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A storm fueled by greater awareness about sexual assault and harassment has been gaining momentum in the U.S., ever since a former Uber engineer named Susan Fowler hit “publish” on a post about her jarring experience inside the high-flying ride-share company. So many man have been swept up – and out – of their respective businesses for behaving badly that Time magazine pronounced the powerful social campaign #metoo and the women behind it as “Person of the Year.” 

Silicon Valley has hardly been immune. In the world of venture capital, two of the highest-profile poster boys for this uprising (as of this writing) are venture capitalists Steve Jurvetson, formerly of the venture firm DFJ, and Shervin Pishevar, who cofounded the firm Sherpa Capital and has, in recent days, taken a leave of absence from the outfit.

While seemingly devastating body blows for their respective firms, institutional investors with whom we’ve spoken and who asked not to be named in this story say they remain interested in superstars like Jurvetson if they’re able to repair their reputations.

If not, they say, plenty of family offices will rush to fill the void.

“I’m a bright line person,” says one investor (or limited partner, in industry parlance), who isn’t an investor in either DFJ or Sherpa Capital. “If you’re legally accused of a crime, that’s one thing.”  But “I’m not doing [my job as an institutional investor] for social justice,” adds this person. “I do that in my philanthropy.”

Says another LP who, like the first, has stakes in a wide number of venture firms but not in DFJ or Sherpa: “Are some of these VCs forever unbackable, or unbackable until the dust settles? As an LP, it’s easier to say right now, ‘I have a fiduciary duty to my investors’ [and pass]. But a family office doesn’t have to answer to anyone, and if they think Steve is a great investor, shit, they’ll give him money. They understand he hasn’t raped anyone.”

Indeed, while there’s no shortage of outrage in Silicon Valley about powerful men who wittingly take advantage of younger founders, behind the scenes there is growing concern – on the part of returns-seeking LPs, in any case – that every situation involving a VC and a founder is being painted, perhaps unfairly, in black and white.

Step aside

From the outside looking in, Pishevar’s situation may make it far harder for institutional investors to bet on him in the future. Last week, Bloomberg published a piece featuring five unnamed women who say Pishevar has used his position of power to pursue romantic relationships and unwanted sexual encounters.

Yesterday, a sixth woman, speaking with Axios, said Pishevar misled her into being alone with him in an elevator in December 2011 after a charity event; there, says the entrepreneur, Laura Fitton, he aggressively kissed her. She also said she followed him to his room, having been told a group of attendees were reconvening there in the late hours, but she found the two of them alone, where he made further unwanted advances before she fled.

These accusations follow Pishevar’s arrest in May, at a hotel in London, after a woman accused him of raping her. Police said Pishevar was “released under investigation” and never charged.

Pishevar didn’t respond to a request for comment for this story. His attorney, Randa Osman of Quinn Emanuel Urquhart & Sullivan, has told media outlets that he “unequivocally and categorically denies any improper behavior toward Ms. Fitton.” Pishevar has also filed suit against a GOP political opposition research group that he alleges was conducting a smear campaign against him.

Pishevar cofounded Sherpa in 2013 with Scott Stanford, a former banker with Goldman Sachs. The firm, which had raised two funds totaling $470 million just last year, reportedly began seeking out $400 million for a new fund this fall.

Three days ago, Pishevar announced that he was taking a leave from Sherpa, along with the transportation company Virgin Hyperloop One, which he also helped found, and other company boards. Said Pishevar in a statement: “This was a decision I came to and proposed on my own accord.”

The move seemingly puts the firm’s investors in a bind. None responded to our requests for comment yesterday, but the career LPs we spoke with note that a leave of absence is highly rare in the world of VC. A fund formation expert meanwhile tells us that a leave of absence usually owes to a medical issue or happens “when general partners are voting another general partner off the island.”

