Ex-EVP partners push to oust current GPs over alleged forced sale of portfolio company Uken Games


Two founding partners of Toronto-based VC firm Extreme Venture Partners have advocated for the removal of the current general partners over the alleged forced sale of a portfolio company, BetaKit has learned.

In an email to LPs of Extreme Venture Partners Fund I obtained by BetaKit, Sundeep Madra and Amar Varma ask that the current general partners of the fund, Ray Sharma, Ken Teslia, and Imran Bashir, be removed due to a “personal vendetta” that would undermine the fund’s best interests.

In the email to LPs, Madra and Varma allege that Sharma, Teslia, and Bashir “have harassed the founders of Uken to sell the company” to fund an ongoing lawsuit between the two groups of partners.

Central to the ask is EVP portfolio company Uken Games, which the email alleges is part of an impending exit. A mobile and social game developer, Uken will allegedly sell one of its game assets, Bingo Pop, as part of a move to eliminate Extreme Venture Partners Fund I from its ownership table.

In the email to LPs, Madra and Varma allege that Sharma, Teslia, and Bashir “have harassed the founders of Uken to sell the company,” to fund an ongoing lawsuit between the two groups of partners. The email further alleges that EVP’s current GPs “[owe] millions of dollars to the courts for security and are selling early the position in Uken games to meet the liquid requirements of the court.”

The lawsuit in question dates back to 2014, when Sharma, Bashir, and Teslia filed a claim of over $200 million in damages against Madra and Varma, alleging that the pair had conspired with Social Capital CEO Chamath Palihapitiya to hide an interest in Tinder as part of a sale of shares in dev studio Xtreme Labs.

A brief summary: Xtreme Labs was founded in 2007, the same year as EVP. Accounts differ as to its origin story; Madra and Varma list themselves as co-founders, with Varma as CEO, while Sharma, Teslia, and Bashir have told the press in the past that they brought Madra and Varma on both as directors in EVP to manage investments in the fund, and also to run Xtreme Labs. What is certain is that Xtreme Labs sold a controlling stake in the company to Palihapitiya in 2012, buying out Sharma, Bashir, and Teslia.

At the time, Xtreme owned a portion of Hatch Labs, a joint initiative between the company and Los Angeles-based IAC. Hatch Labs begat Tinder, and when Xtreme sold to Pivotal in October 2013 for $65 million USD, Palihapitiya sold his stake in the dating app to IAC (valued according to court documents at $55 million USD, per the Wall Street Journal). Sharma, Bashir, and Teslia allege that Madra and Varma withheld knowledge of Tinder during the sale; Madra and Varma claim that the app didn’t launch until August 2012, months after the Xtreme Labs negotiations ended.

Notably, per The Globe and Mail, Madra and Varma filed a counterclaim of over $10 million in punitive damages, and argued that the plaintiffs should not be allowed to finance the legal proceedings from cash via Extreme Venture Partners Fund I.

While not the size of Tinder, Madra and Varma claim in their email to EVP’s LPs that Uken features similar growth potential, comparing it to Epic Games, makers of the generational hit Fortnite, which has led the game studio to surpass a valuation of $15 billion USD.

“Much like Epic Games, the Founders of Uken Games have the knowledge and skills to create a once in a generation games studio company valued in the billions,” the email reads. As part of the alleged forced sale, which would relinquish EVP ownership in the game developer, “the Founders of Uken will move on with all the remaining assets and continue to make great games of which we will no longer participate in the upside.” 

Uken Games

Uken Games co-founders Chris Ye and Mark Lampert.

Uken co-founders Chris Ye and Mark Lampert have not responded to multiple requests for comment. Varma and Madra told BetaKit that they have “no comment beyond what was written” in their email to LPs.

“[Varma and Madra’s] recent letter to our limited partners is a desperate attempt to distract from the merits of our action against them.”
– Ray Sharma, EVP CEO

As EVP CEO, Sharma provided an extensive statement in response to BetaKit on behalf of the firm’s partners, citing not only the legal dispute above, but an additional claim that Varma and Madra created and hid a fund called EVP Annex, “[using] that fund to benefit from our goodwill, and to obtain for themselves investments that ought rightfully to have been those of our limited partners.”

Per the WSJ, that claim alleges that EVP Annex Fund invested $2.6 million CAD in startups from EVP’s existing portfolio, with Varma and Madra using information gained while at EVP to “cherry pick” the best investments.

“Our trial is now only a few months away, and we are finally in a position where Mr. Varma and Mr. Madra will be held accountable for their actions,” the statement continues. “Their recent letter to our limited partners is a desperate attempt to distract from the merits of our action against them. We have also been repeatedly harassed over the last year or more with anonymous messages seeking to intimidate us into abandoning our action, however we remain resolute in our efforts to obtain redress for our limited partners.”

“The most important thing that our investors need to know is that we have respect for them, and that we are here to provide service to them. This includes taking action to protect them. Our investors support our efforts to obtain justice on their behalf.”

Regarding the email’s allegations, Sharma noted that he has served on Uken’s board for the last four years, “and with support from EVP and our years of experience with other games studios, Uken has emerged as one of the largest and most successful indy [sic] games studios in Canada. We fully endorse their decision to capitalize on their hard work and well earned success, which will benefit all shareholders and stakeholders.”

Any questions about Uken or its business, Sharma said, “should be addressed to Uken directly.”

Disclosure: Extreme Venture Partners Fund I invested in Toronto startup Vouchr in late 2012, at which the author worked at the time. BetaKit covered the story here.

Douglas Soltys

Douglas Soltys

Douglas Soltys is the Editor-in-Chief of BetaKit and founder of BetaKit Incorporated. He has worked for a few failed companies and written about many more. He spends too much time on the Internet.