Millions of dollars are at stake in a legal battle between Ron Conway and his former SV Angel partner David Lee, according to a suit filed last week in Marin County Superior Court and first reported by Axios.
Lee filed the complaint claiming Conway has not paid him in previously promised fees and agreed-upon shares in investments in companies such as Airbnb, Pinterest and Snapchat.
Lee was the former managing partner of SV Angel, which he founded with Conway, but left two years ago in what was portrayed back then as “a personal decision” to spend more time with his family in Los Angeles, according to a piece detailing the departure in Fortune.
However, it seems the split was not so amicable. In fact, Conway was allegedly critical of Lee when speaking to LPs about Lee’s lack of involvement and move to L.A.
Conway also believed his former partner to be paying himself far and above the fund’s $250,000 annual salary cap by skimming off of SV Angel funds through a technique known as a fee waiver, a fairly common way for fund managers to cover the costs they are expected to invest upfront. The concept was apparently foreign to Conway, however.
Now Lee, who runs a VC firm called Refactor Capital, claims Conway owes him $3.5 million for breach of contract and unpaid fees the two had previously agreed to before Lee’s departure. Further, Lee wants declaratory relief to ensure he is paid for future exits in investments he made with the firm, which could total $15 million to $20 million.
However, Conway tells TechCrunch Lee filed the suit before the two could work things out.
“Recently a dispute has arisen regarding compliance with some settlement agreement terms,” Conway said in a statement. “Before we could resolve our differences, David filed a lawsuit insisting upon money that SV Angel does not believe he is entitled to receive.”
“It is very disappointing that David is trying to pressure SV Angel to pay monies that do not belong to him, and the SV Angel funds intend to vigorously defend against David’s meritless claims,” Conway said.
When asked for comment, Lee told TechCrunch the following: “When I left SV Angel, Ron Conway and I reached a settlement regarding my departure. Many of the terms we agreed upon were proposed by Ron. I wish Ron no ill will. I simply want him to honor the agreement we signed.”.