Cybereason CEO Resigns Amid Boardroom Chaos

(Bloomberg) — In a shocking turn of events, Cybereason Inc.’s chief executive officer, Eric Gan, has stepped down following a prolonged feud with key investors, including SoftBank Group Corp. and former US Treasury Secretary Steven Mnuchin. This internal conflict has significantly stalled decision-making at the cash-strapped cybersecurity startup, raising questions about its future viability.

Boardroom Turmoil at Cybereason

Gan’s resignation comes after a fierce boardroom battle erupted at the La Jolla, California-based company, which has been struggling to secure funding and mitigate losses. The situation escalated to the point where a planned merger with Chicago-based Trustwave Holdings Inc. was terminated, according to sources familiar with the matter.

Legal Actions and Allegations

Eric Gan, who previously held a position at SoftBank, filed a lawsuit against Mnuchin and the Vision Fund last month. He accused the investors of prioritizing their own interests over the company’s well-being, which he claims hindered his efforts to raise the necessary funds to prevent bankruptcy. Both Mnuchin and the Vision Fund have denied these allegations, stating that their actions were in the best interest of the company.

In an internal email to staff, Gan expressed his frustration, stating, “I cannot continue to lead a company where critical decisions are made based on personal interests rather than what is best for the organization. I cannot stand by while minority shareholders, employees, and customers suffer the consequences.”

New Leadership at Cybereason

Following Gan’s departure, Manish Narula, the company’s chief financial officer, has been appointed as the new CEO. An official announcement regarding this leadership change is expected to be made this week.

Disagreements Over Fundraising Strategies

The core of the dispute revolves around differing opinions on how to structure fundraising efforts without disadvantaging or undervaluing the startup. The lawsuit alleges that Liberty and the Vision Fund proposed a financing plan that would have deliberately excluded management, thereby concentrating power in the hands of these two entities.

Representatives from the Vision Fund, SoftBank Corp., and Trustwave have declined to comment on the ongoing situation, while Liberty has not responded to requests for comment.

Investor Commitment and Company Valuation

To date, investors have poured more than $800 million into Cybereason, which specializes in technology that utilizes artificial intelligence to predict and combat cyber-attacks. At one point, the company was valued at billions of dollars, but its valuation has since plummeted to less than $400 million.

Future Prospects and Ongoing Negotiations

In the latest developments, the Vision Fund, SoftBank’s telecom arm, and Mnuchin’s Liberty Strategic Capital are reportedly working to finalize a deal as soon as this week. Last month, discussions included potential funding from Liberty, the Vision Fund, All Blue Capital, and Andra Capital, aiming to inject approximately $100 million into Cybereason while increasing their control over the company.

Representatives for All Blue and Andra have also declined to comment on the situation. Despite the turmoil, Gan remains determined to pursue legal action against the Vision Fund and Liberty, stating, “I’m still fighting for justice,” although he did not provide further details.

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