New terrain

In fact, investment documents between venture capitalists and their own investors – called limited partner agreements — don’t address leaves of absence or sabbaticals. That leaves Sherpa’s LPs with roughly three options, should Pishevar’s leave drag on: suspend the fund, in which case Stanford would work with Sherpa’s LPs on a new game plan that could potentially involve bringing in a new venture investor; terminate Sherpa’s active funds, which would require a supermajority of the firm’s LPs to demand that any uncommitted capital be returned to them and potentially for the firm to liquidate its current positions; or let things ride for now and see how this plays out.

The first option “burns a lot of time, brain cells, and money with legal,” notes one LP. The second is extremely hard to pull off given that a “supermajority” requires three-quarters of investors, who can be hard to corral.

There’s also the question of whether Pishevar would want Sherpa to continue on were he to leave it permanently. Says one LP, “Did investors invest behind Shervin or Scott? And if they invested in Shervin” – whose rise in the industry can be traced to an early investment in Uber – “given his big personality, would he want the fund to go with just Scott?”

Steve Jurveston — an even-better known venture capitalist who has been a VC far longer and backed a greater number of winners, including Tesla, SpaceX, and Planet – is in somewhat of a different category, say LPs.

Though Jurvertson recently left his job at DFJ in the wake of an investigation into sexual harassment, the circumstances for his apparent ouster were rather different. According to Recode’s sources, the investigation “uncovered behaviors by Jurvetson that were unacceptable related to a negative tone toward women entrepreneurs.”

As part of DFJ, Jurvetson was also alleged to have been part of a “predatory culture” toward women at the firm by a founder with whom Jurvetson had a relationship, according to a source. In October, the founder, Keri Kukral, warned founders about DFJ on Facebook, adding in subsequent comments to her post that her experience was not in a professional context.

Partner Heidi Roizen came to DFJ’s defense almost immediately in the wake of Kukral’s accusations. Soon after, two former junior investors at DFJ who are women wrote on Medium that not only had they never experienced sexism at DFJ, but they credited Jurvetson specifically for their career success , writing: “The fact that we are in leadership positions in the industry today is a testament to Steve and DFJ cultivating an environment where women advance professionally.”

Soon after, Jurvetson not only left DFJ but he has taken a leave of absence from the boards of SpaceX and Tesla boards, pending resolution of the allegations.

Judgment calls

Jurvetson declined to comment for this story. DFJ also declined to comment. Further, we were unable to speak with DFJ’s LPs. But playing armchair quarterback, the LPs with whom we spoke suggest that Jurvetson’s absence weakens DFJ, which also parted ways with cofounder Tim Draper in 2013. (Draper has gone to mint many millions of dollars off some early and prodigious bets on Bitcoin.)

These LPs also suggest that whether or not Jurvetson is able to completely clear his name, that unless another shoe drops, there are plenty of people willing to give him capital to manage. They they see his failings as personal and not professional.

“You’re going to have people who’ve made one mistake in their lives, and they’re going to get hung for it, but those aren’t the people we should be talking about,” observes one investor. “It’s the people who’ve demonstrated serial, predatory behavior.”

Another LP points to the cases of Michael Goguen and Joe Lonsdale, two VCs who in recent years were accused by former lovers of being abusive. Last year, Goguen, who had spent 20 years with Sequoia Capital, was sent packing by the firm a day after his accuser filed an explosive lawsuit against him. (Goguen subsequently filed a countersuit and has largely remained out of view at his home in Montana.)

Lonsdale, who in early 2015 was accused in a civil lawsuit of sexual assault and banned from Stanford, where he’d mentored his accuser, was able to rebound after both the suit and ban were dropped, the result of new evidence that came to light during the litigation process.

He has since raised roughly $500 million from investors, but says one LP who we spoke with yesterday, “If that lawsuit happened today, Joe might have been chased of the industry.”

Some VCs are “assholes who I wouldn’t want to meet for dinner,” adds this person. “But I do think there are some assholes who are good investors.” Meanwhile, a “lot of people are getting killed before there’s resolution.”

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