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of abuse, mismanagement and eventually Chung’s request for a restraining order against Van Vuuren that has since been withdrawn.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."