A legal battle between the managers of Xfund, a venture capital firm with ties to Harvard University, New Enterprise Associates and venture capitalist Jim Breyer, entered a newly intense and bitter phase.

Hugo Van Vuuren, co-founder and general partner of Xfund, sued his partner, Patrick Chung, for breach of fiduciary duty, defamation and fraud. He also demanded a jury trial and damages to be determined at trial.

The complaint, filed Friday in Santa Clara County Superior Court, is the latest twist in a drama that has publicized in-fighting in a corner of the notoriously private venture capital community.

According to a copy of the complaint provided by a representative for Van Vuuren’s legal team, Van Vuuren, Xfund employees and the firm’s existence were compromised when Chung "fraudulently amended" partnership agreements to give him control. Before that, the two had equal voting power over Xfund decisions, the lawsuit says.

Van Vuuren signed the new agreements "without reviewing them," believing he was signing a document related to a separate matter, according to the filing. Chung e-mailed the document to Van Vuuren in late 2014 and only referred in the message to the other matter. The complaint alleged that Chung fraudulently induced Van Vuuren to sign the document against his interest.

The lawsuit also claimed Chung’s investments for Xfund have been unprofitable and that he spent the firm’s money on "unnecessary expenses." The complaint also said that in 2014 Chung was fired from New Enterprise Associates due to "behavioral issues and poor investment performance."

A spokeswoman for Xfund wrote in an e-mail that Van Vuuren’s allegations are “bewildering” and “lack any basis in truth.”

Firings, accusations

The origins of Xfund began in 2011 with Van Vuuren, an entrepreneur serving as an expert in residence at Harvard, and New Enterprise Associates, where Chung worked as a partner after graduating from Harvard’s law and business schools. Xfund’s early mission was to find and back startups developed through Harvard’s School of Engineering and Applied Sciences.

By mid 2012, other top VCs Accel Partners, Breyer’s firm Breyer Capital and Polaris Partners joined as limited partners and took seats on Xfund’s investment committee. In 2014 Chung left New Enterprise Associates to take a full time role in a 50-50 partnership with Van Vuuren in Xfund.

What happened over the next few years is under dispute and involves employee firings, accusations of abuse, mismanagement and eventually Chung’s request for a restraining order against Van Vuuren that has since been withdrawn. With the relationship between Van Vuuren and Chung crumbling, Xfund’s limited partners moved in early 2016 to terminate the dueling partners’ ability to make new investments.

In March, five days before Van Vuuren was expected to meet with members of the fund’s advisory committee, Chung filed a restraining order against Van Vuuren on the grounds that Van Vuuren had threatened his family. According to the request for protection, Chung said he felt "very shaken and extremely scared" on Dec. 18. A few days later, Chung wrote Van Vuuren text messages asking to meet in person, according to communication made public in a filing by Van Vuuren.

On Dec. 25, Chung sent Van Vuuren a text that read, "Merry Christmas, Hugo, I hope you and your family have a peaceful time." On Jan. 2, Chung wrote in a letter to Van Vuuren and the fund’s legal team, "Dear Hugo, I believe that the best path forward is to have an in-person meeting... I am growing uncomfortable that we only ever speak on the phone."

Van Vuuren said, in a court filing in response to Chung’s temporary restraining order, he never threatened violence and Chung filed the restraining order to humiliate and discredit Van Vuuren as investors were deciding who would take over management of the fund.

Harvard Professor and faculty adviser to Xfund, Douglas Melton, sided with Van Vuuren in a phone interview. "The behavior of Mr. Chung in this circumstance is questionable and should be investigated," said Melton, co-director of Harvard’s Stem Cell Institute. "Mr. Chung was desperate to deflect attention from his mismanagement of the fund and threw up a smokescreen."

Xfund employee e-mails disclosed in court filings said Chung was on a mission to "disparage" Van Vuuren because the fund was not performing well and that Chung created a "hostile work environment." These employees have either resigned from the firm or have been fired.

Commitments cut

On Friday, the fund’s backers, which include prominent Silicon Valley VCs such as Jasper Ridge Partners, Top Tier Capital Partners, Goldman Sachs Group Inc. and Saudi Aramco, voted to let Chung continue managing the fund’s current investments in 11 startups including Kensho and 23andme. Van Vuuren was terminated from Xfund March 4, according to a representative for Xfund. The investors also voted to cut their commitments in half, reducing the size of the firm’s current fund to $50 million.

Melton, who is not an investor in the fund, said further action is required on behalf of the fund’s limited partners who vote to decide the fate of the fund and include such investors as David York and Breyer.

"I do not know why the investors are so tight lipped," Melton said. "I’m willing to speak on the record because I feel there has been a great injustice."