Social Capital fires two partners over 'situation' involving AI investment

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Chamath Palihapitiya's venture capital group Social Capital has fired its two most senior partners and hired a law firm to investigate undisclosed “circumstances” related to its investment in artificial intelligence chip startup Groq.

Social Capital said in a letter to investors this week that it had fired Jay Zaveri, head of early-stage and venture capital, who had been a partner since 2015, and Ravi Tanuku, head of public markets and M&A since 2020.

The letter, seen by the Financial Times, said Social Capital had hired law firm Wachtell Lipton to investigate the “circumstances” it became aware of last Tuesday, but gave no further information. It also said the company was working with the heads of its portfolio companies, where Zaveri serves as a board member, to ensure an orderly transition.

Social Capital said in a statement: “Due to the specific circumstances of the employee, we have terminated the employment of two employees. We have no further comment at this time.” Bloomberg first reported the firing of the partners.

Zaveri and Tanuku did not immediately respond to requests for comment. Social Capital declined to comment further, and Groq could not immediately be reached for comment.

The development is related to Social Capital's investment in Groq, according to two people familiar with the matter.

Private Equity backed the Silicon Valley company in 2017 and 2018, including investing $52.3 million to purchase $60 million in convertible notes. Groq's value has since surged, raising $300 million in a funding round led by Tiger Global Management and D1 Capital in 2021, valuing it at more than $1 billion.

The two partners recently launched a special purpose vehicle designed to sell distributions in the convertible note financing, people familiar with the matter said.

Social Capital has had a tumultuous few years under the control of its founder, former Facebook executive and “SPAC king” Palihapitiya, who was the latest in a wave of blank-check companies to launch between 2020 and 2022. One of the outspoken promoters.

He launched the fund in 2011, raised $1 billion and made early investments in companies including Slack. After a series of high-profile exits, he streamlined it in 2017, effectively turning it into a family office. He tried to raise new funds from outside backers in 2022 but abandoned that plan earlier this year.