Breakthrough Victoria, state’s VC fund, faces court action from former Seer Medical CEO Dean Freestone

The Victorian government’s $2bn venture capital fund is facing allegations it threatened the former CEO of one of its investment companies ‘personally’ before he was sacked.

Dean Freestone, medical scientist and co-founder of Seer Medical, says he has suffered ‘distress, hurt and humiliation’ following a dispute with Breakthrough Victoria.

The Victorian government’s $2bn venture capital fund is facing allegations its executives threatened the former CEO of one of its investment companies “personally” before he was sacked, amid an explosive Federal Court case.

Dean Freestone, medical scientist and co-founder of Seer Medical, says he has suffered “distress, hurt and humiliation” following a dispute which started with Breakthrough Victoria’s plans to withdraw a second funding offer of $10m in May last year, after it had already invested $30m in July 2022.

Allegations made in court documents seen by The Australian claim Breakthrough Victoria’s chief asset management officer Sally McCutchan said the funding would be withheld unless Seer Medical agreed to a number of changes designed to increase its ownership and control of the business.

Mr Freestone says he was unfairly sacked from his role at Seers Medical in March this year, and is seeking compensation in lost wages and superannuation.

A Breakthrough Victoria spokesman said: “As the matter is before the courts it would be inappropriate to comment.”

Mr Freestone alleged Breakthrough Victoria was “coming after the applicant personally”, amid threats to change the conditions of a funding deal, according to the court documents.

Former Victorian Premier John Brumby is chair of Breakthrough Victoria. He is not the subject of any allegations in the court documents.

Mr Freestone said he suffered “distress, hurt, and humiliation”. He said he complained about the withdrawal to Breakthrough Victoria’s CEO Grant Dooley and its board, and sent an email in May last year outlining his concerns.

In July last year, Mr Freestone claimed he made further complaints about the conduct of Ms McCutchan towards him including that she “seemed to have personal animosity” towards him and Breakthrough Victoria was adopting an “aggressive approach” to changing the terms of its funding conditions.

Mr Freestone says he made a further two inquiries about the strategic direction of Seer Medical “in light of BV’s approach”.

At a further meeting between Breakthrough Victoria and Seer in November last year, Mr Freestone alleged the venture capital fund wanted to structure a new investment deal and that it preferred Seer to take funding from one company, healthcare investor KPRx, over other companies.

As part of the deal, Seer was required to be valued at $0 and if Seer did not accept the valuation, Breakthrough Victoria and KPRx were prepared to block other investments and cause the company to go into administration, gain control of it and phoenix the company, the court documents allege.

In the court documents, Mr Freestone said he complained to Seer staff including now CEO Joshua Reich, Sharon Ye and Damien Kenny about the conduct of Breakthrough Victoria.

Mr Freestone said between January and February this year, he complained to Breakthrough Victoria and Ms McCutchan threatened to arrange the terms of future funding agreements to “remove the applicant (Mr Freestone) from all board, governance, senior management, and executive leadership positions with Seer; and … be unfavourable to existing shareholders”.

“BV’s action in issuing the terms sheet on terms which made draw down of the $2m bridge loan conditional on the applicant being removed from all board, governance, senior management, and executive leadership positions with Seer constituted organising to take action against the applicant,” the court documents allege.

“The action which BV was organising to take against the applicant was the action of ensuring that the applicant was removed from all board, governance, senior management, and executive leadership positions with Seer. Taking that action against the applicant would have been unlawful, unconscionable, or illegitimate.”