lerer Hippeau declined to comment.
Binary companies were thrown into some chaos last June after one of two managing partners at the fund, Justin Caldbeck, was accused of unwanted sexual advances on multiple women, leading to the closure of his fund.
After Caldbeck’s departure, the other partner, Jonathan Teo, at first offered to resign, but his firm’s limited partners never officially accepted his resignation. The firm has since been bogged down in various legal matters, including an attempt by Teo to have his fate decided in arbitration.
This article originally appeared on Recode.net.
