Drive Capital was founded by two former Sequoia Capital Partners looking to start anew in the Midwest. But investors in the Columbus, Oh.-based firm have had a bumpy ride of late, and according to our sources, they aren’t enjoying it.

It’s a dramatic turn for Drive, which announced $1 billion in capital commitments back in June, a healthy amount for a 10-year-old firm whose mission it is to invest nearly everywhere in the U.S. outside of Silicon Valley. In fact, in June, the firm — cofounded by veteran VCs Mark Kvamme and Chris Olsen — seemed to be riding high, with a couple of apparent wins in its portfolio and assets under management that had grown to more than $2 billion.

Olsen now says that he’s surprised by this development. We obtained a letter that Drive sent out to its limited partners tonight that reads:

Dear Limited Partner:

This week an article was published indicating that our Partner Emeritus Mark Kvamme is launching a new investment fund. All of us at Drive were surprised by this news, as we are sure you were too. While we will not send you a note each time a new article about Mark is published, we feel that in the spirit of being a good partner, it’s appropriate to provide you with a transparent update about this situation and our relationship with Mark.

After the article was published we spoke with Mark and learned that the prospect of him raising a new fund was leaked to a journalist from an unknown source. According to Mark, he has not yet determined what he is going to do next. Raising a new type of fund is something he is considering, along with other options in public service and personal endeavors.

We have a formal separation agreement with Mark that prevents him from starting a competitive firm or fund to Drive. Please know that this was a heavily negotiated agreement to ensure that it substantially protects Drive, our Limited Partners’ interests, and everything we are building toward at Drive.

Again, we do not intend to communicate with you each time a new article is written about Mark, but in this instance, we thought it appropriate to provide clarification. Should you have any questions, please do not hesitate to reach out [contact information redacted by TechCrunch].

Sincerely,
The Drive Team

Olsen declined to comment for this story; we reached out to Kvamme and did not receive a response. But it’s complicated, to say the least.

According to our sources, part of the split traces to a relationship between Olsen and Yasmine Lacaillade, who was Drive’s COO for nearly seven years before leaving the firm in April to launch her own investment outfit.

Asked about this, a Drive spokesman downplayed any tensions that may have arisen from a romantic relationship between the two, writing: “Yes you heard right in that Chris and Yas are in a relationship. That’s been public knowledge for some time. No comments beyond that.”

Olive AI has since said it will sell a portion of its products and services to Rotera, a company built out of Olive’s own venture studio.

Limited partners aren’t happy about these collective developments, but as far as we’re aware, they have not talked about taking action and it seems unlikely that they will.

First, it’s exceedingly rare for limited partners to organize against a venture firm to which they’ve committed capital and only slightly less rare for VCs to extend LPs the courtesy of scaling back their commitments.

They might also expect that Olsen will land on his feet. He does have 16 years of venture investing experience and a staff of roughly 20 at Drive to support him.

Further, there isn’t much interest in creating headaches for Kvamme, who borders on VC royalty. (His father was a partner at Kleiner Perkins; his first wife is the daughter of another famed VC, former Sequoia Capital partner Pierre Lamond.)

Drive Capital’s investors reach a fork in the road by Connie Loizos originally published on TechCrunch

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